The Supreme Court will once again decide whether taxpayers are entitled to refunds of unconstitutionally collected taxes.

• Author: Eisenstadt, Amy
• Position: Reich v. Collins

On Feb. 22, 1994, the Supreme Court announced that it accepted review of another state tax case involving the refund of unconstitutionally collected taxes (Reich v. Collins). At issue is whether Georgia had provided an "adequate predeprivation hearing" to Federal retirees so that "backward looking relief," i.e., the payment of refunds of a discriminatory tax on their Federal pensions, is not required under the Due Process Clause of the U.S. Constitution. In McKesson Corp. v. Division of Alcoholic Beverages, 496 US 18 (1990), and Harper v. Virginia Department of Taxation, 113 Sup. Ct. 2510 (1993), the Court held that the Due Process Clause did not require a state to pay refunds of unconstitutionally collected taxes if an adequate predeprivation hearing was provided, such that taxpayers were afforded an opportunity to challenge a tax before making any tax payments. However, the Court did not provide guidance as to what judicial or administrative procedures would be required to meet due process requirements.

The Georgia Supreme Court recently took advantage of this lack of guidance to protect the State's treasury and refused to pay refunds of unconstitutionally collected taxes in Reich v. Collins, Ga., 1993, and James B. Beam Distilling Co., Ga., 1993. In both cases, the Georgia Supreme Court, citing the U.S. Supreme Court's decision in Harper v. Virginia Department of Taxation, held that refunds of unconstitutionally collected taxes were not required because the state had provided adequate predeprivation remedies.

In James B. Beam Distilling Co., the court held that a refund was not required to remedy an unconstitutionally collected tax. According to the court, Georgia law provides the following adequate predeprivation remedies:

* A predeprivation declaratory judgment action.

* The opportunity for a...