Garble & Sons (Petitioner) brought a quiet tile action in state court against Darue Engineer (Respondent) for property claimed by the Internal Revenue Service (IRS). Respondent had the caseremoved.
State law claims can be removed under federal question jurisdiction when they implicate significant federal issues, unless removing the case would disrupt the division of labor between state and federal courts.
The Internal Revenue Service (IRS) seized Grable & Sons’ (Petitioner) property to satisfy tax delinquency and sold the property to Darue Engineering (Respondent). Five years later, Petitioner brought a quiet title action in state court to reclaim the property, claiming the IRS failed to properly notify them of the seizure as required by federal law 26 U.S.C. § 6335. Respondent removed the claim, arguing the claim could have been brought under federal question jurisdiction.
Can a case turning on the interpretation of federal tax law be removed?
Yes, cases involving a significant federal issue can be removed. The Court of Appeals is affirmed.
The Court determined that removal was proper because Petitioner’s claim turns on the interpretation of 26 U.S.C. § 6335. Federal courts have a strong interest in the law of tax collection and this was a rare enough overlap between state an federal law so as not to impede on the courts’ division of labor. Contrary to Petitioner’s argument, this holding was consistent with the precedent set by Merrell Dow v. Thompson.