U.S. SUPREME COURT DENIES AIR FREIGHT TAX HEARING
The U.S. Supreme Court has denied an request for appeal of a tax ruling
by the Hawaii Supreme Court that sets a dangerous precedent for air-freight
companies.
The Hawaii tax ruling overturned a widely held legal definition of "air
transportation" that had prohibited states from taxing the gross receipts
derived from the sale of interstate air freight services. Industry
officials are concerned that other states may institute similar tax plans.
Lynden Air Freight, which filed the request for appeal, has paid Hawaii
more than $500,000 in back taxes awarded from the ruling, in addition to
several hundred thousand dollars in legal fees.
United Parcel Service, which has paid Hawaii about $344,000 in similar
taxes, was watching the Lynden case closely. The deadline for UPS to file
an appeal to the Supreme Court has passed.
UPS "believes that the state’s application of this tax is wrong,"
said
Norman Black, a UPS spokesman. "But you have to weigh the cost of bringing
an appeal. Just look at the company that did try to appeal. They didn’t get
very far.
Black said the Hawaii tax case is unique and will not be followed by
other states that seek to encourage business. "We do not believe that this
is going to be emulated by the rest of the 48 states," he said.