Wiltsie v. United States
United States Court of Claims · 1933-06-19 · cited 3×
The case concerned whether a purchaser of delinquent real estate tax liens from counties and municipalities could exclude the interest income received from taxpayers from federal income tax on the ground that the transactions made him an instrumentality of local government performing an essential tax-collection function. The court held that the income was taxable and dismissed the petition for refund. It reasoned that the federal tax imposed only a remote and indirect burden on municipal operations, as the plaintiff had made an outright purchase of the liens for personal gain rather than acting as an agent of the localities, and that precedents such as Willcuts v. Bunn and Group No. 1 Oil Corp. v. Bass confirmed that profits derived from dealings in state-created interests are not exempt. The court further noted that any reduction in municipal revenues from lower bidder participation would be too attenuated to trigger the constitutional immunity against federal taxation of state instrumentalities.