Supreme Court Denies Virginia Airport Duty-Free Tax Dispute

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By Ryan Prete

The U.S. Supreme Court won’t reconsider a nearly 75-year-old decision that prohibits states and localities from imposing sales tax on exported international items.

The high court denied review April 2 of Loudoun County, Va. v. Dulles Duty Free LLC, which concerned a local government’s ability to tax international sales in duty-free shops at Virginia’s Dulles International Airport. The controlling law in this area comes from the Supreme Court’s 1946 opinion in Richfield Oil Corp. v. State Bd. of Equalization.

The high court’s denial allows the current rule to stand, which is a victory for Dulles’ duty-free stores.

Richard D. Pomp, the Alva P. Loiselle Professor of Law at the University of Connecticut School of Law, told Bloomberg Tax that the Supreme Court may think it has enough on its plate in terms of state tax. Oral argument is set for April 17 in South Dakota v. Wayfair—a direct challenge to the 1992 ruling in Quill Corp v. North Dakota prohibiting the imposition of sales tax on digital interstate purchases.

“The duty-free issue will likely come up again in the future,” Pomp said. “The high court may think they’ve done enough for state and local taxation with the Wayfair case, but it’s always difficult on what to make of a cert denial.”

Pomp said that while the court’s decision was disappointing, the Supreme Court’s composition could change in the next five years—with possible retirements of Justices Ruth Bader Ginsburg and Anthony Kennedy—and the door could open for more state tax cases.

Pomp was among a coalition of 19 tax lawyers that filed a a Jan. 25 friend-of-the-court brief urging the high court to rule in favor of Virginia, undo Richfield Oil, and allow states and localities to benefit from untapped duty-free tax revenue.

Journey to High Court

In August 2017, the Supreme Court of Virginia reversed a lower court ruling that Dulles Duty Free LLC must collect Loudoun County’s Business, Professional, and Occupational License tax on the gross receipts of its sales to international travelers. The Circuit Court of Loudoun County had found no violation of the U.S. Constitution’s Import-Export Clause.

Duty Free, which operates several stores in Dulles Airport, didn’t challenge the imposition of the tax on its domestic sales, according to the court opinion. However, it challenged the constitutionality of the imposition of the tax on transactions with international travelers.

To contact the reporter on this story: Ryan Prete in Washington at

To contact the editor responsible for this story: Ryan C. Tuck at

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