The Federal Tax Injunction Act (TIA), Section 1341 of Title 28, was enacted nearly a century ago. The federal law bars state and local tax litigation in federal courts. This unusual carve-out from federal court jurisdiction deprives taxpayers from pursuing their litigation of important federal questions in a neutral federal court. State taxes have become more prevalent and complex since the time of the original enactment of TIA. Given the important federal law questions that arise from these complexities, the time has come to modernize TIA.
Taxpayers face a growing history and pattern of discriminatory state taxation, resulting in Due Process and Commerce Clause concerns under the U.S. Constitution. In 2018, the U.S. Supreme Court issued a 5-4 decision in South Dakota v. Wayfair, 585 U.S. 162 which allowed states to expand their tax jurisdictions to any business that establishes an “economic presence.” As a result, taxpayers of all sizes now face the daunting burden of filing tax returns in jurisdictions where they do not engage in any operations.
In recognition of these issues, we have formed the Fair Access to Interstate Remedies (FAIR) Coalition to support a modernization of TIA. The FAIR Coalition is expanding its membership, and we are inviting interested organizations to join our efforts.
For more information about our efforts, and to get involved, please contact us.