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Court Says Railroad Can Challenge Alabama Tax

Washington, D.C. – The Supreme Court says a railroad company can challenge an Alabama tax of its purchase of diesel fuel.

The high court on a 7-2 vote overturned a decision by a federal appeals court that allowed Alabama to place a sales and use tax on CSX Transportation's purchase of diesel.

The railroad company argued that the tax was illegal. The law says states cannot put a tax on railroads that are not also charged to their main competitors, motor and water carriers. Water and motor carriers are not charged the 4 percent tax.

But the 11th U.S. Circuit Court of Appeals said the railroad could not challenge the state's decision to levy the tax. The high court disagreed.

The case is CSX Transportation Inc., v Alabama Department of Revenue, 09-520.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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