In the case of Lutz v. Magone, 1893, the United States Supreme Court was tasked with determining whether a collector of customs had the right to seize imported goods that were undervalued by their importer in order to avoid paying higher duties. The plaintiff, Lutz, argued that he should be allowed to re-appraise his goods and pay any additional duties owed rather than having them seized outright. However, Collector of Customs Magone contended that seizure was within his rights under federal law. The court ruled in favor of Magone stating that collectors have broad powers under U.S. tariff laws including seizing undervalued imports as penalties for fraud or attempts at evasion. It further clarified that an importer's right to reappraisal does not supersede this power but is subject to it instead.

In the dissenting opinion for Lutz v. Magone, Justice Brewer argued that the majority's interpretation of tax law was incorrect. He believed that a tax on imported goods should be considered paid when those goods are sold to consumers, not when they enter the country and are placed in bonded warehouses. According to him, this would mean that any increase in value while stored (due to market fluctuations or other factors) should also be taxable income under U.S laws since it is part of the profit made from selling these imported goods. The majority's decision effectively allowed importers to avoid paying taxes on this additional income by treating it as untaxable foreign revenue rather than domestic income which he saw as an unfair loophole favoring large corporations over individual taxpayers who cannot similarly shield their incomes from taxation.