Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
The Tucker Act and Tax Refund Suits: Sovereign Immunity at Play in United States v. Clintwood Elkhorn Mining Co.
Max J. Levine
In United States v. Clintwood Elkhorn Mining Co., the Supreme Court examined two longstanding categories of claims not often combined in a single suit: Tucker Act claims and tax refund claims. While most tax refund claims are brought under the provisions of the administrative tax refund scheme, the plaintiffs in Clintwood Elkhorn based part of their tax refund claim on the Tucker Act, the main jurisdictional statute of the Court of Federal Claims, which also provides a general waiver of sovereign immunity for the court to hear claims against the United States. Because the Tucker Act’s waiver of immunity is general, the plaintiffs needed to point to a complementary legal provision as the basis of their claim. Here, the plaintiffs attempted to recover taxes collected in violation of the Constitution’s Export Clause, which prohibits
taxes on “Articles exported from any State.”
Section I of this Note sets forth the facts and holding of Clintwood Elkhorn. Section II discusses the debate over the role that sovereign immunity should play in protecting the government from suit in a democratic society. Because the taxpayers here attempted to rely on the Tucker Act’s waiver of sovereign immunity, this debate elucidates the key policy issues at stake in the suit. Though the Supreme Court did not reach the issue, Section III provides an analysis of the viability of a Tucker Act claim based on the Export Clause given prior interpretations of the scope of the Tucker Act’s waiver of immunity. Section IV then analyzes the issue the Supreme Court found critical: the narrowly tailored administrative tax refund scheme, by its plain language, preempts claims based on the Tucker Act’s more general waiver of immunity. Section V concludes by observing the Supreme Court’s recent trend of cutting off attempts to reach behind the time limits of the administrative tax refund scheme, leaving to Congress the question of whether there should be an expansion of taxpayer remedies in certain cases.