Supreme Court Upholds Multi-State Vehicle Tax Ruling

The Connecticut Supreme Court has upheld the constitutionality of taxing a Massachusetts-based company’s vehicles in Connecticut.

In a unanimous decision released Dec. 19, the court determined a Connecticut town’s tax on vehicles owned and registered in Massachusetts was not unconstitutional.

The court upheld an earlier trial court decision that the town of Somers did not violate the U.S. Constitution by taxing the Massachusetts vehicles that leave and return each day.

The lsuit was brought by Alico, LLC, a Massachusetts-based landscape construction company with offices in Ludlow, Massachusetts and Somers.

The company owns two vehicles for business use that were driven daily and garaged each evening at the business owners’ home in Somers.

Tax Assessment

In 2018, the Somers’ tax assessor became aware the vehicles were registered in Massachusetts and began assessing the motor vehicle property tax for both vehicles.

The owners of Alico, LLC appealed, arguing that the dormant commerce clause of the U.S. Constitution prohibited the town from taxing a vehicle registered and taxed in Massachusetts.

The Supreme Court, however, ruled that the law was not discriminatory because Connecticut taxed vehicles based on their physical presence and duration of stay in the state while Massachusetts taxed vehicles based on registration.

The court found that although the company faced multiple taxation on the vehicles, that “was not the result of a discriminatory tax scheme but, rather, was caused by the plaintiffs’ own business decisions.”

This ruling may impact how businesses register and store vehicles for business use given the potential local motor vehicle property tax implications in Connecticut.

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For more information, contact CBIA’s Chris Davis.