Newspaper article The Florida Times Union

High Court Hears Debate in Taxing Gambling Ships; Case May Set Precedent for Local Casino Lines

Newspaper article The Florida Times Union

High Court Hears Debate in Taxing Gambling Ships; Case May Set Precedent for Local Casino Lines

Article excerpt

Byline: J. Taylor Rushing, Times-Union staff writer

TALLAHASSEE -- A multimillion dollar tug of war between Florida's Department of Revenue and the state's various casino cruise ships has reached the Supreme Court in a case that may set a costly precedent for Jacksonville's two casino lines.

SunCruz and La Cruise are among the companies likely to be impacted by the state's lawsuit against Fort Lauderdale-based New Sea Escape. The lawsuit is considered the lead case in a dispute over whether the companies owe state taxes on cruises that travel beyond the state's territorial waters before returning.

Florida's 18 casino cruise lines traditionally travel beyond the state's territorial waters, which extend 3 miles off the Atlantic coast and 9 miles into the Gulf of Mexico, to allow passengers to legally gamble. State attorneys say the companies should be paying Florida's 6 percent use tax on food, drinks and other items distributed aboard the ships, based on the theory that state law should apply within the 12-mile federal waters limit.

Company attorneys say the items are not being sold and that the transactions are non-taxable because they occur beyond Florida's 3-mile limit of territorial waters.

SunCruz Marketing Director Steven Rinaldi said his company has not been sued by the state but is watching the case.

"These revenues are being earned in international waters, and the state is not entitled to the tax," Rinaldi said. "We're taking a wait-and-see approach to see what happens next."

La Cruise executives could not be reached for comment.

During a Supreme Court hearing Thursday, justices quizzed attorneys closely, expressing skepticism on both sides of the issue.

Revenue department attorney Nicholas Bykowsky told justices the cruises should be fully taxable.

"A cruise to nowhere starts in Florida, it does not go to any foreign jurisdiction, and it returns to Florida," Bykowsky said. …

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