JUSTICE O'CONNOR delivered the opinion of the Court.
The principal question presented by the parties to these appeals is whether certain state and federal statutes violate the Establishment and Free Exercise Clauses of the First Amendment [ Footnote 1 ] by requiring religious schools unaffiliated with any church to pay unemployment insurance taxes. We do not reach this substantive question, however, holding instead that the Tax Injunction Act, 28 U.S.C. § 1341, [ Footnote 2 ] deprived the District Court of jurisdiction to hear these challenges. Accordingly, we vacate the judgment below.
I
Last Term, in St. Martin Evangelical Lutheran Church v. South Dakota, 451 U. S. 772 (1981), this Court considered statutory and constitutional challenges to provisions of the Federal Unemployment Tax Act (FUTA), 26 U.S.C. §§ 3301-3311 (1976 ed. and Supp. IV). Because the present claims involve the same provisions that we interpreted in St. Martin, we recount only briefly the substance and legislative history of the relevant statutes before turning to the facts in the present cases.
A
In FUTA, [ Footnote 3 ] Congress has authorized a cooperative federal-state scheme to provide benefits to unemployed workers. The Act requires employers to pay an excise tax on wages paid to employees in "covered" employment, [ Footnote 4 ] but entitles them to a credit of up to 90% of the federal tax for contributions they have paid into federally approved state unemployment compensation programs. [ Footnote 5 ] One of the requirements for federal approval is that state programs "cover" certain broad categories of employment.
Until 1970, 26 U.S.C. § 3306(c)(8) excluded from the definition of covered employment "service performed in the employ of a religious, charitable, educational, or other [tax exempt] organization." Pub.L. 86-778, § 533, 74 Stat. 984. As a consequence, such organizations were not required to pay either federal excise taxes or state unemployment compensation taxes. In 1970, Congress amended FUTA to require state plans to cover employees of nonprofit organizations, state hospitals, and state institutions of higher education, thus eliminating the broad exemption available to nonprofit organizations. [ Footnote 6 ] See § 3309(a)(1). At the same time, Congress enacted § 3309(b) to exempt from mandatory state coverage a narrow class of religious and educational employees, i.e., Congress exempted services performed
(1) in the employ of (A) a church or convention or association of churches, or (B) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;
(2) by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;
(3) in the employ of a school which is not an institution of higher education.
Pub.L. 91-373, § 104(b)(1), 84 Stat. 698.
In 1976, Congress again amended FUTA, this time eliminating the substance of § 3309(b)(3), thereby removing the blanket exemption for school employees. See Unemployment Compensation Amendments of 1976, Pub.L. 94-566, § 115(b)(1), 90 Stat. 2670. [ Footnote 7 ] In order to maintain compliance with FUTA, the States promptly amended their corresponding state programs. See, e.g., Cal.Un.Ins.Code Ann. §§ 634.5(a), (b) (West Supp.1982).
B
The plaintiffs in these cases, a number of California churches and religious schools, sought to enjoin the Secretary of Labor from conditioning his approval of the California unemployment insurance program on its coverage of the plaintiffs' employees, and to enjoin the State from collecting both tax information and the state tax. [ Footnote 8 ] For the purposes of evaluating their statutory and constitutional claims, the District Court divided the plaintiffs into three classes of employers: Category I represents those schools that are part of the corporate structure of a church or association of churches; Category II includes schools that are separate corporations formed by a church or association of churches; and Category III includes schools that are
operated primarily for religious purposes, but which [are] not operated, supervised, controlled or principally supported by a church or convention or association of churches, i.e., an independent, non-church affiliated religious school.
Supplemental Opinion, reprinted in App. to Juris.Statement in No. 81-31, p. 71 (J. S. App.). [ Footnote 9 ]
On September 21, 1979, the District Court granted a preliminary injunction against the State, restraining it from collecting the state unemployment tax from the Category I plaintiffs. See id. at 51. The basis for the court's order was its conclusion that the plaintiffs were exempt from mandatory state coverage under § 3309(b)(1), and alternatively, that, if they were not exempt under the terms of FUTA, collection of the tax from the plaintiffs would involve excessive governmental entanglement with religion, in violation of the Establishment Clause of the First Amendment. See J.S.App. 58-65.
In the same opinion, the District Court rejected the Federal Government's argument that, because the state remedy was "plain, speedy and efficient," the Tax Injunction Act, 28 U.S.C. § 1341, barred the court from granting injunctive relief. Considering first the availability of injunctive relief from the state courts, the court concluded that state statutory and constitutional provisions [ Footnote 10 ] made such relief "at best, uncertain." J.S.App. 66. The court then concluded that a state suit for a refund was an inadequate remedy because the plaintiffs claimed not only that their property had been taken unlawfully, but also that the "very process of determining whether any tax is due at all results in a violation of their First Amendment rights." Id. at 67. Because this First Amendment injury was "irreparable" once the taxes had been collected, only an injunction against collection of the tax could remedy the plaintiffs' claims. Accordingly, because there existed no "plain, speedy and efficient" remedy in the state courts, the District Court concluded that it had jurisdiction to grant injunctive and declaratory relief
In a supplemental opinion filed June 2, 1980, the court clarified its earlier opinion, stating expressly that the preliminary injunction covered only Category I plaintiffs. See id. at 71. For the same reasons that it had granted the initial preliminary injunction, however, the court extended the preliminary injunction to Category II plaintiffs. The court continued to deny relief to the Category III plaintiffs after concluding that they were not covered by the statutory exemptions in § 3309(b) and that the risk of excessive governmental entanglement with religion was too small to violate the Establishment Clause. J.S.App. 77-79. [ Footnote 11 ]
Finally, on April 3, 1981, the court filed a second supplemental opinion ruling on all of the plaintiffs' motions for permanent injunctions enjoining the State from collecting unemployment compensation taxes and the Federal Government from conditioning approval of the state unemployment compensation programs on their inclusion of the plaintiffs' employees. See id. at 1. Considering first the statutory claims, the court concluded that Category I and Category II schools, but not Category III schools, are exempt from coverage under 26 U.S.C. § 3309(b) and the corresponding state provision, Cal.Un.Ins.Code Ann. § 634.5(a) (West Supp.1982). J.S.App. 3-15. [ Footnote 12 ] The court also found that the benefit entitlement decisions for employees of Category III schools risk excessive governmental entanglement with religion in violation of the Establishment Clause of the First Amendment. Id. at 25-33. [ Footnote 13 ] Consequently, the court held that "constitutional considerations bar the application of the scheme" to the Category III plaintiffs. Id. at 33.
Based on these findings, the court issued orders permanently enjoining the federal defendants from requiring state unemployment insurance programs to cover Category I and Category II schools as a precondition for federal approval of the state programs, id. at 47, 51, and permanently enjoining the state defendants from "collecting, or attempting to collect, unemployment compensation… taxes" from the Category I, II, or III schools. Id. at 47, 50. The court expressly held Cal.Un.Ins.Code Ann. § 634.5(a) (West Supp.1982) unconstitutional. See J.S.App. 45, 46. The court did not issue an injunction against the federal defendants as to Category III schools because it
has no information indicating what response, if any, the Secretary will make to the Court's conclusion that the state defendants may not constitutionally impose the state unemployment compensation tax scheme on the Category 3 employees of non-church affiliated schools…. If the Secretary, in response to failure by the state defendants to collect unemployment compensation taxes on behalf of Category 3 employees, institutes decertification proceedings against the State of California, the parties may apply to this Court for further relief.
Second Supplemental Opinion, reprinted in J.S.App. 44, n. 39.
Following issuance of the court's injunction, this Court decided St. Martin Evangelical Lutheran Church v. South Dakota, holding that § 3309(b)(1)(A) exempts Category I schools from mandatory coverage under the state unemployment insurance programs. Although no Category II schools were before the Court in St. Martin, the Court noted in a footnote that
[t]o establish exemption from FUTA, a separately incorporated church school (or other organization) must satisfy the requirements of § 3309(b)(1)(B): (1) that the organization 'is operated primarily for religious purposes,' and (2) that it is 'operated, supervised, controlled, or principally supported by a church or convention or association of churches.'
451 U.S. at 451 U. S. 782 -783, n. 12.
As a result of this opinion, the Secretary of Labor reconsidered his position and decided that both Category I and Category II schools are statutorily exempt from mandatory coverage under FUTA. Consequently, the federal defendants, as well as the State defendants, have not appealed the District Court's injunction involving Category I and Category II schools, but only that part of the District Court order involving the Category III schools. [ Footnote 14 ]
II
An initial matter requiring our attention is whether this Court has jurisdiction to hear these appeals. [ Footnote 15 ] Congress has provided that
[a]ny party may appeal to the Supreme Court from an interlocutory or final judgment, decree or order of any court of the United States… holding an Act of Congress unconstitutional in any civil action, suit, or proceeding to which the United States or any of its agencies, or any officer or employee thereof, as such officer or employee, is a party.
28 U.S.C. § 1252.
The only possible doubt regarding our appellate jurisdiction under this provision is the requirement that the District Court hold "an Act of Congress unconstitutional."
In McLucas v. DeChamplain, 421 U. S. 21 (1975), we stated that § 1252 was an unambiguous exception to the policy of minimizing the mandatory docket of this Court. Indeed, the
language of the statute sufficiently demonstrates its purpose: to afford immediate review in this Court in civil actions to which the United States or its officers are parties, and thus will be bound by a holding of unconstitutionality.
Id. at 421 U. S. 31. Moreover, this Court has appellate jurisdiction under § 1252
when the ruling of unconstitutionality is made in the application of the statute to a particular circumstance,… rather than upon the challenged statute as a whole.
Fleming v. Rhodes, 331 U. S. 100, 331 U. S. 102 -103 (1947) (discussing the predecessor to § 1252, Act of Aug. 24, 1937, 50 Stat. 751). See United States v. Christian Echoes National Ministry, Inc., 404 U. S. 561, 404 U. S. 563 (1972) (per curiam); United States v. Darusmont, 449 U. S. 292, 449 U. S. 293 (1981). Finally, § 1252 provides jurisdiction even though the lower court did not expressly declare a federal statute unconstitutional, so long as a determination that a statutory provision was unconstitutional "was a necessary predicate to the relief" that the lower court granted. United States v. Clark, 445 U. S. 23, 445 U. S. 26, n. 2 (1980). [ Footnote 16 ]
In the present case, the District Court did not expressly hold § 3309(b) of FUTA unconstitutional as applied to the Category III appellees, [ Footnote 17 ] but the effect of its several opinions and orders was to make "the United States or its officers… bound by a holding of unconstitutionality." McLucas v. DeChamplain, supra, at 421 U. S. 31. For example, while discussing the Establishment Clause claim of the Category III schools, the District Court held:
Since such entanglement [involving the resolution of questions of faith and doctrine by secular tribunals] is inevitable during the benefit eligibility determination process if religious schools are brought within the scope of the unemployment compensation tax scheme, constitutional considerations bar the application of the scheme to them.
Second Supplemental Opinion, reprinted in J.S.App. 33 (emphasis added). Examination of other portions of the court's opinion makes clear that the court's use of the word "scheme" refers to the combined federal and state provisions. See, e.g., id. at 421 U. S. 26 (expressly referring to both federal and state statutory provisions in discussing the "unemployment compensation scheme"); id. at 421 U. S. 25 (referring to the intent of Congress and the California Legislature in discussing the "unemployment compensation tax scheme"). Moreover, the District Court's analysis leading to its order holding the California provision unconstitutional is based solely on its understanding of the operation and effect of FUTA, which, of course, prompted the passage of the corresponding state statute in the first place. [ Footnote 18 ] Cf. St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. at 451 U. S. 780, n. 9 (holding that the Court could review the South Dakota Supreme Court's interpretation of its unemployment compensation tax statute because its "analysis depended entirely on its understanding of the meaning of FUTA and the First Amendment"). Finally, in its second supplemental opinion, the court made clear that, if the Secretary "institutes decertification proceedings against the State of California" for failing to collect unemployment compensation taxes on behalf of Category III employees, "the parties may apply to this Court for further relief," which can only mean injunctive relief against the Secretary. J.S.App. 44, n. 39. Under these circumstances, it is clear that the Secretary is "bound by a holding of unconstitutionality," and that this Court has jurisdiction under § 1252 to hear this appeal.
III
As we noted above, the District Court declared Cal.Un.Ins.Code Ann. § 634.5(a) (West Supp.1982) unconstitutional and enjoined the state defendants from collecting state unemployment compensation taxes from the Category III schools. [ Footnote 19 ] In the course of granting this declaratory and injunctive relief, the court expressly rejected the Federal Government's argument that the Tax Injunction Act, 28 U.S.C. § 1341, deprived the court of jurisdiction. See J.S.App. 65-69. Consequently, before reaching the merits of the appellees' claim, we must decide whether the District Court correctly ruled that it had jurisdiction under the Tax Injunction Act to issue declaratory and injunctive relief
A
The Tax Injunction Act states simply that the district courts "shall not enjoin, suspend or restrain the… collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State."
It is plain from this language that the Tax Injunction Act prohibits a federal district court, in most circumstances, from issuing an injunction enjoining the collection of state taxes. Although this Court once reserved the question, [ Footnote 20 ] we now conclude that the Act also prohibits a district court from issuing a declaratory judgment holding state tax laws unconstitutional.
Initially, we observe that the Act divests the district court not only of jurisdiction to issue an injunction enjoining state officials, but also of jurisdiction to take actions that "suspend or restrain" the assessment and collection of state taxes. Because the declaratory judgment "procedure may in every practical sense operate to suspend collection of the state taxes until the litigation is ended," Great Lakes Dredge & Dock Co. v. Huffman, 319 U. S. 293, 319 U. S. 299 (1943), the very language of the Act suggests that a federal court is prohibited from issuing declaratory relief in state tax cases. [ Footnote 21 ] Additionally, because there is little practical difference between injunctive and declaratory relief, we would be hard-pressed to conclude that Congress intended to prohibit taxpayers from seeking one form of anticipatory relief against state tax officials in federal court while permitting them to seek another, thereby defeating the principal purpose of the Tax Injunction Act: "to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes." Rosewell v. LaSalle National Balk, 450 U. S. 503, 450 U. S. 522 (1981). [ Footnote 22 ] As JUSTICE BRENNAN stated in his opinion concurring in part and dissenting in part in Perez v. Ledesma, 401 U. S. 82, 401 U. S. 128, n. 17 (1971):
If federal declaratory relief were available to test state tax assessments, state tax administration might be thrown into disarray, and taxpayers might escape the ordinary procedural requirements imposed by state law. During the pendency of the federal suit, the collection of revenue under the challenged law might be obstructed, with consequent damage to the State's budget, and perhaps a shift to the State of the risk of taxpayer insolvency. Moreover, federal constitutional issues are likely to turn on questions of state tax law, which, like issues of state regulatory law, are more properly heard in the state courts.
See Fair Assessment in Real Estate Assn., Inc. v. McNary, 454 U. S. 100, 454 U. S. 108 -109, n. 6 (1981). [ Footnote 23 ]
Consequently, because Congress' intent in enacting the Tax Injunction Act was to prevent federal court interference with the assessment and collection of state taxes, we hold that the Act prohibits declaratory, as well as injunctive, relief. Accordingly, the District Court in these cases was without jurisdiction to declare the California tax provision unconstitutional or to issue its injunction against state authorities unless the appellees had no "plain, speedy and efficient remedy" in the state courts.
Last Term, in Rosewell v. LaSalle National Bank, this Court had occasion to consider the meaning of the "plain, speedy and efficient" exception in the Tax Injunction Act. After reviewing previous decisions [ Footnote 24 ] and the legislative history of the Act, [ Footnote 25 ] the Court concluded that the "plain, speedy and efficient" exception requires the "state court remedy [to meet] certain minimal procedural criteria." 450 U.S. at 450 U. S. 512 (emphasis in original). In particular, a state court remedy is "plain, speedy and efficient" only if it
provides the taxpayer with a 'full hearing and judicial determination' at which she may raise any and all constitutional objections to the tax.
Id. at 450 U. S. 514 (quoting LaSalle National Bank v. County of Cook, 57 Ill.2d 318, 324, 312 N.E.2d 252, 255-256 (1974)). [ Footnote 26 ] Applying these considerations, the Rosewell Court held that an Illinois tax scheme, requiring the taxpayer to pay an allegedly unconstitutional tax [ Footnote 27 ] and seek a refund through state administrative and judicial procedures, was a "plain, speedy and efficient remedy" within the meaning of the Tax Injunction Act. In reaching this holding, the Court specifically relied on legislative Reports demonstrating congressional awareness that refunds were the exclusive remedy in many state tax systems. [ Footnote 28 ]
The holding in Rosewell reflects not only Congress' express command in the Tax Injunction Act, but also the historical reluctance of the federal courts to interfere with the operation of state tax systems if the taxpayer had available an adequate remedy in the state courts. As this Court stated in Dows v. City of Chicago, 11 Wall. 108, 78 U. S. 110 (1871), long before enactment of the Tax Injunction Act:
"No court of equity will… allow its injunction to issue to restrain [state officers collecting state taxes] except where it may be necessary to protect the rights of the citizen whose property is taxed, and he has no adequate remedy by the ordinary processes of the law. It must appear that the enforcement of the tax would lead to a multiplicity of suits, or produce irreparable injury,… before the aid of a court of equity can be invoked. [ Footnote 29 ] " In order to accommodate these concerns and be faithful to the congressional intent "to limit drastically" federal court interference with state tax systems, we must construe narrowly the "plain, speedy and efficient" exception to the Tax Injunction Act.
With these cases and principles in mind, we turn to the California provisions to determine whether there exists a "plain, speedy and efficient" state remedy for the appellees' claim.
B
There is no dispute that appellees in the present cases can seek a refund of the California unemployment tax through state administrative and judicial procedures. Once a taxpayer has sought from, and been denied a refund by, the appropriate state agency, see Cal.Un.Ins.Code Ann. §§ 1176-1185 (West 1972 and Supp.1982), [ Footnote 30 ] he may file an action in Superior Court for a refund of the taxes paid, raising all arguments against the validity of the tax. Cal.Un.Ins.Code Ann. § 1241 (West Supp.1982). If the taxpayer is unsuccessful at trial, he may appeal the decision to higher state courts and ultimately seek review in this Court. Nothing in this scheme prevents the taxpayer from "rais[ing] any and all constitutional objections to the tax" in the state courts. Rosewell v. LaSalle National Bank, 450 U.S. at 450 U. S. 514. As the Court in Rosewell noted, the "Act contemplates nothing more." Id. at 450 U. S. 516, n.19. [ Footnote 31 ] Moreover, assuming that the appellees' constitutional claims are meritorious, an issue on which we express no view, there is every reason to believe that, once a state appellate court has declared the tax unconstitutional, the appropriate state agencies will respect that declaration. See Pacific Motor Transport Co. v. State Board of Equalization, 28 Cal.App.3d 230, 236, 104 Cal.Rptr. 558, 562 (1972) (noting that while the "relief afforded may not prevent or enjoin' or otherwise hamper present or future tax assessment or collection effort… [i]t will be presumed that the governmental agency will respect a judicial declaration concerning a regulation's validity"). Accordingly, it appears that Rosewell is directly applicable to the present cases, and that the District Court had no jurisdiction to hear the appellees' claims.
The appellees contend, however, that the California refund procedures do not constitute a "plain, speedy and efficient remedy" because their claims can be remedied only by injunctive relief, and that such relief is unavailable in California courts to restrain the collection of state taxes. See n 10, supra. Injunctive relief is necessary, the appellees claim, because, prior to state judicial review, the employer must meet certain recordkeeping, registration, and reporting requirements, see Cal.Un.Ins.Code Ann. §§ 1085, 1086, 1088, 1092 (West 1972 and Supp.1982), and potentially is subject to administrative benefit eligibility hearings [ Footnote 32 ] in violation of the appellees' First Amendment rights. The appellees thus fear that their constitutional rights will be violated before they have an opportunity to challenge the constitutionality of the unemployment tax scheme in state court.
This argument is unpersuasive. First, nothing in the California scheme precludes the appellees from challenging the unemployment tax before a benefit eligibility hearing is held for one of their former employees. As soon as an employer makes its first payment to the state unemployment insurance fund, it may file for a refund and, after exhausting state administrative remedies, seek a judicial determination of the constitutionality of the tax. [ Footnote 33 ] If the employer ultimately prevails on his constitutional argument, the state taxing authorities can be expected to respect that court's holding in future administrative proceedings. See Pacific Motor Transport Co. v. State Board of Equalization, supra, at 236, 104 Cal.Rptr. at 562. Thus, before any entanglement from the benefit eligibility hearings occurs, the appellees should be able to challenge the constitutionality of the state unemployment insurance taxes.
Second, while an employer may be subject to some recordkeeping and reporting requirements, or even a benefit eligibility hearing, pending the resolution of its constitutional claims in state court, it will be subject to the same burdens even if it seeks relief from the federal courts. Thus, whatever harm the appellees may suffer pending resolution of their constitutional claims, that harm is not reduced by seeking relief in federal court. Stated differently, there are no apparent advantages to federal court relief that make state court remedies less than "plain, speedy and efficient." [ Footnote 34 ]
Finally, we must keep in mind that, at the time that it passed the Tax Injunction Act, Congress was well aware that refund procedures were the sole remedy in many States for unlawfully collected taxes. See S.Rep. No. 1035, 75th Cong., 1st Sess., 1 (1937); H.R.Rep. No. 1503, 75th Cong., 1st Sess., 2 (1937). [ Footnote 35 ] Carving out a special exception for taxpayers raising First Amendment claims would undermine significantly Congress' primary purpose "to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes." Rosewell v. LaSalle National Bank, 450 U.S. at 450 U. S. 522. [ Footnote 36 ] Because we do not believe that Congress intended federal injunctions and declaratory judgments to disrupt state tax administration when state refund procedures are available, we decline to find an exception in the Tax Injunction Act for the appellees' claims. [ Footnote 37 ] Accordingly, because the appellees could seek a refund of their state unemployment insurance taxes, and thereby obtain state judicial review of their constitutional claims, we hold that their remedy under state law was "plain, speedy and efficient" within the meaning of the Tax Injunction Act, and consequently, that the District Court had no jurisdiction to issue injunctive or declaratory relief. [ Footnote 38 ]
C
Despite the absence of jurisdiction in the District Court, the federal defendants urge us to consider the merits of the appellees' First Amendment claims because of the "public interest in, and the Secretary's need for, a definitive interpretation of 26 U.S.C. § 3309(b)." Brief for United States 21. The Government bases this argument on our decision in McLucas v. DeChamplain, 421 U.S. at 421 U. S. 32, in which we held that "whether the District Court did or did not have jurisdiction to act, this case is properly here under § 1252." See also Weinberger v. Salfi, 422 U. S. 749, 422 U. S. 763, n. 8 (1975).
The Government's argument is unavailing, however, for in McLucas and Salfi, some federal trial court had jurisdiction, [ Footnote 39 ] whereas, in the present cases, no federal district court had jurisdiction. If this Court were nonetheless to reach the First Amendment issues presented in these appeals, the litigants would have sidestepped neatly Congress' intent and our longstanding policy "to limit drastically" federal interference in the administration of state taxes when a "plain, speedy and efficient" state remedy is available. [ Footnote 40 ] Accordingly, we do not reach the appellees' First Amendment claims.
The judgment of the District Court is vacated, and the cases are remanded for further proceedings consistent with this opinion.
So ordered.
Notes
* Together with No. 81-228, United States et al. v. Grace Brethren Church et al.; and No. 8155, Grace Brethren Church et al. v. United States et al., also on appeal from the same court.
[ Footnote 1 ]
The First Amendment provides in pertinent part that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof." The Free Exercise and Establishment Clauses apply to the States through the Due Process Clause of the Fourteenth Amendment. See Cantwell v. Connecticut, 310 U. S. 296, 310 U. S. 303 (1940); Everson v. Board of Education, 330 U. S. 1, 330 U. S. 15 (1947).
[ Footnote 2 ]
The Act provides:
The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.
[ Footnote 3 ]
FUTA was enacted originally as Title IX of the Social Security Act of 1935, ch. 531, 49 Stat. 639.
[ Footnote 4 ]
See 26 U.S.C. § 3301.
[ Footnote 5 ]
See 26 U.S.C. § 3302 (1976 ed. and Supp. IV). Each state program receives annual approval after the Secretary of Labor finds that it complies with federal statutory standards. See 26 U.S.C. §§ 3304(a), (c) (1976 ed. and Supp. IV). The federal standards for the state programs are contained in §§ 3304 and 3309. If a state plan complies with federal standards, the State is authorized to receive a federal grant to administer the state plan. See 29 U.S.C. § 49d(b); 42 U.S.C. § 501.
[ Footnote 6 ]
See Employment Security Amendments of 1970, Pub.L. 91-373, § 104 (b)(1), 84 Stat. 697. Under §§ 3309(a)(2) and 3304(a)(6)(B), such nonprofit organizations were given the option of either making the same contribution to the state unemployment compensation fund required of other employers, or reimbursing the fund for unemployment compensation payments actually made to the nonprofit organizations' former employees.
Although nonprofit organizations were covered by federally approved state unemployment compensation laws, they continued to be exempt from the federal excise tax on wages because the definition of "employment" in § 3306(c)(8), excluding services performed for such organizations, remained unchanged.
[ Footnote 7 ]
In its place, Congress substituted an unrelated provision.
[ Footnote 8 ]
This litigation grew out of two suits, one filed in the District Court by Grace Brethren Church et al. (Case No. CV 79-93 MRP), and the other filed in state court by the Lu