Glenn Hegar, Comptroller of Public Accounts of the State of Texas, in His Official Capacity v. Texas Entertainment Association, Inc.

The Tax Injunction Act (TIA) bars federal courts from enjoining “the assessment, levy or collection of any tax under State law.” 28 U.S.C. §ௗ1341. But courts are split over distinguishing a “tax” from a regulatory fee that may be challenged in federal court. The Second, Seventh, and Tenth Circuits deem a charge a tax if it raises revenue, even if it serves a regulatory purpose. The Third, Sixth, Eighth, Eleventh, and D.C. Circuits deem a charge a tax if it raises revenue without some corresponding administrative benefit; the First, Fourth, and Ninth Circuits work a similar concern into multifactor tests, which the Seventh Circuit has called into doubt. The Fifth Circuit exercised jurisdiction over a charge that would be deemed a tax under either of those approaches. Texas imposes a $5-per-customer charge for businesses that combine alcohol and live nude entertainment. Like cigarette excise taxes, this charge increases costs and undisputedly raises public revenue from those who partake. The Fifth Circuit deemed it a fee because it has “a regulatory purpose.” Pet. App. 15a. The lower courts are thus locked into a mature, threeway spilt that only this Court can resolve. Because the TIA is a jurisdictional statute, establishing a clear rule is of paramount importance. The Fifth Circuit’s anomalous rule frustrates the uniform application of the TIA and states’ sovereign prerogatives in raising revenue. The question presented is whether, under the TIA, a state revenue measure is a tax if it raises public revenue, notwithstanding a regulatory purpose, as three circuits would hold; if the measure lacks corresponding administrative benefits, as eight circuits would hold; or only if it serves no regulatory purpose at all, as the Fifth Circuit has held. (I)