WEST VIRGINIA will continue collecting severance taxes on coal destined for export.
The US constitution bars states from taxing imports or exports without the consent of Congress. The West Virginia Supreme Court held in a 3-to-2 decision in December that the state is not barred from collecting a 5% severance tax on coal mined in the state, even when the coal will be sold overseas. The state was at risk of having to refund nearly $500 million in back taxes and interest to coal companies. Between 14% and 21% of coal mined in the state is sold abroad. The court said that the tax is collected on the activity of mining and processing in West Virginia, and coal does not enter the export stream until after processing. Eleven coal and steel companies brought suit seeking refunds.
The decision is expected to be appealed to the US Supreme Court. The case is US Steel Mining Company LLC v. Helton.