Tax News

CCH (cch.taxgroup.com) reports:

  The U.S. Supreme Court has granted a request by an operator of oil tankers to review whether an Alaska city's personal property tax on large vessels docking at private facilities violates the U.S. Constitution. The city of Valdez imposes a tax on 100% of a vessel's assessed value, times a ratio based on the number of days spent in Valdez divided by the total number of days spent in all ports, including Valdez, where the vessel has acquired a situs for taxation. The tanker operator challenged the tax in court, asserting that it violates the Due Process and Commerce Clauses of the U.S. Constitution because it creates a risk of multiple taxation, and the Constitution's Tonnage Clause, which prohibits taxes that "operate to impose a charge for the privilege of entering, trading in, or lying in a port."

  The Alaska Supreme Court rejected these challenges. The state high court held that the port-days formula is fair and does not create a risk of duplicative taxation. Furthermore, the court held that a fairly apportioned property tax is not a tonnage duty and, therefore, does not violate the Tonnage Clause. (TAXDAY, 2008/04/30, S.1)

  Subscribers to CCH Tax Research NetWork can view the petition that was granted.

  Polar Tankers, Inc. v. Valdez, U.S. Supreme Court, Dkt. 08-310, petition for certiorari granted December 12, 2008