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When a Legitimate “Fee” is Transformed Into a “Tax”

IVGID 101 Posted on by

Yes it can!

Given an otherwise legitimate “fee” can be transformed into an impermissible special “tax”1 because

“The Legislature’s law-making authority is…not unlimited (and)…courts are obligated to enforce the limitations that the Constitution imposes upon legislative acts,”2

Here we examine the circumstances under which this can take place.

The Manner in Which a Fee is Expended: Given a fee must be “reasonably proportionate to the benefit received,”22 where it is unrestricted and can be used for purposes other than those represented3, it is transformed into a tax. For a more comprehensive discussion of this subject, the reader is referred to our Are The District’s RFF/BFF Really Fees discussion.

The Manner in Which a Fee is Adopted: Given courts are obligated to enforce the limitations that the Constitution imposes upon legislative acts2, fees collected in violation of the Constitution4 are transformed into a tax. For a more comprehensive discussion of this subject, the reader is referred to our Are The District’s RFF/BFF Taxes Because They’re The Product of a Local or Special Law discussion.

Deprivation of Due Process: Given 1 of the Fourteenth Amendment to the United States Constitution and Art. I, ¶8(2) of the Nevada Constitution both guarantee that neither the State nor any local government in Nevada shall deprive any “person…of life, liberty, or property5 without due process of law,” where fees are involuntarily collected without providing due process6, this is another example7 where they are transformed into impermissible special taxes. For a more comprehensive discussion of this subject, the reader is referred to our Are The District’s RFF/BFF Valid Because Those Whose Properties Are Assessed Are Deprived of Due Process discussion.

And now you know!

  1. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 301, 255 P. 3d 247, 256 (2011).
  2. See Clean Water Coalition, supra, at 127 Nev. 309.
  3. See Clean Water Coalition, supra, at 127 Nev. 318 [“while the fees were collected as user fees, when the(y were)…transferred to the State’s general fund for unrestricted general use, they were transformed into a local and special tax”].
  4. See Clean Water Coalition, supra, at 127 Nev. 320 [fees the product of “circumstances…of statewide concern…cannot be addressed through legislation that does not comport with Art. IV, §21 (of the Constitution)’s local and special law proscription”].
  5. In Sniadach v. Family Finance Corp., 395 U.S. 337, 339-42, 89 S.Ct. 1820 (1969) the U.S. Supreme Court ruled that money (i.e., wages) is property for purposes of the Fourteenth Amendment. There the Court ruled that “Wisconsin(‘s) garnishment procedure violated that due process…in that notice and an opportunity to be heard (we)re not given before the in rem seizure of…wages.”
  6. “Following fair legal procedures…includ(ing the) giving (of) notice, a chance to respond, and a neutral decision-maker (usually a judge)” (go to https://act.represent.us/sign/due-process-explained/?source=go-ad-gen-20241212&utm_source=go&utm_medium=ad&utm_campaign=gen&utm_content=20241212&utm_term=&gad_source=1&gad_campaignid=22025691781&gbraid=0AAAAADhg-cCp6SxpQL4gtfdMZfHF69MoC&gclid=CjwKCAjwhqfPBhBWEiwAZo196pGIKrbcUT0mAEqRHWsZGTApnSDraTomttY7rfKbK0Vz8hsFmNjHghoCMeoQAvD_BwE).
  7. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 316-318, 255 P. 3d 247, 256 (2011).

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