Automakers and their suppliers have been paying a tax on exports for years, and now they want the money back. No dice, says Uncle Sam.
The sides are at odds over the so-called harbor maintenance tax. That federal levy amounts to 0.125 percent on the value of export cargo shipped through seaports. The government insists the levy is not really a tax, but a user fee; thus, the Constitution's forbidding of exports or duties from states does not apply.
Last month, an appeals court upheld a decision that the tax is unconstitutional and ordered the government to pay refunds.
The government may appeal to the U.S. Supreme Court.
Esoteric and small as the tax may seem, the figures are large, even on a scale of automotive and federal dollars. Attorney Robert Eisen, who represents the carmakers, says over the past two years alone the industry has paid out hundreds of millions of dollars it should have been able to keep. Refunds are in order, he contends, while warning that claim time may be running out fast under statutes of limitation.
Automotive exports are substantial today, and are expected to climb significantly as companies like BMW and Mercedes-Benz use assembly plants in the United States to supply far-flung and growing world markets.
'You can't tell the dollar amount from the complaint, but the total for all exporters, not just the car industry, is in the billions of dollars,' said Eisen, who heads the customs and international trade practice at Coudert Brothers. That New York law firm represents the Big 3, Toyota, Nissan, Honda, Mazda and other makers of vehicles and parts, Eisen said.
Opponents say the tax, collected since 1991 by the U.S. Customs Service, is unconstitutional. And it is not a user fee because it is based on the value of exports with no bearing on harbor use.
The tax was imposed by Congress as part of the Water Resources Development Act of 1986. Funds are to be used for harbor dredging.
In 1995, the U.S. Court of International Trade in New York ruled in favor of tax opponents.
In February, the appeal went before the U.S. Court of Appeals for the Federal Circuit in Washington. Last month the appeals court upheld the decision favoring those who had paid the tax.
The trade court had said refunds, with interest, could be collected for two years back from the date a taxpayer filed in court. GM filed in late 1994 and was among the first to do so, Eisen said.
The Justice Department, representing the Customs Service, has until October to appeal the appeals court ruling. The department declined to say what its plans are.
In 1995, 698,067 vehicles worth $11.3 billion were exported from the United States to destinations excluding Canada and Mexico, the American Automobile Manufacturers Association reports.