United States v. International Business Machines Corp., 517 U.S. 843 (1996)

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certiorari to the united states court of appeals for the federal circuit

No. 95-591. Argued March 18, 1996—Decided June 10, 1996

Pursuant to 4371 of the Internal Revenue Code, respondent International

Business Machines Corporation (IBM) paid a tax on insurance premiums remitted to foreign insurers to cover shipments of goods to its foreign subsidiaries. When its refund claims were denied, IBM filed suit in the Court of Federal Claims, contending that 4371's application to policies insuring export shipments violated the Export Clause, which states that "[n]o Tax or Duty shall be laid on Articles exported from any State." The court agreed, rejecting the Government's argument that Thames & Mersey Marine Ins. Co. v. United States, 237 U. S. 19—in which this Court held that a federal stamp tax on policies insuring marine risks could not, under the Export Clause, be constitutionally applied to policies covering export shipments—had been superseded by subsequent decisions interpreting the Import-Export Clause, which states in relevant part, "No State shall . . . lay any Imposts or Duties on Imports or Exports." The Court of Appeals affirmed.

Held: The Export Clause prohibits assessment of nondiscriminatory federal taxes on goods in export transit. Pp. 846-863. (a) While this Court has strictly enforced the Export Clause's prohibition against federal taxation of goods in export transit and certain closely related services and activities, see, e. g., Thames & Mersey, supra, it has not exempted pre-export goods and services from ordinary tax burdens or exempted from federal taxation various services and activities only tangentially related to the export process, see, e. g., Cornell v. Coyne, 192 U. S. 418. Conceding that the tax assessed here violates the Export Clause under Thames & Mersey, the Government asks that the case be overruled because its underlying theory has been rejected in the context of the Commerce and Import-Export Clauses and those Clauses have historically been interpreted in harmony with the Export Clause. Pp. 846-850. (b) When this Court expressly disavowed its early view that the dormant Commerce Clause required a strict ban on state taxation of interstate commerce, Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 288-289, it resolved a long struggle over the meaning of the nontextual negative command of that Clause. The Export Clause, on the other


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