U.S. Supreme Court vacates and remands Texas decision striking down tax on domestically owned cargo containers used in international shipping.

• Author: Lippman, Michael H.

On Mar. 8, 1993, the U.S. Supreme Court vacated the Texas Court of Appeals' decision in Harris County Appraisal District v. Transamerica Container Leasing, Inc., 821 SW 2d 63 7 (Tex. Ct. App. 1991), appeal docketed, No. 92-973 (1993), and remanded the case back to the Texas court for further consideration. The Texas Court of Appeals had previously held that the assessment of ad valorem property tax on shipping containers used in international commerce owned by a domestic corporation violated the Foreign Commerce Clause of the U.S. Constitution because of the substantial risk of multiple international taxation.

The Supreme Court directed the Texas Court of Appeals to consider the Court's recent holding in Itel Containers International Corporation, 113 S. Ct. 1095 (1993). In Itel, the Supreme Court upheld the validity of the Tennessee sales tax on leases of containers owned by a domestic company and used exclusively in international commerce. The Court easily concluded that there was no substantial risk of international multiple taxation because the sales tax at issue was imposed on a discrete transaction occurring within the state. Moreover, the state in Itel provided a credit against its own tax for any tax paid in another jurisdiction on the same transaction.

The issue in Transamerica Container is whether the ad valorem property tax on domestically owned international cargo containers, despite...