author: Mr. Justice White

text:
    BOSTON STOCK EXCHANGE et al. v. STATE TAX COMMISSION et al.
    No. 75-1019.
    Argued November 2, 1976
    Decided January 12, 1977

      Roger Pascal argued the cause for appellants. With him on the briefs was Milton H. Cohen.

      Robert W. Bush, Assistant Attorney General of New York, argued the cause for appellees. With him on the brief were Louis J. Lefkowits, Attorney General, and Ruth Kessler Toch, Solicitor General.
   Mr. Justice White

delivered the opinion of the Court.

In this case we are asked to decide the constitutionality of a recent amendment to New York State’s longstanding tax on securities transactions. Since 1905, New York has imposed a tax (transfer tax) on securities transactions, if part of the transaction occurs within the State. In 1968, the state legislature amended the transfer tax statute so that transactions involving an out-of-state sale are now taxed more heavily than most transactions involving a sale within the State. In 1972, appellants, six “regional” stock exchanges located outside New York, filed an action in state court against the State Tax Commission of New York and its members. The Exchanges’ complaint alleged that the 1968 amendment unconstitutionally discriminates against interstate commerce by imposing a greater tax burden on securities transactions involving out-of-state sales than on transactions of the same magnitude involving in-state sales.' The State Supreme Court denied the Commission’s motion to dismiss the action and the Commission appealed. The Appellate Division reversed and ordered that the Commission’s motion be granted to the extent of entering a judgment declaring the 1968 amendment to be constitutional. 45 App. Div. 2d 365, 357 N. Y. S. 2d 116 (1974). The New York Court of Appeals affirmed the order, 37 N. Y. 2d 535, 337 N. E. 2d 758 (1975), and we noted probable jurisdiction of the Exchanges’ appeal, 424 U. S. 964 (1976).

I

New York Tax Law § 270.1 (McKinney 1966) provides that “all sales, or agreements to sell, or memoranda of sales and all deliveries or transfers of shares or certificates of stock” in any foreign or domestic corporation are subject to the transfer tax. Administrative regulations promulgated with respect to the transfer tax provide that the tax applies if any one of the five taxable events occurs within New York, regardless of where the rest of the transaction takes place, and that if more than one taxable event occurs in the State, only one tax is payable on the entire transaction. 20 N. Y. C. R. R. 440.2 (1976). For transactions involving sales, the rate of tax depends on the selling price per share and the total tax liability is determined by the number of shares sold. N. Y. Tax Law § 270.2 (McKinney 1966). Thus, under the unamended version of § 270, a transaction involving a sale and a transfer of shares in New York was taxed the same as a transaction involving an in-state transfer but an out-of-state sale. In both instances, the occasion for the tax was the occurrence of at least one taxable event in the State, the rate of tax was based solely on the price of the securities, and the total tax was determined by the number of shares sold. The Exchanges do not challenge the constitutionality of § 270.

None of the States in which the appellant Exchanges are located taxes the sale or transfer of securities. During the 1960’s the New York Stock Exchange became concerned that the New York transfer tax created a competitive disadvantage for New York trading and was thus responsible for the growth of out-of-state exchanges. In response to this concern and fearful that the New York Stock Exchange would relocate outside New York, the legislature in 1968 enacted § 270-a to amend the transfer tax by providing for two deviations from the uniform application of § 270 when one of the taxable events, a sale, takes place in New York. First, transactions by nonresidents of New York are afforded a 50% reduction (“nonresident reduction”) in the rate of tax when the transaction involves an in-state sale. Taxable transactions by residents (regardless of where the sale is made) and by nonresidents selling outside the State do not benefit from the rate decrease. Second, § 270-a limits the total tax liability of any taxpayer (resident or nonresident) to $350 (maximum tax) for a single transaction when it involves a New York sale. If a sale is made out-of-State, the § 270 tax rate applies to an in-state transfer (or other taxable event) without limitation.

The reason for the enactment of § 270-a and the intended effect of the amendment are clear from tlie legislative history. With respect to the amendment, the legislature found:

“The securities industry, and particularly the stock exchanges located within the state have contributed importantly to the economy of the state and its recognition as the financial center of the world. The growth of exchanges in other regions of the country and the diversion of business to those exchanges of individuals who are nonresidents of the state of New York, requires recognition that the tax on transfers of stock imposed by article twelve of the tax law, is an important contributing element to the diversion of sales to other areas to the detriment of the economy of the state. Furthermore, in the case of transactions involving large blocks of stock, recognition must be given to the ease of completion of such sales outside the state of New York without the payment of any tax. In order to encourage the effecting by nonresidents of the state of New York of their sales within the state of New York and the retention within the state of New York of sales involving large blocks of stock, a separate classification of the tax on sales by nonresidents of the state of New York and a maximum tax for certain large block sales are desirable.” 1968 N. Y. Laws, c. 827, § 1.

In granting executive approval to § 270-a, then Governor Nelson Rockefeller confirmed that the purpose of the new law was to “provide long-term relief from some of the competitive pressures from outside the State.” The Governor announced that as a result of the transfer tax amendment the New York Stock Exchange intended to remain in New York.

Appellant Exchanges contend that the legislative history-states explicitly what is implicit in the operation of § 270-a: The amendment imposes an unequal tax burden on out-of-state sales in order to protect an in-state business. They argue that this discrimination is impermissible under the Commerce Clause. Appellees do not dispute the statements of the legislature and the Governor that § 270-a is a measure to reduce out-of-state competition with an in-state business. They agree, however, with the holding of the Court of Appeals that the legislature" has chosen a nondiscriminatory, and therefore constitutionally permissible, means of “encouraging” sales on the New York Stock Exchange. We hold that § 270-a discriminates against interstate commerce in violation of the Commerce Clause.

II

As in Great A&P Tea Co. v. Cottrell, 424 U. S. 366 (1976), we begin with the principle that “[t]he very purpose of the Commerce Clause was to create an area of free trade among the several States.” McLeod v. J. E. Dilworth Co., 322 U. S. 327, 330 (1944). It is now established beyond dispute that “the Commerce Clause was not merely an authorization to Congress to enact laws for the protection and encouragement of commerce among the States, but by its own force created an area of trade free from interference by the States. ... [T]he Commerce Clause even without implementing legislation by Congress is a limitation upon the power of the States.” Freeman v. Hewit, 329 U. S. 249, 252 (1946). The Commerce Clause does not, however, eclipse the reserved “power of the States to tax for the support of their own governments,” Gib bons v. Ogden, 9 Wheat. 1, 199 (1824), or for other purposes, cf. United States v. Sanchez, 340 U. S. 42, 44-45 (1950); rather, the Clause is a limit on state power. Defining that limit has been the continuing task of this Court.

On various occasions when called upon to make the delicate adjustment between the national interest in free and open trade and the legitimate interest of the individual States in exercising their taxing powers, the Court has counseled that the result turns on the unique characteristics of the statute at issue and the particular circumstances in each case. E. g., Freeman v. Hewit, supra, at 252. This case-by-case approach has left “much room for controversy and confusion and little in the way of precise guides to the States in the exercise of their indispensable power of taxation.” Northwestern States Portland Cement Co. v. Minnesota, 358 U. S. 450, 457 (1959). Nevertheless, as observed by Mr. Justice Clark in the case just cited: “[Fjrom the quagmire there emerge . . . some firm peaks of decision which remain unquestioned.” Id., at 458. Among these is the fundamental principle that we find dispositive of the case now before us: No State, consistent with the Commerce Clause, may “impose a tax which discriminates against interstate commerce ... by providing a direct commercial advantage to local business.” Ibid. See also Halliburton Oil Well Co. v. Reily, 373 U. S. 64 (1963); Nippert v. Richmond, 327 U. S. 416 (1946); I. M. Darnell & Son v. Memphis, 208 U. S. 113 (1908); Guy v. Baltimore, 100 U. S. 434, 443 (1880); Welton v. Missouri, 91 U. S. 275 (1876). The prohibition against discriminatory treatment of interstate commerce follows inexorably from the basic purpose of the Clause. Permitting the individual States to enact laws that favor local enterprises at the expense of out-of-state businesses “would invite a multiplication of preferential trade areas destructive” of the free trade which the Clause protects. Dean Milk Co. v. Madison, 340 U. S. 349, 356 (1951).

Although apparently accepting the teaching of the prior cases, the Court of Appeals seemed to view § 270-a as “compensatory legislation” enacted to “neutralize” the competitive advantage § 270 conferred on stock exchanges outside New York. Thus, it analogized the New York statute to state use taxes which have survived Commerce Clause challenges. 37 N. Y. 2d, at 542, 337 N. E. 2d, at 762. The statute will not support this characterization.

Prior to the 1968 amendment, the New York transfer tax was neutral as to in-state and out-of-state sales. An in-state transfer or delivery of securities triggered the tax and the burden fell equally on all transactions regardless of the situs of sale. Thus, the choice of an exchange for the sale of securities that would be transferred or delivered in New York was not influenced by the transfer tax; wherever the sale was made, tax liability would arise. The flow of interstate commerce in securities was channeled neither into nor out of New York by the state tax.

Section 270-a upset this equilibrium.. After the amendment took effect, a nonresident contemplating the sale of securities that would be delivered or transferred in New York faced two possible tax burdens. If he elected to sell on an out-of-state exchange, the higher rates of § 270 applied without limitation on the total tax liability; if he sold the securities on a New York exchange, the one-half rate of § 270-a applied and then only up to a $350 tax liability. Similarly, residents engaging in large block transactions on the New York exchanges were subject to a maximum tax levy of $350; but if they sold out-of-State, their tax bill would be limited only by the number of shares sold. Thus, under § 270-a the choice of exchange by all nonresidents and by residents engaging in large transactions is not made solely on the basis of nontax criteria. Because of the delivery or transfer in New York, the seller cannot escape tax liability by selling out of State, but he can substantially reduce his liability by selling in State. The obvious effect of the tax is to extend a financial advantage to sales on the New York exchanges at the expense of the regional exchanges. Rather than “compensating” New York for a supposed competitive disadvantage resulting from § 270, the amendment forecloses tax-neutral decisions and creates both an advantage for the exchanges in New York and a discriminatory burden on commerce to its sister States.

Equal treatment of interstate commerce, lacking in § 270-a, has been the common theme running through the cases in which this Court has sustained “compensating,” state use taxes. In Henneford v. Silas Mason Co., 300 U. S. 577 (1937), Washington imposed a 2% sales tax on all goods sold at retail in the State. Since the sales tax would have the effect of encouraging residents to purchase at out-of-state stores, Washington also imposed a 2% “compensating tax” on the use of goods within the State. The use tax did not apply, however, when the article had already been subjected to a tax equal to or greater than 2%. The effect of this constitutional tax system was nondiscriminatory treatment of in-state and out-of-state purchases:

“Equality exists when the chattel subjected to the use tax is bought in another state and then carried into Washington. It exists when the imported chattel is shipped from the state of origin under an order received directly from, the state of destination. In each situation the burden borne by the owner is balanced by an equal burden where the sale is strictly local.” Id., at 584.

A similar use-sales-tax structure was sustained in General Trading Co. v. Tax Comm’n, 322 U. S. 335 (1944), because the “tax [was] what it professes to be — a nondiscriminatory excise laid on all personal property” regardless of where the sale was made. Id., at 338. See also International Harvester Co. v. Department of Treasury, 322 U. S. 340 (1944); Alaska v. Arctic Maid, 366 U. S. 199, 204 (1961). In all the use tax cases, an individual faced with the choice of an in-state or out-of-state purchase could make that choice without regard to the tax consequences. If he purchased in State, he paid a sales tax; if he purchased out of State but carried the article back for use in State, he paid a use tax of the same amount. The taxes treated both transactions in the same manner.

Because it imposes a greater tax liability on out-of-state sales than on in-state sales, the New York transfer tax, as amended by § 270-a, falls short of the substantially evenhanded treatment demanded by the Commerce Clause. The extra tax burden on out-of-state sales created by § 270-a is not what the New York Court of Appeals holds it out to be; it neither compensates for a like burden on in-state sales, nor neutralizes an economic advantage previously enjoyed by the appellant Exchanges because of § 270.

III

The court below further attempted to save § 270-a from invalidation under the Commerce Clause by finding that the effect the amendment might have on sales by residents and nonresidents did not amount to unconstitutional discrimination. As to New York residents, the court found that the higher tax on large out-of-state sales would have no “practical” effect since “it is more than likely . . . that the sale would be made on a New York exchange in any event.” 37 N. Y. 2d, at 543, 337 N. E. 2d, at 762. As to the discriminatory tax burden on all out-of-state sales by nonresidents, the court observed that because New York sales by nonresidents also involve interstate commerce, § 270-a does not discriminate against interstate commerce in favor of intrastate commerce; rather, it discriminates between two kinds of interstate transactions. Ibid. Although it did not so state, the Court of Appeals apparently believed that such discrimination was permissible under the Commerce Clause. We disagree with the Court of Appeals with respect to both residents and nonresidents.

The maximum tax discrimination against out-of-state sales by residents is not triggered until the taxed transaction involves a substantial number of shares. Investors, institutional and individual, engaging in such large-block transactions can be expected to choose an exchange on the basis of services, prices, and other market conditions rather than geographical proximity. Even a small difference in price (of either the securities or the sales services) can, in a large sale, provide a substantial enough additional profit to outweigh whatever additional transaction costs might be incurred from trading on an out-of-state exchange. The New York Legislature, in its legislative findings in connection with § 270-a, recognized that securities transactions by residents were not being conducted only on the New York exchanges; it therefore considered the amendment necessary to “[retain] within the state of New York . . . sales involving large blocks of stock.” If, as the Court of Appeals assumed, it were “more than likely” that residents would sell in New York, there would have been no reason for the legislature to reduce the tax burden on in-state sales by residents in order to retain their sales in New York. Nor is the discriminatory burden of the maximum tax insubstantial. On a transaction of 30,000 shares selling at $20 or more, for example, the tax on an in-state sale is the maximum $350, while an out-of-state sale is taxed $1,500. The disparity between the two taxes increases with the number of shares sold. Such a large tax penalty for trading on out-of-state markets cannot be deemed to have no. practical effect on interstate commerce.

Both the maximum tax and the rate reduction provisions of § 270-a discriminate against out-of-state sales by nonresidents. The fact that this discrimination is in favor of nonresident, in-state sales which may also be considered as interstate commerce, see Freeman v. Hewit, 329 U. S., at 258-259, does not save § 270-a from the restrictions of the Commerce Clause. A State may no more use discriminatory taxes to assure that nonresidents direct their commerce to businesses within the State than to assure that residents trade only in intrastate commerce. As we stated at the outset, the fundamental purpose of the Clause is to assure that there be free trade among the several States. This free trade purpose is not confined to the freedom to trade with only one State; it is a freedom to trade with any State, to engage in commerce across all state boundaries.

There has been no prior occasion expressly to address the question whether a State may tax in a manner that discriminates between two types of interstate transactions in order to favor local commercial interests over out-of-state businesses, but the clear import of our Commerce Clause cases is that such discrimination is constitutionally impermissible. Guy v. Baltimore, 100 U. S., at 443, held that no State, consistent with the Commerce Clause, may “build up its domestic commerce by means of unequal and oppressive burdens upon the industry and business of other States”; and in Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511 (1935), New York was prohibited from regulating the price of out-of-state milk purchases because the effect of that regulation would be “to suppress or mitigate the consequences of competition between the states.” Id., at 522. More recently, we noted that this “Court has viewed with particular suspicion state statutes requiring business operations to be performed in the home State that could more efficiently be performed elsewhere. Even where the State is pursuing a clearly legitimate local interest, this particular burden on commerce has been declared to be virtually per se illegal.” Pike v. Bruce Church, Inc., 397 U. S. 137, 145 (1970). Cf. Halliburton Oil Well Co. v. Reily, 373 U. S., at 72-73.

Although the statutes at issue in those cases had the primary effect of prohibiting or discriminatorily burdening a resident’s purchase of out-of-state goods and services, the constitutional policy of free trade and competition that led to their demise is equally fatal to the New York transfer tax. New York’s discriminatory treatment of out-of-state sales is made possible only because some other taxable event (transfer, delivery, or agreement to sell) takes place in the State. Thus, the State is using its power to tax an in-state operation as a means of “requiring [other] business operations to be performed in the home State.” As a consequence, the flow of securities sales is diverted from the most economically efficient channels and directed to New York. This diversion of interstate commerce and diminution of free competition in securities sales are wholly inconsistent with the free trade purpose of the Commerce Clause.

IV

Our decision today does not prevent the States from structuring their tax systems to encourage the growth and development of intrastate commerce and industry. Nor do we hold that a State may not compete with other States for a share of interstate commerce; such competition lies at the heart of a free trade policy. We hold only that in the process of competition no State may discriminatorily tax the products manufactured or the business operations performed in any other State.

The judgment of the New York Court of Appeals is reversed, and the case remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

       Appellants are the Boston Stock Exchange, Detroit Stock Exchange, Pacific Coast Stock Exchange, Cincinnati Stock Exchange, Midwest Stock Exchange, and the PBW (Philadelphia-Baltimore-Washington) Stock Exchange. The Exchanges provide facilities for their members to effect the purchase and sale of securities for their own accounts and the accounts of their customers.

       In the courts below the Exchanges also contended that the amendment to the transfer tax was unconstitutional under the Privileges and Immunities Clause of Art. IV, § 2, and the Equal Protection Clause of the Fourteenth Amendment. They have not brought those claims to this Court and we do not address them.

       The Commission’s motion to dismiss was based on three grounds: (1) the state court lacked subject-matter jurisdiction, (2) the Exchanges did not have standing to question the constitutionality of the statute, and (3) the complaint failed to state a cause of action. All three state courts agreed that there was jurisdiction and standing, but the Appellate Division and the Court of Appeals dismissed the complaint on the merits because the statute was constitutional.
      We agree, of course, that state courts of general jurisdiction have the power to decide cases involving federal constitutional rights where, as here, neither the Constitution nor statute withdraws such jurisdiction. We also agree that the Exchanges have standing under the two-part test of Data Processing Service v. Camp, 397 U. S. 150 (1970). Appellants’ complaint alleged that a substantial portion of the transactions on their exchanges involved securities that are subject to the New York transfer tax, and that the higher tax on out-of-state sales of such securities diverted business from their facilities to exchanges in New York. This diversion was the express purpose of the challenged statute. See infra, at 325-328, and nn. 7, 10. The allegation establishes that the statute has caused them “injury in fact,” and that a case or controversy exists. 397 U. S., at 151-152. The Exchanges are asserting their right under the Commerce Clause’to engage in interstate commerce free of discriminatory taxes on their»business and they allege that the transfer tax indirectly infringes on that right. Thus, they are “arguably within the zone of interests to be protected ... by the . . . constitutional guarantee in question.” Id., at 153. Moreover, the Exchanges brought this action also on behalf of their members. “[A]n association may have standing solely as the representative of its members ... [if it] allege[s] that its members, or any one of them, are suffering immediate or threatened injury as a result of the challenged action of the sort that would make out a justiciable case had the members themselves brought suit.” Warth v. Seldin, 422 U. S. 490, 511 (1975). See also National Motor Freight Assn. v. United States, 372 U. S. 246 (1963); NAACP v. Alabama, 357 U. S. 449, 458-460 (1958). The Exchanges’ complaint alleged that their members traded on their own accounts in securities subject to the New York transfer tax. The members therefore suffer an actual injury within the zone of interests protected by the Commerce Clause, and the Exchanges satisfy the requirements for representational standing.

       After the decision by the New York Court of Appeals in this case, § 21 (2) (d) of the Federal Securities Acts Amendments of 1975 became effective. This amendment provides that no State may tax a change in beneficial or record ownership of securities if the change is effected through the facilities of a registered clearing house of registered transfer agent unless the change would otherwise be taxable if the facilities were not physically located in the taxing State. §21 (2) (d), 89 Stát. 161, amending § 28 of the Securities Exchange Act of 1934, 15 U. S. C. § 78bb (d) (1970 ed., Supp. V). A transfer agent is defined in § 3 (6) of the 3975 amendments, 89 Stat. 100, amending § 3 (a) of the Securities Exchange Act of 1934, 15 U. S. C. §78e(a)(25) (1970 ed., Supp. V). Although the Senate Committee was unclear as to whether the New York transfer tax reached such changes in ownership, the Senate Report on the 1975 amendments indicates that § 21 (2) (d) was directed to New York’s transfer tax in particular, and in general to similar taxes being considered by other States. S. Rep. No. 94r-75, p. 60 (1975). See N. Y. Tax Law § 270.5(i)-(l) (McKinney Supp. 1976).
      On December 1, 1975, counsel for the New York State Department of Taxation and Finance issued an .opinion that the 1975 amendments limited the types of taxable events covered by §270:
      “[W]here the sole event in New York State is the delivery or transfer to or by a ‘registered clearing agency’ or a ‘registered transfer agent,’ as those terms are defined under the Securities Exchange Act of 1934, there is no stock transfer tax due and owing on and after December 1, 1975. However, where a sale, agreement to sell, memorandum of sale or any other delivery or transfer takes place in New York State, the stock transfer tax due and owing thereon must be paid.” 2 CCH N. Y. Tax Rep. ¶ 57-101.605 (1976).
      Although the new federal law may eliminate many transactions as taxable events under §270, the constitutional questions raised by the Exchanges on this appeal still apply to the transactions that are taxable under § 270 after the 1975 amendments.

       The rates provided for in §270.2 range from 1.25 cents per share when the sale price of the security is_ less than $5 to the highest rate of 5 cents per share when the price is $20 or more. When no sale is involved, e. g., a gift, the rate is a constant 2.5 cents per share. In recent years, a 25% surcharge has been added to all transfer taxes. N. Y. Tax Law § 270-d (McKinney Supp. 1976).

       Shortly after it was first enacted, the New York transfer tax was upheld against a challenge under the Fourteenth Amendment in New York ex rel. Hatch v. Reardon, 204 U. S. 152 (1907). The writ of error in Hatch did not challenge the constitutionality of the statute under the Commerce Clause, but both parties argued that issue before the Court. Id., at 157. In response to those arguments, Mr. Justice Holmes observed only that the particular transaction involved was intrastate and that therefore the tax as applied to the party before the Court, did not implicate the Commerce Clause. Id., a.t 161-162. As to the question of whether the statute should fall because it would also be applied to interstate transactions, the Court found that the seller lacked standing to raise that claim. The Commerce Clause question was thus left undecided. Id., at 160-161.
      Thirty-three j-ears later, the New York Court of Appeals held, in a 4 — 3 decision, that the transfer tax did not violate the Commerce Clause. O’Kane v. State, 283 N. Y. 439, 28 N. E. 2d 905 (1940). The challenge there was to a tax levy “upon an agreement for the sale of shares of stock which are to be sold and delivered across State lines.” Id., at 442, 28 N. E. 2d, at 906. The state court expressly noted that the tax, as then applied, was “a non-discriminatory State tax,” and that “no discrimination was practiced on interstate commerce.” Id., at 444, 447, 28 N. E. 2d, at 907, 909. In the absence of discrimination, the tax was held not to be an undue burden on commerce.

       In a public statement on the proposed amendment to § 270, the president of the New York Stock Exchange explained the competitive problems of his organization and urged that the transfer tax be amended to help solve them:
      “[T]he stock transfer tax has been the subject of extensive study by the City, State and the securities industry. These studies indicate that the New York securities markets have experienced increasing competitive problems in recent years from regional stock exchanges located in San Francisco, Los Angeles, Chicago, Detroit, Philadelphia and Boston. Some 88% of share trading on these exchanges is in New York Stock Exchange listed securities.
      “From 1965 through 1967, the volume of trading on the regional exchanges increased by 73.2%. Regional ‘cross’ volume (a transaction on a regional exchange in which the broker finds both the buyer and seller) has increased by 202% in 1965-67. This indicates the loss of business by the New York markets to the regionals. As their volume continues to grow, a snowball effect develops. They become more competitive and are able to take more and more business away from New York. A loss of business to New York securities markets also means a loss of stock transfer tax revenue to New York City.
      “. . . However, the existing law can be amended in such a way as to ease the competitive disadvantage of the tax on New York securities markets and still preserve the revenue from the tax.
      “Competitive problems are particularly acute in two areas — non-resident investors and large block transactions.” Statement of Robert W. Haack, Mar. 4, 1968.

       The Exchanges do not challenge New York’s authority to tax residents in a greater amount than nonresidents as long as the extent of the tax burden does not depend on an out-of-state sale.

       The nonresident reduction and the maximum tax of § 270-a initially involved a smaller disparity between in-state and out-of-state sales. The gap was gradually increased until the current rates took effect on July 1, 1973.
      The relevant provisions of N. Y. Tax Law § 270-a (McKinney Supp. 1976) are as follows:
      “1. Notwithstanding the provisions of section two hundred seventy of this chapter on and after July first, nineteen hundred sixty-nine, the rates of tax set forth in paragraph (a) of this subdivision and the maximum amounts of tax set forth in subdivision two of this section shall apply, in the case of those sales made within this state subject to tax under section two hundred seventy and described in paragraph (a) of this subdivision and subdivision two of this section.
      “(a) On such sales by a nonresident during the periods set forth in the following table, the rates of tax shall be the percentages, set forth in such table, of the rates of tax provided in section two hundred seventy of this article:

      “2. Where any sale made within the state and subject to the tax imposed by this chapter relates to shares or certificates of the same class and issued by the same issuer the amount of tax upon any such single taxable sale shall not exceed, during the period beginning on July first, nineteen hundred sixty-nine and ending on June thirtieth, nineteen hundred seventy, the sum of two thousand five hundred dollars; during the period beginning on July first, nineteen hundred seventy and ending on June thirtieth, nineteen hundred seventy-one, the sum of one thousand two hundred fifty dollars; during the period beginning on July first, nineteen hundred seventy-one and ending on June thirtieth, nineteen hundred seventy-two, the sum of seven hundred fifty dollars; during the period beginning on July first, nineteen hundred seventy-two and ending on June thirtieth, nineteen hundred seventy-three, the sum of five hundred dollars; and on and after July first, nineteen hundred seventy-three, the sum of three hundred fifty dollars; provided, however, that sales made within this state by any member of a securities exchange or by any registered dealer, who is permitted or required pursuant to any rules and regulations promulgated by the tax commission pursuant to the provisions of section two hundred eighty-one-a of this chapter to pay the taxes imposed by this article without the use of the stamps prescribed by this article, pursuant to one or more orders placed with the same member of a securities exchange or the same registered dealer on one day, by the same person, each relating to shares or certificates of the same class and issued by the same issuer, all of which sales are executed on the same day (regardless of whether it be the day of the placing of the orders), shall, for the purposes of this subdivision two, be considered to constitute a single taxable sale.”

       In his memorandum of approval of the transfer tax amendment, Governor Kockefeller explained the changing competitive patterns in the securities industry and acknowledged that § 270-a was a response to these changes:
      “Since the stock transfer tax was enacted in 1905, there have been far reaching changes in the securities industry, but the stock transfer tax has not been revised to keep pace with those changes. The securities industry has grown from an essentially New York industry to one of national and international scope. While the bulle of stock transfers still funnels through New York, only twelve percent of the Nation’s investors are located in the State. At the same time, competition for the New York markets has been heightened by the rise of regional stock exchanges located outside the State where more than 90 percent of trading is in securities listed on the New York Stock Exchange. The development of modem telecommunications and electronic computer systems has, of course, greatly expanded the capacity of the regional exchanges to challenge the New York exchanges for business.
      “The bill recognizes the changing character of the securities industry and the importance of its continued presence and strength for the future economic prosperity of the State and will provide long-term relief from some of the competitive pressures from outside the State.
      “As a result of adoption of the revisions of the stock transfer tax contained in this bill, the New York Stock Exchange has announced that it intends to remain and expand in New York and is now studying sites for a new exchange building in downtown Manhattan.” Public Papers of Governor Nelson A. Rockefeller 553 (1968).

       Of course, the unamended § 270 did discourage sales in New York when no other taxable event would occur in that State, since out-of-state sales would not be taxed at all while in-state sales would be taxed at the full rate. Section 270-a, however, does not neutralize this competitive disadvantage of the New York exchanges. Although the reduced tax of the amendment decreases the disincentive to trade out of State, to the extent that any tax is imposed on transactions involving only an in-state sale, sales in New York are discouraged. Had New York sought to eliminate the only competitive edge enjoyed by the regional exchanges as- a result of § 270, it could have done so without burdening commerce to its sister States by simply declaring that sales would not be a taxable event. Under that system, sellers who would not otherwise be liable for the tax would not incur liability by electing to sell on a New York exchange.

       Because of the discrimination inherent in § 270-a, we also reject the Commission’s argument that the tax should be sustained because it is imposed on a local event at the end of interstate commerce. While it is true that, absent an undue burden on interstate commerce, the Commerce Clause does not prohibit the States from taxing the transfer of property within the State, the tax may not discriminate between transactions on the basis of some interstate element. International Harvester Co. v. Department of Treasury, 322 U. S. 340, 347-348 (1944). As was held in Welton v. Missouri, 91 U. S. 275, 282 (1876): “[T]he commercial power [of the Federal Government] continues until the commodity has ceased to be the subject of discriminating legislation by reason of its foreign character. That power protects it, even after it has entered the State, from any burdens imposed by reason of its foreign origin.”

       Even if we did not conclude that large-block sellers are likely to rely on economic rather than geographical factors in choosing an exchange, § 270-a would fall before the Commerce Clause. Whatever the current inclinations of New York investors, the Clause protects out-of-state businesses from any discriminatory burden on their interstate commercial activities. Even if the tax is not now the sole cause of New York residents’ refusal to trade on out-of-state exchanges, at the very least it reinforces their choice of an in-state exchange and is an inhibiting force to selling out of State; that inhibition is an unconstitutional barrier to the free flow of commerce.

         Baldwin is particularly relevant to this case. After holding that the Commerce Clause prohibits obstructions to competition between the States, Mr. Justice Cardozo expressly rejected the proposition that such obstructions may be justified as measures to assure the economic health of local industry:
      “If New York, in order to promote the economic welfare of her farmers, may guard them against competition with the cheaper prices of Vermont, the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.
      “The Constitution was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long ran prosperity and salvation are in union and not division.” 294 U. S., at 522-523.
      For the same reasons that Baldwin rejected New York’s attempts to protect its dairy industry from competition from without, we now reject a similar attempt to protect New York’s securities industry.

       When it enacted § 270-a, the New York Legislature also enacted a saving provision such that the invalidity of any part of the amendment should not affect the enforcement of any other part. It is not clear from the saving provision whether the legislature intended that the distinction between residents and nonresidents should survive the invalidation of the discrimination between in-state and out-of-state sales. Compare 1968 N. Y. Laws, c. 827, § 10 with § 11. Construction of the saving clause is, of course, a question of state law appropriately-decided by the state courts.


source: Caselaw Access Project

author: Mr. Justice Blackmun Mr. Chief Justice Burger,

license: Public Domain

text:
    G. M. LEASING CORP. et al. v. UNITED STATES et al.
    No. 75-235.
    Argued October 4, 1976
    Decided January 12, 1977

      Richard J. Leedy argued the cause and filed briefs for petitioners.

      Solicitor General Bork argued the cause for the United States et al. With him on the brief were Assistant Attorney General Crampton, Stuart A. Smith, Leonard J. Henske, Jr., and Stephen M. Gelher.

   Mr. Justice Blackmun

delivered the opinion of the Court.

We granted certiorari in this case, 423 U. S. 1031 (1975), limited to the Fourth Amendment issue arising in the context of seizures of property in partial satisfaction of income tax assessments.

I

Petitioner G. M. Leasing Corp. is a Utah corporation organized in April 1972; among its stated business purposes is the leasing of automobiles. George I. Norman, Jr., although apparently not an incorporator, officer, or director of petitioner, was its general manager.

In 1971 Norman was tried and convicted in the United States District Court for the District of Colorado on two counts of aiding and abetting a misapplication of funds from a federally insured bank, in violation of 18 U. S. C. § § 2 and 656. He was sentenced to two concurrent two-year terms of imprisonment. On appeal, his conviction was affirmed. United States v. Cooper, 464 F. 2d 648, 651-652 (CA10 1972). This Court denied certiorari. 409 U. S. 1107 (1973).

Norman and his wife, on November 15, 1971, filed a joint income tax Form 1040 for the calendar year 1970 on which, apart from their names, address, social security numbers, occupations, and dependents, they indicated only that their tax for that year, “ [estimated,” was $280,000. The sum of $289,800 was transmitted when the form was filed and was placed by the Internal Revenue Service in a suspense account for future credit. Apart from the naked figure of estimated tax, the return contained no information as to income or deductions. App. 94.

The Normans also sought and were granted an extension of time within which to file their return for the calendar year 1971. A check for $405,125 was given to the Service on April 15, 1972, for application on their 1971 tax. This check evidently was dishonored. Although further extensions of time were granted, neither of the Normans ever filed a 1971 return.

In October 1972, after Norman’s conviction was affirmed by the Tenth Circuit, the Service assigned the Norman account for 1970 and 1971 to Agent P. J. Clayton for investigation. Mr. Clayton, however, took no immediate action. Id., at 66; Tr. of Oral Arg. 24 — 25.

In March 1973, after Norman’s petition for a writ of certiorari had been denied, and after his petition for rehearing had also been denied, 410 U. S. 959 (1973), he surrendered to the United States Marshal for the serving of his sentence. By a ruse, however, he immediately disappeared. Tr. of Oral Arg. 6. Norman thereupon became a fugitive from justice; he was still one at the time of the oral argument. App. 15; Brief for Petitioners 5; Tr. of Oral Arg. 5-6.

Upon Norman’s becoming a fugitive, the Service activated its investigation. On March 19, it determined deficiencies in Norman’s income tax liability for 1970 and 1971 in the amounts of $406,099.34 and $545,310.59, respectively. App. 95. These were based solely on information from third parties concerning the amount of stock sales Norman made through various brokerage houses. Id., at 30, 67. Because of Norman’s failure to file appropriate returns and because of his fugitive status, collection of the taxes as so determined was regarded by the Service as in jeopardy; the deficiencies, therefore, were assessed forthwith pursuant to the authority granted by § 6861 (a) of the Internal Revenue Code of 1954, 26 U. S. C. § 6861 (a).

The following day revenue agents called at the Norman residence in Salt Lake City to endeavor to collect the taxes. Mrs. Norman answered the door. The agents informed her of the jeopardy assessments and demanded payment. No payment was forthcoming, and Mrs. Norman suggested that the agents get in touch with her attorney. App. 56. Thereafter, pursuant to their authority under § 6331 of the Code, the agents filed notice of tax liens with the Salt Lake County Recorder’s Office and levied on a bank account of Norman. App. 95, 58.

While the agents were at the Norman residence, they observed automobiles parked in the driveway. Later, upon checking with the Utah Motor Vehicle Division, they learned that these vehicles were registered in the name of petitioner or in the name of another corporation owned by Norman, and that no automobile was registered in Norman’s name or in that of his wife. Id., at' 73-74. They also learned that petitioner had no license to conduct business within Salt Lake County and had no telephone listing. Id., at 74. It was further ascertained that, pursuant to the request of the Utah Department of Employment Security, petitioner had filed a Status Report. That report described the corporation’s principal business activity as “Leasing Luxury Automobiles, Boats, etc.” It recited that the corporation’s “average number of employees” was zero and that it had paid no wages while it was in existence during the last three quarters of 1972 or thus far in 1973. Id., at 91-92. On its Utah Sales and Use Tax Return for the second quarter of 1972, the corporation reported no sales. Id., at 93. The agents regarded the automobiles seen at the Norman residence as “show” or “collector” cars and not the type “that would normally be used in a leasing business.” Id., at 74.

All these facts suggested to the agents that petitioner corporation was not engaged in any business activity but, instead, was Norman’s alter ego and a repository of at least some of his personal assets. The agents consulted with the Service’s Regional Counsel. With his concurrence, the conclusion was drawn that the assets of the corporation actually belonged to Norman. Accordingly, the decision was made to levy upon and seize automobiles titled in petitioner’s name in partial satisfaction of the assessments against Norman. Id., at 75-76.

On or about March 21, two days after the jeopardy assessments, revenue officers, without a warrant, seized several automobiles. Among them were a 1972 Stutz, a Rolls Royce Phantom V, a 1930 Rolls Royce Phantom I, two 1971 Stutzes, and a Jaguar. Three were taken at two different locations in Salt Lake City; two at the Century Plaza parking lot in Los Angeles, Cal.; and one near Norman’s residence in Salt Lake City. Id., at 121, 129; Tr. of Oral Arg. 13-14. None of the ears was on property in which petitioner had an interest. All were registered in petitioner’s name. App. 75-76. The officers left a Chevrolet and 'a station wagon for the personal use of Mrs. Norman and her family. Id., a.t 58.

Also on March 21, revenue officers went to petitioner’s office'in Salt Lake County to levy on property subject to seizure, including the building itself. Id., at 19. They had information that one, and possibly two, luxury automobiles might be there. Upon learning that a car was in the garage on the premises, they telephoned their superior, Bert Apple-gate, and asked him to come out to assist. Id., at 77-79. The premises consisted of a cottage-type building and the garage. When Applegate arrived, a locksmith was there. He already had removed the lock from the garage door at the direction of the officers. A Stutz automobile was inside. The locksmith also had removed the lock on the cottage’s rear door. Id., at 80-81.

Applegate entered the cottage. He observed that its outward appearance was such that it could be a residence. He noticed a kitchen. He instructed the officers not to proceed with the seizure of any property there until the status of the cottage could be confirmed. Id., at 81, 23-24. The officers then left the cottage without taking anything, and its lock was replaced. Id., at 82.

While the officers were in the cottage, Norman’s son, George I. Norman III, age 19, and listed as a dependent on the 1970 Form 1040, appeared. He told the officers that the Stutz belonged to the petitioner corporation, and not to Norman. Id., at 80, 34. He testified that he was living at the cottage “as security.” Id., at 34. He was asked to provide evidence as to the car’s ownership. A decision was made not to seize the automobile at that 'time.

Information then came to Applegate, primarily from a Mr. Redd who was a contractor for Norman, that the cottage was a place of business and not a residence. Id., at 79. In addition, there was activity at the cottage that night; the lights were on and boxes were being moved. The next morning the Stutz was not in the garage. Id., at 83. Sometime during the next two days, a decision was made to seize the cottage, its furnishings and any other assets there. On March 23, agents, acting without a warrant, and with the assistance of locksmiths and the equipment of a private van and storage firm, entered the cottage and removed its remaining contents, including furnishings and books and records. An inventory was made of the property so seized. The agents hoped to examine the books and records to see if they contained’stock certificates or information concerning the location of other assets. The Regional Counsel, however, instructed them to pack the books and records, seal the boxes, and remove them to a safe storage place. Id., at 83-88.

In May, petitioner corporation instituted this suit. JBy its amended complaint it asserted a claim for wrongful levy, with a request for the return of the automobiles; a claim for suppression of all evidence obtained from the seized documents; and a claim against the agents for damages. Id., at 105-112. It alleged that the assessments were arbitrary and capricious, that petitioner was not an alter ego of Norman, and that the levy upon its premises and the contents violated the Fourth Amendment. Ibid.

Shortly thereafter, the Service returned to the cottage the originals of the records and documents that had been seized. In the meantime, however, they had been photocopied. By a second amendment to petitioner’s complaint, id., at 124, punitive damages, among other relief, were requested.

Norman’s son filed a complaint in intervention, id., at 112-117, alleging essentially the same facts and requesting similar relief. The District Court allowed his intervention. The Government then filed a counterclaim seeking foreclosure of the tax liens against the property held in petitioner’s name. Id., at 127-134.

At the ensuing trial before the court without a jury there was testimony that Norman himself originally held title to some of the automobiles registered in petitioner’s name, id., at 37; that petitioner had no employees and did not lease any cars, id., at 37, 39; that petitioner’s only assets were luxury or vintage model automobiles; that the cars had not been transferred to it until at or near the end of 1972; and that petitioner never issued any stock, held any director’s meetings, or engaged in any business. Id., at 43-45.

The District Court entered judgment for petitioner and for the intervenor. It found that the premises in question were the offices of petitioner and the residence of the intervenor; that the revenue-officer defendants had no> search warrant; that they forcibly entered the premises on March 23 and again on March 25; that they made the entry, search, and seizure “knowing full well that they were violating the rights” of petitioner, the intervenor, “and others”; that Agent Clayton committed the entry “maliciously”; that the defendants returned the books and records that had been seized but photocopied them and retained the photocopies; that the defendants levied upon and seized all the assets of petitioner, including seven automobiles and a bank account; that they disposed of two of the automobiles and stored the others in Salt Lake City; that the assessments of taxes, penalties, and interest against Norman and his wife for 1970 and 1971 were erroneous; that Norman and his wife had no liability for federal income tax, penalties, or interest for those years; that petitioner had “engaged in substantial business activity in preparation for its business purpose of leasing automobiles”; that it was not controlled solely by Norman or his wife; that it was not an alter ego of Norman or his wife; and that it was not their nominee. The court concluded that the revenue-officer defendants committed an illegal search and seizure of petitioner’s offices and the intervenor’s residence, in violation of the Fourth Amendment; that the photocopies of the seized books and records in the possession of the Service should be destroyed because am&.use of them would be illegal; that petitioner and the intervenor were entitled to general and punitive damages in amounts to be determined; that the Government’s counterclaim should be dismissed with prejudice; that the Service should return all the seized assets of petitioner and of the intervenor; and that judgment should be awarded against the United States in favor of petitioner for the value of the two automobiles that had been sold. Id., at 136-142. Judgment, including injunctive relief for the return of the automobiles and the books and records, and for the destruction of the photocopies, was entered accordingly. Id., at 142-144.

The Court of Appeals, for the most part, reversed. 514 F. 2d 935 (CA10 1975). It ruled that the evidence conclusively established that petitioner was Norman’s alter ego so that its assets could be seized to satisfy Norman’s income tax liability; that the District Court’s finding to the contrary was clearly erroneous; that petitioner had not sustained its burden of proving the assessments to be erroneous; and that the trial court erred in invalidating, the assessments and in dismissing the Government’s counterclaim. In regard to the claim of illegal search and seizures, the Court of Appeals held:

“The refusal to pay authorized appellants to collect the tax by levy, and this included the power of 'seizure by any means.’ Thus appellants were acting pursuant to statute and did not commit an illegal search. The trial court’s order returning the assets and suppressing the documents is improper.” (Footnote omitted.) Id., at 941.

The c(3urt also ruled that there was no evidence to support the trial court’s finding that Clayton’s participation “was of a malicious character.” Ibid. In accord with a concession by the Government, the Court of Appeals affirmed the trial court’s judgment insofar as it ordered the return of certain shares of stock to the intervenor.

II

A. Section 6331 (a) of the 1954 Code authorizes the Secretary or his delegate to collect taxes “by levy upon all property and rights to property” belonging to a person who “neglects or refuses to pay” any tax “or on which there is a lien ... for the payment of such tax.” Section 6331 (b), and §7701 (a) (21) as well, define “levy” as including “the power of distraint and seizure by any means.” Both real estate and personal property, tangible and intangible, are subject to levy. Levy upon tangible property normally is effected by service of forms of levy or notice of levy and physical seizure of the property. Where that is not feasible, the property is posted or tagged. Because intangible property is not susceptible of physical seizure, posting, or tagging, levy upon it is effected by serving the appropriate form upon the party holding the property or rights to property. See Treas. Reg. § 301.6331-1 (a)(1), 26 CFR § 301.6331-1 (a)(1) (1976). See also Phelps v. United States, 421 U. S. 330, 335-337 (1975). And the Court has recognized that compulsion on the part of the Service occasionally is required in the enforcement of the revenue laws. See United States v. Bisceglia, 420 U. S. 141, 145 (1975). Indeed, one may readily acknowledge that the existence of the levy power is an essential part of our self-assessment tax system and that it enhances voluntary compliance in the collection of taxes that this Court has described as “the life-blood of government, and their prompt and certain availability an imperious need.” Bull v. United States, 295 U. S. 247, 259 (1935).

Under § 6321 of the Code, the assessments against Norman were a lien in favor of the United States upon all property belonging to Norman. If petitioner was Norman’s alter ego, it had no countervailing effect for purposes of his federal income tax. Griffiths v. Commissioner, 308 U. S. 355 (1939); Higgins v. Smith, 308 U. S. 473, 476 (1940). It would then follow that the Service could properly regard petitioner’s assets as Norman’s property subject to the lien under § 6321, and the Service would be empowered, under § 6331, to levy upon assets held in petitioner’s name in satisfaction of Norman’s income tax liability. See United States v. Plastic Electro-Finishing Corp., 313 F. Supp. 330, 333-334 (EDNY 1970), aff’d, 71-1 USTC ¶9421 (CA2 1971).

B. Our grant of certiorari was limited to the Fourth Amendment issue, and we declined to review petitioner’s and Norman’s son’s claims that the assessments and levies should have been voided and that petitioner was not Norman’s alter ego. Pet. for Cert. 2, 3. We therefore approach this case accepting the Court of Appeals’ determinations that the assessments and levies were valid and that petitioner was Norman’s alter ego. Those facts necessarily establish probable cause to believe that assets held by petitioner were properly subject to seizure in satisfaction of the assessments. Petitioner does not claim that' there was no probable cause to believe that the automobiles were held by petitioner, nor does it claim that there was no probable cause to believe that its offices would contain other seizable goods. There being probable cause for the search and seizures, the only questions before the Court are whether warrants were required to malee “reasonable” either the seizures of the cars or the entry into and seizure of goods in the cottage.

C. The seizures of the automobiles in this case took place on public streets, parking lots, or other open places, and did not involve any invasion of privacy. In Murray’s Lessee v. Hoboken Land & Improv. Co., 18 How. 272 (1856), this Court held that a judicial warrant is not required for the seizure of a debtor’s land in satisfaction of a claim of the United States. The seizure in Murray’s Lessee was made through a transfer of title which did not involve an invasion of privacy. The warrantless seizures of the automobiles in this case are governed by the same principles and therefore were not unconstitutional. See also Hester v. United States, 265 U. S. 57 (1924) (liquor seized in open field).

D. The seizure of the books and records, however, involved intrusion into the privacy of petitioner’s offices. Significantly, the Court has said:

“[0]ne governing principle, justified by history and by current experience, has consistently been followed: except in certain carefully defined classes of cases, a search of private property without proper consent is 'unreasonable’ unless it has been authorized by a valid search warrant.” Camara v. Municipal Court, 387 U. S. 523, 528-529 (1967).

See Coolidge v. New Hampshire, 403 U. S. 443, 45A-455 (1971); id., at 512 (White, J., concurring and dissenting) ; Stoner v. California, 376 U. S. 483 (1964); United States v. Jeffers, 342 U. S. 48 (1951); McDonald v. United States, 335 U. S. 451 (1948); Agnello v. United States, 269 U. S. 20 (1925).

The respondents do not contend that business premises are not protected by the Fourth Amendment. Such a proposition could not be defended in light of this Court’s clear holdings to the contrary. See v. City of Seattle, 387 U. S. 541 (1967); Go-Bart Co. v. United States, 282 U. S. 344 (1931); Silverthorne Lumber Co. v. United States, 251 U. S. 385 (1920). Nor can it be claimed that corporations are without some Fourth Amendment rights. Go-Bart Co. v. United States, supra; Silverthorne Lumber Co. v. United States, supra; Oklahoma Press Pub. Co. v. Walling, 327 U. S. 186, 205-206 (1946); Hale v. Henkel, 201 U. S. 43, 75-76 (1906). Cf. California Bankers Assn. v. Shultz, 416 U. S. 21 (1974); Federal Trade Comm’n v. American Tobacco Co., 264 U. S. 298, 305-306 (1924); Wilson v. United States, 221 U. S. 361, 375-376 (1911); Consolidated Rendering Co. v. Vermont, 207 U. S. 541, 553-554 (1908).

The Court, of course, has recognized that a business, by its special nature and voluntary existence, may open itself to intrusions that would not be permissible in a purely private context. Thus, in United States v. Biswell, 406 U. S. 311 (1972), a warrantless search of a locked storeroom during business hours, pursuant to the inspection procedure authorized by the Gun Control Act of 1968, 18 U. S. C. § 923 (g), was upheld:

“When a dealer chooses to engage in this pervasively regulated business and to accept a federal license, he does so with the knowledge that his business records, firearms, and ammunition will be subject to effective inspection.” 406 U. S., at 316.

See also Colonnade Catering Corp. v. United States, 397 U. S. 72 (1970) (Congress has broad authority to fashion standards of reasonableness for searches and seizures to regulate the liquor industry but failed in that case to authorize a warrantless search).

In the present case, however, the intrusion into petitioner’s privacy was not based on the nature of its business, its license, or any regulation of its activities. Rather, the intrusion is claimed to be justified on the ground that petitioner’s assets were seizable to satisfy tax assessments. This involves nothing more than the normal enforcement of the tax laws, and we find no justification for treating petitioner differently in these circumstances simply because it is a corporation.

The respondents argue that there is a broad exception to the Fourth Amendment that allows warrantless intrusions into privacy in the furtherance of enforcement of the tax laws. We recognize that the “Power to lay and collect Taxes” is a specifically enunciated power of the Federal Government, Const., Art. I, § 8, cl. 1, and that the First Congress, which proposed the adoption of the Bill of Rights, also provided that certain taxes could be “levied by distress and sale of goods of the person or persons refusing or neglecting to pay.” Act of Mar. 3, 1791, c. 15, § 23, 1 Stat. 204. This, however, relates to warrantless seizures rather than to warrantless searches. It is one thing to seize without a warrant property resting in an open area or seizable by levy without an intrusion into privacy, and it is quite another thing to effect a warrantless seizure of property, even that owned by a corporation, situated on private premises to which access is not otherwise available for the seizing officer.

Indeed, one of the primary evils intended to be eliminated by the Fourth Amendment was the massive intrusion on privacy undertaken in the collection of taxes pursuant to general warrants and writs of assistance. As Madison argued, urging the adoption of a Bill of Rights to restrain the Federal Government:

“The General Government has a right to pass all laws which shall be necessary to collect its revenue; the means for enforcing the collection are within the direction of the Legislature: may not general warrants be considered necessary for this purpose, as well as for some purposes which it was supposed at the framing of their constitutions the State Governments had in view? If there was reason for restraining the State Governments from exercising this power, there is like reason for restraining the Federal Government.” 1 Annals of Cong. 438 (1834 ed.).

The respondents urge that the history of the common law in England and the laws in several States prior to the adoption of the Bill of Rights support the view that the Fourth Amendment was not intended to cover intrusions into privacy in the enforcement of the tax laws. We do not find in the cited materials anything approaching the clear evidence that would be required to create so great an exception to the Fourth Amendment’s protections against warrantless intrusions into privacy.

The respondents also rely upon certain dicta in Boyd v. United States, 116 U. S. 616 (1886) (subpoena of private papers impermissible). But see Fisher v. United States, 425 U. S. 391, 408-411 (1976), and Andresen v. Maryland, 427 U. S. 463, 471-472 (1976). We do not find in Boyd any direct holding that the warrant protections of the Fourth Amendment do not apply to invasions of privacy in furtherance of tax collection. Insofar as language in Boyd might be read so to state, we decline to follow those dicta into rejection of the basic governing principle that has shaped Fourth Amendment law.

Finally, the respondents argue that warrantless searches are justified by congressional enactment, as were the searches in Biswell and Colonnade. The statute, § 6331 (b) of the Code, 26 U. S. C. § 6331 (b), authorizes “distraint and seizure by any means.” See n. 15, supra. Read narrowly, it authorizes the use of every means to deprive the taxpayer of use, enjoyment, or title to property (e. g., transferring title, asportation, immobilization). It does not refer to warrant-less intrusions into privacy. The respondents, however, would have us read the statute to authorize such warrant-less intrusions. They assert that a statute of that kind is permissible in light of the considerations discussed in Camara and See. Examination of the statute shows that quite the opposite is true.

The respondents recognize that one of the Court’s critical concerns in Camara and See was the discretion of the seizing officers. Brief for Respondents 66. Yet § 6331 clearly gives the Secretary or his delegate discretion as to what property to seize. If more than one location is involved, the Secretary will choose which dwelling will be invaded. If property is to be found both in public places and in private areas, the Secretary may choose which to seize. This hardly can be called a restraint on discretion. The respondents also recognize the concern with the existence of questions of disputed fact. They argue that in the seizure situation there are no such questions; yet in the present case the agents’ confusion over whether the premises were an office or a residence demonstrates the contrary.

The respondents assert that the burden on the Government of obtaining a warrant is a relevant factor. Brief for Respondents 67-68. They suggest that the burden is great here because the Government is dealing with persons who may attempt to put their property beyond reach. Yet the statute authorizes distraint and seizure whenever a taxpayer neglects or refuses to pay his tax, and regardless of any indication of risk of concealment. The statute simply does not focus on situations involving a need for rapid action.

The respondents argue that the interest in the collection of taxes is such as to bring this case within the reasoning of Biswell and Colonnade. Those cases involved voluntary participation in a highly regulated activity. Section 6331, however, covers all defaults on all taxes, and we are unwilling to hold that the mere interest in the collection of taxes is sufficient to justify a statute declaring per se exempt from the warrant requirement every intrusion into privacy made in furtherance of any tax seizure.

The respondents suggest that the privacy interest in business premises is less than that in a private home., Even if correct, the assertion is irrelevant with respect to the intent of the statute, for the statute makes no distinction between business properties and dwelling areas. If it authorizes entries at all, it authorizes entries into both business premises and private homes.

The respondents offer no legislative history in support of their reading of § 6331, and to give the statute that reading would call its constitutionality into serious question. We therefore decline to read it as giving carte blanche for warrantless invasions of privacy. Rather, we give it its natural reading, namely, as an authorization for all forms of seizure, but as silent on the subject of intrusions into privacy.

The intrusion into petitioner’s office is therefore governed by the normal Fourth Amendment rule that “except in certain carefully defined classes of cases, a search of private property without proper consent is 'unreasonable’ unless it has been authorized by a valid search warrant.” Camara v. Municipal Court, 387 U. S., at 528-529.

As an alternative to their argument that a new exception to the warrant requirement should be recognized, the respondents assert that the facts of this case bring it within the “exigent circumstances” exception to the warrant requirement. The agents’ own actions, however, in their delay for two days following their first entry, and for more than one day following the observation of materials being moved from the office, before they made the entry during which they seized the records, are sufficient to support the District Court’s implicit finding that there were no exigent circumstances in this case.

We therefore conclude that the warrantless entry into petitioner’s office was in violation of the commands of the Fourth Amendment.

Ill

This takes us to the issue of remedy. Specifically, petitioner, by its second amended complaint, prayed for (a) the return of the photocopies of the books and records; (b) the return of the automobiles; (c) a declaration that petitioner is not the alter ego of Norman or of Mrs. Norman; (d) the suppression of all evidence obtained from the books And records; (e) the suppression of the automobiles as evidence; (f) the release of all levies; and (g) general and punitive damages against the individual defendant-agents. App, 123-124.

The alter ego issue, as has been noted, was denied review. The books and' records were returned, and the photocopies concededly have been destroyed; that claim, thus, is moot. We have decided the issue of the legality of the seizure of the automobiles adversely to petitioner. The suppression issue, as to the books and records, obviously is premature and may be considered if and when proceedings arise in which the Government seeks to use the documents or information obtained from them. See Meister v. United States, 397 F. 2d 268, 269 (CA3 1968); Hill v. United States, 346 F. 2d 175 (CA9), cert. denied, 382 U. S. 956 (1965). And the irreparable injury required to support a motion to suppress, under Fed. Rule Crim. Proc. 41 (e), on equitable grounds in advance of any proceedings, has not been demonstrated. Hunsucker v. Phinney, 497 F. 2d 29, 34 (CA5 1974), cert. denied, 420 U. S. 927 (1975).

This leaves only the issue of damages against the individual agents. The District Court found that Agent Clayton “maliciously committed said forced entry, and search and seizure,” App. 138, and concluded that he and other individual defendants acted “knowing full well that they were violating the rights of” petitioner. Ibid. It concluded that petitioner was entitled to judgment for those actions. The Court of Appeals, in the context of its holding that the entry and search were not illegal, ruled that the finding of maliciousness on the part of Clayton was unsupported by any evidence in the record and was clearly erroneous. 514 F. 2d, at 940-941. It also reversed the judgment awarding petitioner damages. Id., at 942.

We have held above, however, that a warrant should have been obtained, under the circumstances of this case, before the forcible entry was effected. This brings into focus and for consideration this Court’s decision in Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388 (1971), and the reservation there of the immunity question. The Government suggests that, assuming a violation of the Fourth Amendment by the agents, petitioner is not entitled to money damages if the agents acted in good faith; that good faith was supported by the “apparent fact” that the agents’ conduct was in conformity with standard Service procedures based upon Murray’s Lessee, supra; and that the record justifies the conclusion that the agents acted in good faith. That may well be, but we conclude that this aspect of the facts, the existence of proof of any injury to petitioner resulting from the entry and the temporary seizure of the books and records, and the immunity issue all should be addressed in the first instance by the Court of Appeals and, if it so directs, by the District Court.

The judgment of the Court of Appeals is therefore affirmed in part and reversed in part, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Mr. Chief Justice Burger,

concurring.

While I concur in the opinion of the Court, it may be useful to note that the factual setting of this case provides what seems, to me, a classic illustration of the dividing line between an impermissible, warrantless entry and one permissible under the “exigent circumstances” exception to the Fourth Amendment warrant requirement.

After their initial entry into, and retreat from, the petitioner’s office-cottage, the IRS agents assigned to the investigation of the fugitive Norman’s tax liability placed the premises under 24-hour surveillance. One night during the course of this surveillance, the agents observed cartons and other materials being removed from the premises by persons unknown to them. Against the background facts, such surreptitious nighttime activity constituted an exigent circumstance that would have justified an immediate seizure of the materials being moved in order to protect the interests of the United States. This is especially so since here the premises were controlled by the alter ego of an individual who was not only a delinquent taxpayer, but who was, at the time, a fugitive from justice. Rather than acting immediately, however, the agents chose to wait for approximately a day and a half to two days before making their entry. I agree with the conclusion that there were no exigent circumstances on these facts; however, the Court holds no more than that the agents’ delay after observing these highly suspicious events makes that exception • to the warrant requirement unavailable to them. By failing to act at once, the exigency was dissipated, and I do not understand our opinion to imply, in any way, that the removal of cartons, which could reasonably have contained relevant records needed by the Government, would not have been an exigent circumstance permitting immediate seizure without the warrant required by the Fourth Amendment.

       The Fourth Amendment reads:
      “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

       Four extensions of time for filing had been granted. App. 99.

       At the same time, the Service determined deficiencies in Mrs. Norman’s income tax liability for 1970 and 1971 in the amounts of $69,265.04 and $84,873.50, respectively. Id., at 96. Those deficiencies are not at issue in this case.

       Agent Clayton, called as a witness for the petitioner in the present case, on cross-examination answered “No” to the question whether he was “able to get any cooperation at all” from Mr. Norman. Id., at 30. When later called as a witness on behalf of the respondents, Clayton also gave a negative answer to the question whether he had received “any information from the taxpayer or his accountant or representative.” Id., at 66.
      Petitioner protests any adverse inference that might flow from this testimony and asserts that there is no evidence that Clayton requested assistance from Norman or his representatives who had filed powers of attorney with the Service. Reply Brief for Petitioners 3-4. Counsel for respondents at oral argument stated: “I want to correct any wrong implication if there is one, that they received no cooperation from Mr. Norman. . . . [N]obody had asked him prior to that time [his becoming a fugitive] for cooperation.” Tr. of Oral Arg. 25.

       Jeopardy assessments of the determined deficiencies in Mrs. Norman’s taxes were also made on March 19. App. 97.
      The notice which is required after jeopardy assessment by § 6861 (b) of the Code enables the taxpayer to file a petition with the United States Tax Court for a redetermination of the deficiency. See Laing v. United States, 423 U. S. 161 (1976). A timely notice was sent to Norman, and a petition was filed on his behalf with the Tax Court. His case awaits trial there (Docket No. 6000-73).

       The two automobiles seized in Los Angeles were a two-door tan Stutz, valued at $30,000, and a four-door burgundy Stutz, valued at $100,000. They were financed by loans from Murray First Thrift. Following the levy, Murray foreclosed its own liens and arranged with Norman’s attorney for the sale of the automobiles. App. 33, 122. It appears that the Government did not participate in those transactions and received no portion of the proceeds of the sales.

       The Internal Revenue Service Manual, ¶ 5341.1, instructs that if an occupant of a private residence denies a revenue officer permission to enter, the officer should not attempt entry by force.

       The Service later found this particular automobile at another location. App. 83. It had been moved by Norman’s son after the revenue agents had left on March 21. Id., at 34.

       Title to the cottage was in the name of Real Estate, Inc., a corporation the Service determined to be the alter ego of Mrs. Norman. Id., at 97. That corporation is not a party to the present suit and the relief petitioner requests does not include the return of the cottage.

       There is some evidence in the record that this took place on March 22 rather than March 23. Id., at 34, 59, 77.

       The respondents in their brief state that while the case was pending on appeal to the Tenth Circuit the Service voluntarily destroyed all existing photocopies of the seized books and records. Brief for Respondents 16 n. 9, 76-77, and n. 43. Petitioner concedes that the seized documents have been returned and the photocopies destroyed. Tr. of Oral Arg. 14r-15.

       There was conflicting testimony as to whether stock was issued. 1 Tr. 52-53.

       This date appears to be an error. See also n. 10, supra.

       This portion of the judgment of the Court of Appeals affirming the trial court is not before us. Neither is any right of the intervenor at issue here. Tr. of Oral Arg. 13.

       Section 6331 reads in part:
      “(a) Authority of Secretary or delegate.
      “If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary or his delegate to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. ... If the Secretary or his delegate makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary or his delegate and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section.
      “(b) Seizure and sale of property.
      “The term ‘levy’ as used in this title includes the power of distraint and seizure by any means. A levy shall extend only to property possessed and obligations existing at the time thereof. In any case in which the Secretary or his delegate may levy upon property or rights to property, he may seize and sell such property or rights to property (whether real or personal, tangible or intangible).”

       Section 6321 reads:
      “If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.”

       This effectuated a denial of the son’s petition for certiorari.

       If additional support were needed for this result, it is found in the Court’s decisions sustaining the right of the Government to collect taxes by summary administrative proceedings. Thus, in Bull v. United States, 295 U. S. 247, 260 (1935), it was stated that a tax assessment “is given the force of a judgment, and if the amount assessed is not paid when due, administrative officials may seize the debtor’s property to satisfy the debt.” See also Cheatham v. United States, 92 U. S. 85, 87-90 (1876); State Railroad Tax Cases, 92 U. S. 575, 612-615 (1876); Graham v. Du Pont, 262 U. S. 234, 255 (1923). The rationale underlying these decisions, of course, is that the very existence of government depends upon the prompt collection of the revenues. In Phillips v. Commissioner, 283 U. S. 589, 596-597 (1931), the Court rejected a constitutional challenge to the statutory system under which taxes may be collected summarily without a pre-seizure judicial hearing. It was held that as long as there was an adequate opportunity for a post-seizure determination of the taxpayer’s rights, the statute met the requirements of due process. See Commissioner v. Shapiro, 424 U. S. 614, 630-633 (1976); Fuentes v. Shevin, 407 U. S. 67, 91-92 (1972). These cases, of course, center upon the Due Process Clause rather than the Fourth Amendment, but the constitutional analysis is similar and yields a like result. It is to be noted that the Court in Phillips, 283 U. S., at 596, cited Murray’s Lessee with approval as a case which sustained proceedings “more summary in character” and “involving less directly the obligation of the taxpayer.”

       See T. Taylor, Two Studies in Constitutional Interpretation 41 (1969); N. Lasson, The History and Development of the Fourth Amendment to the United States Constitution 51-78 (1937); J. Landynski, Search and Seizure and the Supreme Court 30-42 (1966).

       In Boyd, the Court stated:
      “The search for and seizure of stolen or forfeited goods, or goods liable to duties and concealed to avoid the payment thereof, are totally different things from a search for and seizure of a man’s private books and papers for the purpose of obtaining information therein contained, or of using them as evidence against him.” 116 U. S., at 623.
      The Court's concern in Boyd was with establishing the impermissibility of the subpoena of papers. It was not concerned with the warrant requirement for entry into- private places. The'Court, however, did say:
      “The entry upon premises, made by a sheriff or other officer of the law, for the purpose of seizing goods and chattels by virtue of a judicial writ, such as an attachment, a sequestration, or an execution, is not within the prohibition of the Fourth or Fifth Amendment, or any other clause of the Constitution.” Id., at 624 (emphasis added).
      The Court was not concerned with, and therefore did not explain, whether the “judicial writ” referred to above was necessary in order to meet the warrant requirements. The opinion does describe the “obnoxious writs of assistance” against which the Fourth Amendment was designed to protect. This description gives an indication of the types of tax-enforcement actions that the Amendment’s protections were intended to reach:
      “Even the act under which the obnoxious writs of assistance were issued did not go as far as this, but' only authorized the examination of ships and vessels, and persons found therein, for the purpose of finding goods prohibited to be imported or exported, or on which the duties were not paid, and to enter into and search any suspected vaults, cellars, or warehouses for such goods." (Footnote omitted.) Id., at 623.

       There is no claim that any"'other exception to the warrant requirement, such as “hot pursuit,” “plain view,” or “pursuant to an arrest,” is applicable here.