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Immunity of Veterans Administration Medical Facilities From Alabama State Utility License Tax

Date of Issuance:

The utility license tax imposed by the State of Alabama on public utilities operating within that State, whose economic burden is passed on by the utilities to their customers by order of the state public utility commission, is constitutionally valid as applied to federal agencies, since its legal incidence falls on the utilities and not on their customers.

In determining whether the legal incidence of a state tax was intended by the legislature to fall upon the federal government, and is thus prohibited under the Supremacy Clause, a tax scheme as a whole and the context in which it operates, as well as the terms of the taxing statute, must be considered.

The fact that the terms of the taxing statute do not require the tax to be passed on to customers, and do not provide a mechanism for doing so, is indicative of the legislature’s intent that the incidence of the license tax remain on the utilities.

Updated July 9, 2014