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Supreme Court Backs Bid For Refund From Unconstitutional Taxes With AM-Scotus-Business, Bjt

June 20, 1991

WASHINGTON (AP) _ The Supreme Court on Thursday revived a liquor company’s bid to get back $2.4 million it paid to Georgia under a tax law later found to be unconstitutional.

But lawyers could not say, after studying the decision for hours, just what impact the decision will carry for other states facing the possibility of retroactive liability for invalidated tax laws.

The potential stakes are enormous.

For example, controversy still surrounds the effect of a 1989 Supreme Court decision in which the court said states may not tax federal pensions while exempting the pensions of retired state and local government workers.

A survey conducted by the Virginia attorney general’s office of 23 states with laws similar to the Michigan law invalidated in the 1989 ruling found that more than $2 billion had been collected from such taxation.

In the Georgia case Thursday, the court’s 6-3 decision said a 1984 decision striking down a similar Hawaii liquor tax law may be applied retroactively to Georgia’s collection of taxes from 1982 through 1984.

But the court’s voting was splintered, and the reasoning behind the decision fragmented. It was not clear how broadly the decision would expose other states to retroactive liability for invalidated tax laws.

The decision appeared to suggest that those states may have suffered a significant defeat today.

″It’s a difficult ruling to get through,″ said John Taylor Jr., the Atlanta lawyer who won the case for the James B. Beam Distilling Co.

″I’d love to be able to give you a more intelligent answer as to its full impact but I’m still trying to ferret it out,″ Taylor said. ″I believe the decision gives us access to Georgia’s refund statute, and we’ll get our remedy.″

Daniel Formby, Georgia’s senior assistant attorney general, said a team of state lawyers were poring over the decision’s five separate opinions. ″We’re working on it, trying to determine its impact, which has been difficult,″ he said.

Bert Rohrer of the Virginia attorney general’s office said of Thursday’s ruling, ″There is little guidance as to how future cases on different facts″ might be affected.

Beam sued in 1987 for a refund of taxes paid to Georgia because the taxes were higher for out-of-state companies.

Such taxes were invalidated in the Supreme Court’s 1984 ruling on the similar Hawaii system.

The Georgia Supreme Court ruled that the state tax law was unconstitutional, but said Beam was not entitled to any refund. Today, the nation’s highest court sent the dispute back to Georgia courts for further study.

″The applicability of rules of law are not to be switched on and off according to individual hardship,″ Justice David H. Souter wrote in an opinion that, in one part or another, attracted the votes of five other justices.

But Souter said Georgia still may argue that refunds should not be made for ″procedural″ reasons.

The Georgia court was wrong in ruling that the high court’s 1984 decision should not be given retroactive effect, he said.

Only Justice John Paul Stevens joined Souter’s opinion in its entirety.

Justice Byron R. White, in a separate opinion, concurred in its result.

Justices Harry A. Blackmun, Thurgood Marshall and Antonin Scalia also concurred, with Blackmun and Scalia writing separate opinions. All three voted to apply decisions retroactively in all cases.

Chief Justice William H. Rehnquist and Justices Sandra Day O’Connor and Anthony M. Kennedy dissented.

The case is James B. Beam Distilling Co. vs. Georgia, 89-680.

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