One of ZS&R’s most successful practice areas has been litigation challenging state taxes and fees on constitutional or other grounds. Over the past 15 years, ZS&R attorneys have filed and prosecuted to conclusion 17 lawsuits contending that various state taxes and fees violated federal constitutional provisions or statutes. We have prevailed in every case we have concluded to date.

Most of the cases involved state taxes or fees related to transportation activities. Most were brought as class actions on behalf of all companies and individuals subject to the tax or fees, typically thousands of entities, and they resulted in the payment of more than $65 million in refunds of taxes and fees and interest to the taxpayers and feepayers.

A brief description of each case, including citations to cases with reported decisions, follows, starting with the most recent case completed:

• American Bus Association, Inc. v. District of Columbia, Docket No. 7636-98 (D.C. Superior Ct., filed August 21, 1998).

This suit challenged the District of Columbia’s fee on intercity buses on the grounds that it discriminated against interstate commerce. The first business day after the suit was filed, the District rescinded the fee. The parties are negotiating refunds of fees paid by the carriers.

• National Private Truck Council, Inc. v. Commissioner of Revenue of Massachusetts, 426 Mass 324, 688 N.E.2d 936 (1997), cert. denied, 523 U.S. 1137 (1998).

This suit obtained declaratory relief against regulations of Massachusetts Department of Revenue that applied Massachusetts’ corporate excise tax (an income tax) to the income of out-of-state corporations whose only activity in Massachusetts was soliciting sales orders and filling those orders by delivering ordered goods to Massachusetts purchasers in the sellers’ own trucks. The courts held that the regulations violated a federal statute, Pub. Law 86-272, codified at 15 U.S.C. § 381, enacted in 1959 to immunize from state taxation income of out-of-state companies with limited activities in the taxing state.

• Commonwealth of Virginia Department of Taxation v. National Private Truck Council, Inc., 253 Va. 74, 480 S.E.2d 500 (1997).

Suit obtained declaratory relief against regulations of Virginia Department of Taxation that applied Virginia’s corporate income tax to the income of out-of-state corporations whose only activity in Virginia was soliciting sales orders and filling those orders by delivering ordered goods to Virginia purchasers in the sellers’ own trucks. As in the Massachusetts case, the Virginia courts held that the regulations violated Pub. Law 86-272, codified at 15 U.S.C. § 381.

• National Private Truck Council v. Oklahoma Tax Commission, 515 U.S. 582 (1995).

Class action suit obtained injunctive and declaratory relief and tax refunds with interest against an Oklahoma "retaliatory" tax imposed on certain trucking companies operating in Oklahoma – namely, those operating vehicles registered in certain designated states that imposed truck taxes disfavored by Oklahoma. The Oklahoma Supreme Court held Oklahoma’s tax violated the Commerce Clause of the United States Constitution, and ordered State to pay refunds and interest to all taxpayers. $5.5 million in refunds has been paid. Oklahoma Supreme Court denied plaintiffs’ additional claim for attorneys fees pursuant to 42 U.S.C. §§  1983 and 1988, and U.S. Supreme Court affirmed, holding 42 U.S.C. § 1983 does not apply to cases challenging state taxes.

• Felix v. Indiana Department of Revenue, 571 N.E.2d 287 (1991).

Class action suit challenged Indiana Intangibles Tax, an ad valorem property tax on intangible property (securities, etc.) as violating Commerce Clause because it exempted certain securities issued by Indiana corporations. Although the Indiana Supreme Court upheld the tax, the State agreed to settle after plaintiffs filed a petition for U.S. Supreme Court review. The settlement resulted in approximately $10 million in tax refunds to the class.

• Dennis v. Higgins, 498 U.S. 439 (1991)

Class action suit obtained injunctive and declaratory relief against a Nebraska retaliatory tax imposed on certain trucking companies operating in Nebraska. The Nebraska Supreme Court held Nebraska’s tax violated Commerce Clause of the United States Constitution, but held taxpayers had no cause of action under 42 U.S.C. § 1983 because Commerce Clause violations do not violate personal constitutional rights. U.S. Supreme Court reversed the latter holding.

• O’Connell Management Co., Inc. v. Massachusetts Port Authority, No. 90-10908-MA (D. Mass. filed April 9, 1990).

Suit challenged landing fees promulgated by Massport for Logan International Airport as discriminating against smaller aircraft in violation of Federal laws regulating airport fees. Settlement with Massport resulted in revision of fees and refunds of over $3 million to feepayers.

• State Department of Revenue v. Private Truck Council of America, 531 So.2d 367 (Fla. Dist. Ct. App., 1988).

Class action suit obtained injunctive and declaratory relief and refunds of escrowed taxes and interest of a Florida retaliatory tax imposed on certain trucking companies operating in Florida. Florida courts held that the tax violated Commerce Clause and ordered the refund to taxpayers of $ 9 million in taxes and accrued interest held in escrow, per the trial court’s order at the outset of the case.

• State v. Private Truck Council, 258 Ga. 531, 371 S.E.2d 378 (1988).

Class action suit obtained injunctive and declaratory relief and refunds of escrowed taxes and interest of a Georgia retaliatory tax imposed on certain trucking companies operating in Georgia. Georgia courts held that the tax violated Commerce Clause and ordered the refund to taxpayers of $ 7.1 million in taxes and accrued interest held in escrow, per the trial court’s order at the outset of the case.

• Private Truck Council v. State, 111 N.J. 214, 544 A.2d 33 (1988).

Class action suit obtained injunctive and declaratory relief and refunds of escrowed taxes and interest of a New Jersey retaliatory tax imposed on certain trucking companies operating in New Jersey. The New Jersey courts held that the tax violated Commerce Clause and ordered the State to refund all taxes collected (more than $9 million) plus interest to all taxpayers.

• Private Truck Council v. State, 128 N.H. 466, 517 A.2d 13 (1986).

Class action suit obtained injunctive and declaratory relief and refunds of escrowed taxes and interest of a New Hampshire retaliatory tax imposed on certain trucking companies operating in New Hampshire. The New Hampshire Supreme Court held that the tax violated Commerce Clause and ordered the refund to taxpayers of $ 151,000 in taxes and accrued interest held in escrow, per the trial court’s order at the outset of the case.

• Private Truck Council v. Secretary of State, 503 A.2d 214 (Me.), cert. denied, 476 U.S. 1129 (1986).

Class action suit obtained injunctive and declaratory relief and refunds of escrowed taxes and interest of a Maine retaliatory tax imposed on certain trucking companies operating in New Maine. The Maine courts held that the tax violated Commerce Clause and ordered the refund to taxpayers of $ 367,000 in taxes and accrued interest held in escrow, per the trial court’s order at the outset of the case.

• Owner Operators Independent Drivers Association v. New Hampshire, Hillsborough Superior Court, No. 85-E-377, Order of March 30, 1987.

Class action suit for motor carriers obtained injunctive and declaratory relief and refunds of fuel decal fees imposed by New Hampshire on trucks operating in New Hampshire that were registered in other states. The trial court held that fee violated Commerce Clause and ordered the refund to feepayers of $1.3 million in taxes and accrued interest held in escrow, per the trial court’s order at the outset of the case.

• Owner Operators Independent Drivers Association v. Kentucky, Franklin Circuit Court, No. 86-CI-0149, Order of January 28, 1987.

Class action of motor carriers challenging fees imposed by Kentucky to register interstate operating authority. Court held fees were contrary to federal statute and regulations and ordered the State to pay $356,000 in refunds to feepayers.

• Owner Operators Independent Drivers Association v. Rhode Island, Superior Court of Providence County, C.A. No. 85-2967, Order of April 16, 1986.

Class action of motor carriers challenging fees imposed by Rhode Island to register interstate operating authority. Court-approved settlement resulted in $75,000 in refunds to feepayers.

• Private Truck Council of America v. Louisiana, District Court of East Baton Rouge Parish, No. 389,481, Order of December 18, 1985.

Class action obtained injunctive and declaratory relief and refunds of fees imposed on out-of-state private carriers operating in Louisiana. Trial court held fees violated Commerce Clause and ordered the State to refund $391,000 to feepayers.

• Owner Operators Independent Drivers Association v. Oklahoma, District Court of Oklahoma County, No. CJ-84-8804, Order dated May 3, 1985.

Class action of motor carriers challenging fees imposed by Oklahoma to register interstate operating authority. Court-approved settlement resulted in $183,000 in refunds to feepayers.

• Huie v. Private Truck Council of America, 466 N.E.2d 435 (Ind. 1984).

Class action obtained injunctive and declaratory relief and refunds of ad valorem property tax imposed on trucks operating in interstate commerce in Indiana. The Indiana courts held that tax violated the Commerce Clause and ordered refunds to taxpayers of $20 million in taxes and accrued interest that had been held in escrow pursuant to the trial court’s order at outset of case.