USVI Appeals Lower Court Finding That Excise Taxes on US Goods Are Unconstitutional

The U.S. Virgin Islands government recently appealed to the U.S. Court of Appeals for the 3rd Circuit a lower court decision finding that excise taxes it collects on goods imported from other parts of the U.S. are unconstitutional. The Sept. 28 decision in Virgin Islands federal district court found the U.S. territory’s collection of excise taxes on domestic imports violates the commerce clause of the Constitution. U.S.V.I. law provides for collection of excise tax on goods in the Caribbean island chain, but the territorial government never implemented regulations to implement the law and the territory’s customs and tax authorities only collect the excise tax on imports, foreign and domestic. Reefco filed the underlying complaint, seeking refunds on taxes it paid on boat parts. On appeal, the Virgin Islands government will raise the issue of whether the commerce clause extends to U.S. territories, it said in an Oct. 26 filing with the appeals court.