Out-of-state trucking businesses that go into New York can thank small-business truckers for standing up to an unconstitutional tax and decal fee. The Owner-Operator Independent Drivers Association (OOIDA) won a class-action lawsuit against the state and the fee will no longer be enforced.
The Association challenged the taxes as unconstitutional and discriminatory against out-of-state truckers who have paid the taxes in order to do business or travel in New York. The state’s Supreme Court agreed and declared the fees invalid and unenforceable.
OOIDA had argued that the fees constituted an undue burden on interstate commerce in violation of the Commerce Clause of the US Constitution. The taxes were imposed not only on New York-based trucks, which are driven proportionately higher miles in New York, but also on trucks based outside of New York, which are driven mostly in states other than New York.
The Association held that trucks owned and/or operated outside of New York travel fewer miles on New York highways than trucks owned and/or operated in New York. The imposition of the challenged taxes results in a higher per mile tax rate being imposed on out-of-state trucks.
OOIDA’s action also asked for refunds and other appropriate relief on behalf of the plaintiffs. OOIDA President and CEO Jim Johnston said the next step is to submit a memorandum to the court regarding damages, class administration, and attorney’s fees. Johnston said the award could be “up to $20 million or so.”
“A number of similar tax cases were fought against states back in the 80s and 90s and the states lost every one of them,” Johnston said. “Given that history, we were shocked that New York even thought they could get away with this unconstitutional tax. The amount for the New York HUT/decal is $19, which is not huge, but if other states were to implement this tax, it would be huge--collectively and in administrative costs.”
OOIDA’s legal action represents a class of all interstate motor carriers who reside and operate trucking equipment primarily outside New York that have paid or will pay the taxes.