On June 23, 2026, the US Supreme Court decided Pung v. Isabella County, Michigan, No. 25-95, holding that the constitutional baseline for just compensation under the Takings Clause for property sold in a tax sale is the price obtained in the tax sale, rather than the hypothetical open-market price, and that the Excessive Fines Clause does not require the government to return more than the surplus proceeds.
This case concerns the practice of federal, state, and local governments to foreclose on and sell property when taxpayers fall behind on property tax bills. The Pung family owed $2,241.93 in real property taxes to Isabella County. When the Pungs refused to pay, the County initiated foreclosure proceedings — culminating in the County selling the Pung home at public auction. The Pung home sold for $76,008, even though its assessed value for tax purposes was $194,400. The County initially kept all the sale proceeds.
Michael Pung sued in federal court, claiming that the County violated the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment. The trial court granted Pung partial summary judgment on his Takings Clause claim, holding that he was entitled to the surplus proceeds from the tax sale. Because it found for Pung under the Takings Clause, the trial court did not reach his Excessive Fines argument. And the trial court rejected his argument that compensation should be measured by the property's fair market value.
The Sixth Circuit affirmed, holding that a plaintiff whose property is foreclosed and sold at a public auction for failure to pay taxes is not entitled to recoup the fair market value of the property. The Sixth Circuit rejected Pung's Excessive Fines argument, holding that the Michigan tax-foreclosure regime was not punitive and thus not within the ambit of the Eighth Amendment.
The Supreme Court vacated and remanded. It considered Pung's arguments under both the Takings and the Excessive Fines Clauses. Regarding the Takings Clause, the Court considered the long history of the seizure and sale of property as a tax-collection method, and precedent treating this as proper provided that the government return any surplus proceeds to the debtor. This history and precedent, the Court explained, establishes that when the government seizes and sells property to collect a tax debt, the owner is entitled to the surplus sale proceeds—nothing less, and nothing more. Thus, the constitutional baseline for measuring just compensation in the tax-sale context is therefore the sale price, not the property's hypothetical open-market value, at least when the sale is fairly conducted. The Court explained that using a property's hypothetical open-market value would impose unprecedented burdens on jurisdictions in collecting unpaid taxes and might even make tax sales untenable as a tax debt-collection mechanism.
Regarding the Excessive Fines Clause, the Court explained that while forfeiture of property can be a fine under the Eighth Amendment if it is imposed at least in part to punish, Pung failed to put forth precedent or historical evidence suggesting that a fairly conducted tax sale would violate the Eighth Amendment. Accordingly, the Court held that the Excessive Fines Clause does not require the government to return more than the surplus proceeds after a tax sale.
Justice Alito delivered the opinion of the Court, in which Chief Justice Roberts and Justices Sotomayor, Gorsuch, Kavanaugh, Barrett, and Jackson joined, and in which Justice Thomas joined in part. Justice Sotomayor filed a concurring opinion, in which Justices Gorsuch and Jackson joined. Justice Thomas filed an opinion concurring in part and concurring in the judgment, in which Justice Gorsuch joined in part.
