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appealtrialcorporationregulationappellantappellee
jurisdictionappealcorporationregulationappellant

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Xerox Corp. v. Harris County, Tex., 459 U.S. 145, 103 S.Ct. 523, 74 L.Ed.2d 323, 4 ITRD 1193

Facts

Appellant, a New York corporation that manufactures and sells copying machines, shipped machine parts to Mexico City for assembly by its affiliate. After assembly, the copiers were transported to a customs bonded warehouse in Houston, Texas, where they were stored under the supervision of the United States Customs Service. In 1977, the City of Houston and Harris County assessed ad valorem personal property taxes on the copiers stored in the warehouse. Appellant sought declaratory and injunctive relief, claiming the taxes were unconstitutional, but the Texas Court of Civil Appeals reversed the trial court's decision and granted judgment to the appellees.

Appellant, a New York corporation that manufactures and sells copying machines, shipped machine parts manufactured in this country to Mexico City, Mexico, for assembly by its affiliate there. After assembly, the copiers were transported by a customs bonded trucking company to a customs bonded warehouse in Houston, Tex., where they were segregated from other merchandise and stored while awaiting sale and shipment to appellant's affiliates in Latin America.

Issue

Whether a state may impose nondiscriminatory ad valorem personal property taxes on imported goods stored under bond in a customs warehouse and destined for foreign markets.

We noted probable jurisdiction to decide whether a state may impose nondiscriminatory ad valorem personal property taxes on imported goods stored under bond in a customs warehouse and destined for foreign markets.

Rule

State property taxes on goods stored under bond in a customs warehouse are preempted by Congress' comprehensive regulation of customs duties, which allows imports to be stored duty-free in government-supervised bonded warehouses.

State property taxes, such as those involved here, on goods stored under bond in a customs warehouse are pre-empted by Congress' comprehensive regulation of customs duties.

Analysis

The court determined that the comprehensive customs system established by Congress allows for the storage of imported goods in bonded warehouses without the imposition of state taxes. The goods in question were under the continuous control and supervision of the United States Customs Service, and allowing state taxation would undermine the federal scheme designed to encourage the use of American ports for international trade.

Accordingly, we hold that state property taxes on goods stored under bond in a customs warehouse are preempted by Congress's comprehensive regulation of customs duties.

Conclusion

The Texas Court of Civil Appeals' judgment was reversed, and the case was remanded for proceedings not inconsistent with the Supreme Court's opinion.

The judgment of the Texas Court of Civil Appeals is reversed, and the case is remanded for proceedings not inconsistent with this opinion.

Who won?

Xerox Corporation prevailed in the case because the Supreme Court found that the imposition of state property taxes on goods stored in customs bonded warehouses was preempted by federal law.

Xerox Corporation prevailed in the case because the Supreme Court found that the imposition of state property taxes on goods stored in customs bonded warehouses was preempted by federal law.

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