June 16, 2016

Challenge to Washington, D.C.’s tax scheme moves forward

By Christina M. Martin Attorney

This week, in Coleman v. District of Columbia, a federal district court held that the plaintiffs have grounds to bring their Fifth Amendment challenge to the District of Columbia’s taking of their property under its former tax-foreclosure scheme. Liberty Blog readers may recall that PLF filed a friend-of-the-court brief in support of Benjamin Coleman, an elderly veteran who suffered from dementia. Mr. Coleman owned his $200,000 home lien-free when the District of Columbia took the home to pay an overdue $134 tax debt, plus penalties, interest, and fees. Despite the fact that Mr. Coleman’s property was very valuable, and his tax debt was small, District law did not allow Mr. Coleman to collect any of the surplus profits from the tax sale. The District later amended that law, when the Washington Post exposed the unjust tax foreclosure scheme, but it did not compensate Mr. Coleman. A representative for Mr. Coleman sued on his behalf, arguing the District’s scheme violated the Fifth Amendment’s maxim that government cannot take property unless it pays just compensation for the property. In other words, while government may keep fees, penalties, and interest when it sells property to pay a tax debt, it must pay the property owner for the surplus equity it takes.

Last summer, the District asked the court to rule against Mr. Coleman and the other plaintiffs, arguing that taxpayers forfeit their constitutional property rights when they fail to pay their property taxes on time. PLF argued that the government cannot be allowed to redefine property rights or forfeitures in that manner. If state and federal governments were allowed the final say on what constitutes a forfeiture of constitutional rights, then government would find it all too easy to take property from the public. This week, the court thanked PLF for its amicus brief and denied the District’s motion, holding that Mr. Coleman and the other plaintiffs may proceed with their Fifth Amendment challenge.

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