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Case on a State Tax Bounces Back up to US Supreme Court – Glass & Goldberg | Financing, Property & Bankruptcy Law
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Case on a State Tax Bounces Back up to US Supreme Court

Many high school or college students recall the anger and apprehension they felt if a teacher returned an assignment to them with the instructions to redo it or take another stab at it. Sometimes the justices who sit on the United States Supreme Court may have reason to feel like one of those students. It is not infrequent that a matter the Court ruled on at an earlier time makes its way back to the Court for a second go round. A case originating out of Alabama, but having national consequences, may now become one of those “reassignments” if you will.

The Supreme Court is now prepared to decide if it should rehear the case of Alabama Dept. of Revenue, et. al. v. CSX Transportation, Inc., 720 F.3d 863 (11th Cir. 7-1-2013). It decided this case in 2010 when it found that the railway company, CSX Transportation, had the right to challenge the imposition by the State of Alabama of a tax exemption which, the company claims, unfairly discriminates against the railway in violation of the Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. §11501(b)(4). This statute prohibits States from enforcing a sales or use tax that “discriminates against a rail carrier.” When the Court found that the railroad can use the Act to challenge a tax because of exemptions granted to non-railroads, it refused to provide a standard by which lower courts could apply the federal statute to that state’s actions.

Over the last three years since it rendered that decision, five different federal circuit courts of appeal have applied conflicting standards in assessing the state laws in light of the federal statute.  The 3-2 split on the issue revolves roughly around whether a tax provision’s effect on railroad companies should be compared to the similar effects it poses merely to the railroad’s competitors or to all commercial and industrial property users in the state. Because the Supreme Court failed to provide specific guidance to the lower courts on how to apply this federal statute properly, the justices now find themselves having to review the rationales underlying each of the Circuit decisions on the subject before deciding whether it should grant the writ of certiorari to accept the case. As this highest court of the land does frequently take certain cases in order to resolve a conflict among the lower circuits, it is a good bet these Justices may feel some frustration that they did not more fully complete their assignment the first time around.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services and advice for clients in all aspects of commercial compliance, business litigation and transactional law.  Call us at (818) 888-2220, send an email inquiry to info@glassgoldberg.com or visit us online at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

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