Alabama’s Water Carrier Exemption Violates a Federal Act

Friday, April 6th, 2018

 
 
Water carrier (barge).
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Alabama
Transportation

The United States Court of Appeals recently ruled that the sales and use tax exemption for fuel used by water carriers violates the Railroad Revitalization and Regulatory Reform Act (4-R Act) because it discriminates against rail carriers.

Alabama's tax scheme imposes either a sales or use tax on rail carriers when they buy or consume diesel fuel but exempts motor and water carriers from those taxes. Motor carriers must pay a roughly equivalent fuel-excise tax on the sale and use of diesel fuel. However, there is no roughly equivalent tax imposed on water carriers. Water carriers include commercial ships, vessels, and barges.

The 4-R Act prohibits states from imposing a tax discriminates against a rail carrier. The court ruled that the state's water carrier exemption discriminates against rail carriers and therefore violates the 4-R Act.

https://www.ttrus.com/Water Carrier Exemption


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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

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