As I said I was going from memory from a class 30 years ago.
Looking at the case again, I see that the dispute was on whether tax should be withheld in the US. The tax treaty between the US and Australia said that the US would not tax the winnings. The winners had filed the appropriate form with the IRS to invoke the treaty and be exempt from tax.
The state lottery commission automatically withholds federal and state taxes, and refused to make an exception for the Australians. The Australians sued and a district court issued an injunction to stop the state from withholding those taxes.
The federal and state governments appealed. The appellate court reversed and removed the injunction. It turns out there is a law that prohibits courts from issuing injunctions to stop tax collection (and withholding counts as collection) so the district court overstepped its jurisdiction. What you are supposed to do if you think a tax is improperly applied is pay it and then seek a refund.
Looking at the case again, I see that the dispute was on whether tax should be withheld in the US. The tax treaty between the US and Australia said that the US would not tax the winnings. The winners had filed the appropriate form with the IRS to invoke the treaty and be exempt from tax.
The state lottery commission automatically withholds federal and state taxes, and refused to make an exception for the Australians. The Australians sued and a district court issued an injunction to stop the state from withholding those taxes.
The federal and state governments appealed. The appellate court reversed and removed the injunction. It turns out there is a law that prohibits courts from issuing injunctions to stop tax collection (and withholding counts as collection) so the district court overstepped its jurisdiction. What you are supposed to do if you think a tax is improperly applied is pay it and then seek a refund.