WASHINGTON -- The Supreme Court agreed yesterday to consider a Justice Department request to give federal and state governments more power to tax American goods sent overseas.
The department asked the court to allow taxes on exporters, so long as the tax does not single out exports themselves and does not discriminate against goods destined for overseas.
So long as a tax law is general in scope, the department contended, its application to exports should not violate the Constitution's export clause. That clause says that "no tax or duty shall be laid on articles exported from any state."
One issue the court will consider, in a case involving equipment exports by International Business Machines Corp., is whether to overrule a 1915 decision that has barred most taxes that amount to a tax on exports.
The Justice Department has argued that the 1915 decision is out date under modern tax theory and has suggested that the export clause should now be interpreted more liberally.
The dispute centers on a claim by IBM for a refund of $1.5 million in taxes and interest levied under a 1942 law. That law set a 4 percent tax on each dollar that an American company pays to a foreign insurance company to cover goods sent abroad.
The Internal Revenue Service assessed IBM for casualty insurance premiums it paid to foreign companies to insure computer equipment shipments out of this country to foreign buyers or IBM subsidiaries abroad. IBM paid the tax but sued for a refund, claiming that the tax, in effect, fell on the exports themselves.