United States v. International Business Machines Corporation (517 U.S. 843)
U.S. Supreme Court · decided June 10, 1996 · Supreme Court Database (Spaeth)
- Citation
- 517 U.S. 843 · 116 S. Ct. 1793
- Decided
- June 10, 1996
- Term
- October Term 1995
- Vote
- 6–2
- Majority author
- Justice Thomas
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Conservative
- Constitutional ruling
- Federal law held unconstitutional
Opinion excerpt
Justice Thomas delivered the opinion of the Court. We resolve in this case whether the Export Clause of the Constitution permits the imposition of a generally applicable, nondiscriminatory federal tax on goods in export transit. We hold that it does not. I Section 4371 of the Internal Revenue Code imposes a tax on insurance premiums paid to foreign insurers that are not subject to the federal income tax. 26 U. S. C. § 4371 (1982 ed.). International Business Machines Corporation (IBM) ships products that it manufactures in the United States to numerous foreign subsidiaries and insures those shipments against loss. When the foreign subsidiary makes the shipping arrangements, the subsidiary often places the insurance with a foreign carrier. When it does, both IBM and the subsidiary are listed as beneficiaries in the policy. IBM filed federal excise tax returns for the years 1975 through 1984, but reported no liability under §4371. The Internal Revenue Service (IRS) audited IBM and determined that the premiums paid to foreign insurers were taxable under § 4371 and that IBM — as a named beneficiary of the insurance policies — was liable for the tax. The IRS assessed a tax against IBM for each of those years. IBM paid the assessments and filed refund claims, which the IRS denied. IBM then commenced suit in the Court of Federal Claims, contending that application of §4371 to…
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