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Keywords

appeal
respondentdeclaratory judgment

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Department of Revenue of State of Wash. v. Association of Washington Stevedoring Companies, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682, 1978 A.M.C. 1070

Facts

The case arose when the Department of Revenue of the State of Washington adopted a revised rule applying its business and occupation tax to stevedoring services, which had previously been exempt. The Association of Washington Stevedoring Companies and the Washington Public Ports Association challenged this rule in court, arguing that it violated both the Commerce Clause and the Import-Export Clause of the U.S. Constitution. The Superior Court ruled in favor of the associations, declaring the tax invalid for interstate and foreign commerce, leading to an appeal by the Department of Revenue.

Seeking to retain their theretofore-enjoyed exemption from the tax, respondents in January 1975 sought from the Superior Court of Thurston County, Wash., a declaratory judgment to the effect that Revised Rule 193D violated both the Commerce Clause and the Import-Export Clause.

Issue

Did the application of Washington's business and occupation tax to stevedoring activities violate the Commerce Clause and the Import-Export Clause of the U.S. Constitution?

Did the application of Washington's business and occupation tax to stevedoring activities violate the Commerce Clause and the Import-Export Clause of the U.S. Constitution?

Rule

A state may tax the privilege of conducting interstate business as long as the tax is fairly apportioned, does not discriminate against interstate commerce, and is related to services provided by the state.

A State under appropriate conditions may tax directly the privilege of conducting interstate business.

Analysis

The Washington Supreme Court applied the principles established in Complete Auto Transit, Inc. v. Brady, determining that the business and occupation tax did not violate the Commerce Clause. The court found that the tax was levied solely on the value of services performed within the state and that it did not impose multiple burdens on interstate commerce. The court also concluded that the tax was fairly related to the services provided by the state, thus meeting the constitutional requirements.

The Washington Supreme Court, with two justices dissenting, affirmed the judgment of the Superior Court.

Conclusion

The Washington Supreme Court reversed the Superior Court's judgment, holding that the business and occupation tax on stevedoring did not violate the Commerce Clause or the Import-Export Clause.

The Washington business and occupation tax does not violate the Commerce Clause by taxing the interstate commerce activity of stevedoring within the State.

Who won?

The Department of Revenue of the State of Washington prevailed in the case, as the Washington Supreme Court upheld the validity of the business and occupation tax on stevedoring activities.

The Department of Revenue of the State of Washington adopted Revised Rule 193, pt. D, Wash.Admin.Code 458–20–193–D, to implement the State's 1% business and occupation tax on services.

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