Unfair Rail Tax Case to Go Before Justices Again
WASHINGTON (CN) - A finding that Alabama discriminates against retailers with a 4 percent sales tax on gross receipts will go before the Supreme Court, the justices said Tuesday.
CSX Transportation had filed a federal complaint against the state over the 4 percent sales tax that applies to the gross receipts of retail businesses. As an interstate rail carrier, CSX pays the 4 percent sales tax whenever it buys diesel fuel in Alabama.
That tax does not apply, however, to water carriers and motor carriers, both of which compete with CSX to ship freight in interstate commerce.
While Alabama does not impose any tax on the diesel fuel purchases of water carriers, it requires motor carriers to pay an excise tax of 19 cents per gallon.
For every gallon of fuel sold, Alabama distributes 13 cents collected from the fuel excise tax to its Transportation Department for the construction, repair, maintenance, and operation of public roads and bridges, and the payment of principal and interest on highway bonds. The remaining 6 cents from every gallon goes to cities and counties for the construction and maintenance of roads and bridges, and to the Department of Transportation for general highway purposes.
Sales tax revenue meanwhile feeds a general revenue fund.
Though the 11th Circuit initially affirmed dismissal of CSX's case, a Supreme Court reversal led to a bench trial in which a federal judge found that Alabama's sales tax did not discriminate against CSX in violation of the Railroad Revitalization and Regulation Reform Act of 1976.
Better known as the 4-R Act, the law is codified at Section 11501(b)(4) of Title 49.
A three-judge panel of the 11th Circuit reversed in its next look at the case.
"We conclude that the sales tax is indeed discriminatory and that the state has not offered a 'sufficient justification' for exempting CSX's competitors," the July 2013 decision states.
In granting Alabama a writ of certiorari Tuesday, the Supreme Court followed its custom of not issuing any comment on the case.
The order takes up the question presented by the petition and also directs the parties to submit briefs on another issue: whether a court should consider other aspects of a state's tax scheme in resolving a claim of unlawful tax discrimination under 49 U.S.C. §11501(b)(4), rather than focusing solely on the challenged tax provision.