6th Circuit Allows Gas Suppliers’ Tax Challenge

(CN) - A pair of natural gas suppliers can proceed with a lawsuit challenging Ohio's tax scheme as unconstitutionally favoring local suppliers, the 6th Circuit ruled.

Commerce Energy and Interstate Gas Supply sued Ohio Tax Commissioner Richard Levin, claiming that local suppliers received unfair tax exemptions that were unavailable to out-of-state suppliers.

The lower court dismissed the claim for lack of subject-matter jurisdiction, citing the general principals of federalism and comity, or legal reciprocity. The federal appeals court in Cincinnati reversed the decision.

"If plaintiff's claims were to succeed," Judge Martin wrote, "the only entities affected would be four natural gas suppliers."

In that case, the "intrusion into traditional matters of state taxation here is not significant enough to trigger comity to bar jurisdiction," Martin concluded.

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