U.S. Supreme Court

Can the government seize property for unpaid taxes and keep the surplus after selling it? SCOTUS will decide

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The U.S. Supreme Court will consider whether local governments violate the Constitution when they seize property for unpaid taxes, sell it and then fail to return the surplus to the owner.

The high court granted cert Friday in the case of Geraldine Tyler, whose condo was seized by Hennepin County, Minnesota, in 2015 for a $15,000 unpaid tax debt that included $12,700 in penalties, interest and fees. The county sold the condo for $40,000 and kept all the money, the cert petition says.

The county’s distribution of the net proceeds to government entities, as required by statute, did not include anything for Tyler, according to a February 2022 decision upholding the practice by the 8th U.S. Circuit Court of Appeals at St. Louis.

At issue is whether the county violated the Fifth Amendment’s takings clause and the Eighth Amendment’s excessive fines clauses, according to the cert petition. The issue has split state and federal courts.

Minnesota is among 14 states that permit the seizure of property to satisfy delinquent property taxes, utility bills or other government debts associated with real property by confiscating all title and any equity, the cert petition says. In some states, the windfall goes to government, and in others, it goes to private investors.

Tyler is represented by the Pacific Legal Foundation, a public interest law firm, with the assistance of private attorneys, according to a case description. Tyler is currently 94 years old.

SCOTUSblog, Law360 and the Volokh Conspiracy are among the publications covering the cert grant.

The case is Tyler v. Hennepin County; the SCOTUSblog case page is here.

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