Oral Arguments before the Intermediate Court of Appeals
No. 29598 – Wednesday, May 12, 2010 at 10:15 A.M.
In the Matter of the Tax Appeal of REEL HOOKER SPORTFISHING, INC., Plaintiff-Appellant, v. DEPARTMENT OF TAXATION, STATE OF HAWAII, Defendant-Appellee (TAX APPEAL CASE NO. 07-0072) and EXACT GAME FISHING, INC., Plaintiff-Appellant, v. DEPARTMENT OF TAXATION, STATE OF HAWAII, Defendant-Appellee (TAX APPEAL CASE NO. 07-0073) and FINEST KIND, INC., Plaintiff-Appellant v. DEPARTMENT OF TAXATION, STATE OF HAWAII, Defendant-Appellee (TAX APPEAL CASE NO. 07-0074).
Attorney(s) for Plaintiffs-Appellants
Dennis Niles and Shannon S. Imlay (Paul Johnson Park & Niles)
Attorney(s) for Defendant-Appellee
Honorable Mark J. Bennett, Attorney General and Hugh R. Jones and Damien A. Elefante, Deputies Attorney General
COURT: Foley, Fujise and Leonard, JJ.
SPECIAL NOTE: The above argument will take place in the Supreme Court courtroom on the Second Floor of Aliʻiolani Hale, 417 South King Street, Honolulu, Hawaii.
Plaintiff-Appellants, Reel Hooker Sportfishing, Inc., Exact Game Fishing, Inc., and Finest Kind, Inc. (collectively, the Taxpayers) appeal from a December 22, 2008 order of the Land and Tax Appeal Court. The Taxpayers sought a refund for amounts paid pursuant to Hawaii Revised Statutes (HRS) § 40-35, claiming that the State Department of Taxation improperly imposed Hawaii’s General Excise Tax (GET) under HRS § 237-13(6)(A) on the ground that it is preempted by 33 U.S.C. § 5(b), which states, in relevant part:
No taxes, tolls, operating charges, fees, or any other impositions whatever shall be levied upon or collected from any vessel or other water craft, or from its passengers or crew, by any non-Federal interest, if the vessel or water craft is operating on any navigable waters subject to the authority of the United States, or under the right to freedom of navigation on those waters[.]
The Tax Appeal Court rejected the Taxpayers’ preemption argument and construed 33 U.S.C. § 5(b) to allow assessment of GET on charter revenue, as a privilege tax on the Taxpayers’ business. On appeal, the Taxpayers, and amicus curiae, argue that the Tax Appeal Court erred in construing 33 U.S.C. § 5(b) to allow assessment of GET on the earnings of the Taxpayers’ vessels operating on navigable waters on the grounds that the federal law expressly preempts the GET, the federal law fully occupies the field of maritime safety thus precluding the State from imposing additional burdens and undermining federal policy, and/or the GET statute directly conflicts with the federal law and is therefore void to the extent of that conflict.