SUPREME COURT OF MISSOURI 

en banc 

COMMERCIAL BARGE LINE COMPANY, ) 

and AMERICAN COMMERCIAL BARGE ) 

LINE, LLC, N/K/A AMERICAN COMMERCIAL ) 

LINES, LLC, ) 

 ) 

 Appellants, ) 

 ) 

v. ) No. SC93448 

 ) 

DIRECTOR OF REVENUE, ) 

 ) 

 Respondent. ) 

PETITION FOR REVIEW OF A DECISION OF THE ADMINISTRATIVE HEARING 

COMMISSION

The Honorable Karen A. Winn, Commissioner 

Opinion issued April 29, 2014 

 Commercial Barge Line (CBL) and American Commercial Barge Line (ACBL) 

(collectively referred to as Taxpayers) seek review of the Administrative Hearing 

Commission’s (AHC) determination that they owed Missouri sales and use tax on goods 

and supplies delivered to ACBL’s towboats while the towboats traveled south on the 

Mississippi River. Taxpayers contend the assessments violated the Commerce Clause 

because they are not fairly related to any services Missouri provides Taxpayers. They 

also claim that the taxes violate the Maritime Transportation Security Act, 33 U.S.C. 
§ 5(b) (2006), which prohibits non-federal entities from assessing taxes on vessels in 

navigable waters of the United States. They further argue that the three-year statute of 

limitations in sections 144.220 and 144.7201

 bars the Department of Revenue (DOR) 

from assessing any additional tax liability for the audit period, October 1, 2001, through 

December 31, 2006. 

 This Court finds that the sales and use taxes were imposed on supplies purchased 

or used while in Missouri and did not violate the Commerce Clause as they were fairly 

related to the services the Taxpayers received from the state.2

 Further, the taxes did not 

violate the Maritime Transportation Security Act because they were assessed on ACBL’s 

purchases and deliveries of supplies, not on the towboats themselves. Last, because 

Taxpayers did not file any sales or use tax returns during the audit period, DOR was not 

barred from assessing tax liability for the audit period as section 144.220 provides no 

statute of limitations when the taxpayer does not file a return. The AHC’s decision is 

affirmed. 

Factual Background 

CBL is a Delaware corporation and the single member of two limited liability 

companies: ACBL and Louisiana Dock Company.3

 ACBL operates line-haul towboats 

that transport cargo along the Mississippi River from Minneapolis to New Orleans. 

                                                           

1

 All references are to RSMo 2000. 

2

 This Court has exclusive jurisdiction as this case involves the validity of a state statute and the 

construction of state revenue laws. Mo. Const. art. V, sec. 3. 

3

 Prior to 2005, Danielson Holding Company was the parent corporation of ACBL and Louisiana 

Dock. After it reorganized in bankruptcy in January 2005, CBL became their parent company. 

CBL is also connected to several other entities that are not relevant to this case and, therefore, 

are not discussed. 
Louisiana Dock, in turn, provides various goods and services to ACBL, including selling 

and delivering supplies to ACBL’s towboats and storing supplies purchased from thirdparty vendors until they are ready to be delivered. 

Neither CBL nor ACBL is registered to do business in Missouri and neither has 

offices or employees located in Missouri. Louisiana Dock is registered to do business in 

Missouri and has both property and employees in St. Louis. ACBL and Louisiana Dock 

are considered disregarded entities of CBL for both federal and Missouri tax purposes 

because they are limited liability companies and CBL is the only member of each 

company.

4

 However, Louisiana Dock registered in Missouri to pay sales and use tax 

under its own name, as opposed to using CBL’s name, to avoid confusion with vendors. 

Taxpayers did not file any sales or use tax returns in Missouri during the audit period. 

DOR audited CBL, ACBL, Louisiana Dock and other affiliated companies in 

2007. At issue is Taxpayers’ tax liability in two types of transactions: (1) sales tax for 

ACBL’s purchase of food and other supplies from Louisiana Dock and (2) use tax for 

ACBL’s purchases from third-party vendors who either delivered the supplies directly to 

the ACBL towboats or used Louisiana Dock to deliver the supplies. For each type of 

transaction, ACBL used the supplies exclusively on the towboats because the boats did 

not dock while in Missouri. 

                                                           

4

 A disregarded entity is a term used in the federal treasury regulations. It means that, for federal 

tax purposes, ACBL’s and Louisiana Dock’s federal taxable income is included in and reported 

by CBL. See I.R.C. § 7701; Treas. Reg. § 301.7701-3. Further, Missouri statutes provide that, 

for sales and use tax purposes, “a limited liability company and its members shall be classified 

and treated on a basis consistent with the limited liability company’s classification for federal 

income tax purposes.” Section 347.187.2. 

3 
 In the first category of transactions, Louisiana Dock purchased supplies from vendors 

to resell to ACBL. Louisiana Dock did not pay sales tax on these supplies because it 

claimed the resale exemption. When it resold the supplies to ACBL, ACBL also did not 

pay sales tax on the supplies. Instead, ACBL claimed the “in-commerce” exemption, 

using a certificate that said, “Delivers [sic] were not made in the State of Missouri and 

the purchases were not used in the State of Missouri.” 

For the second category of transactions, ACBL purchased supplies from thirdparty vendors located in Kentucky and Illinois. In some instances, the third-party 

vendors shipped the supplies to Louisiana Dock, which stored them in its facility in St. 

Louis. Louisiana Dock then delivered the supplies to ACBL’s towboats while they were 

on the Mississippi River. ACBL paid Louisiana Dock a flat hourly rate for all of the 

services it provided, including making deliveries. In other instances, the Illinois vendor 

delivered the supplies directly to ACBL’s towboats on the Mississippi River. The vendor 

charged Illinois sales tax on all supplies it delivered to northbound boats, but not on 

deliveries to southbound boats. ACBL did not pay any Missouri taxes on the supplies 

purchased from the third-party vendors. Instead, it provided “exemption certificates,” 

which stated, “Title does not pass to ACBL until the supplies have been delivered to the 

towboat which is always outside the State of Missouri.” 

DOR’s audit determined that the certificates ACBL issued to Louisiana Dock and 

the third-party vendors were issued in bad faith and assessed sales and use taxes pursuant 

to sections 144.020 and 144.610. For the supplies ACBL purchased from Louisiana 

Dock, DOR found the Taxpayers liable for $12,893.57 in sales tax and related interest 

4 
and penalties. For the supplies purchased from third-party vendors, DOR found the 

Taxpayers liable for $107,775.09 in use tax and related interest and penalties. 

Taxpayers sought review of these assessments before the AHC. The AHC 

concluded that the sales and use tax assessments did not violate the Commerce Clause 

because the supplies were either purchased or used within Missouri and the benefits 

Missouri provided to Taxpayers were fairly related to the taxes assessed. It further 

concluded that because the sales and use taxes were assessed on tangible personal 

property either purchased or used in Missouri, and not on the privilege of using the river 

or on the towboats, they did not violate the Maritime Transportation Security Act. 

Lastly, it determined that DOR’s claims were not barred by the statute of limitations 

because Taxpayers failed to file sales and use tax returns during the audit period. 

The AHC determined the proper assessment was $53,610.33 in use tax on the 

third-party vendor transactions and $4,904.82 in sales tax on transactions with Louisiana 

Dock. These amounts reflected the tax owed on approximately half of all of ACBL’s 

transactions to represent the times ACBL’s towboats traveled southbound on the 

Mississippi River in Missouri.5

 It then upheld DOR’s assessment of interest and a five 

percent addition as a penalty. Sections 144.170; 144.250; 144.665; 144.720. Taxpayers 

appeal. 

                                                           

5

 Neither party presented evidence regarding what proportion of the relevant transactions took 

place on the Missouri side of the Mississippi River. In the absence of such evidence, the AHC 

approximated that the towboats spend 50 percent of their time traveling southbound and, 

therefore, in Missouri. See Kansas City Power & Light Co. v. Dir. of Revenue, 83 S.W.3d 548, 

553 (Mo. banc 2002) (“where evidence is not sufficient to allow for a precise calculation of the 

amount of tax, then the [AHC] shall make as close an approximation as it can.” (internal 

quotation omitted)). Neither party contests this approximation. 

5 
Jurisdiction and Standard of Review 

 This Court has exclusive jurisdiction in all cases involving the validity of a state 

statute and the construction of state revenue laws. Mo. Const. art. V, sec. 3. The AHC’s 

decision will be affirmed if: (1) it is authorized by law; (2) it is supported by competent 

and substantial evidence on the whole record; (3) it does not violate mandatory 

procedural safeguards; and (4) it is not clearly contrary to the reasonable expectations of 

the General Assembly. Section 621.193; see Loren Cook Co. v. Dir. of Revenue, 414 

S.W.3d 451, 453 (Mo. banc 2013). This Court reviews the AHC’s interpretation of the 

law de novo. Loren Cook Co., 414 S.W.3d at 453. 

Tax Assessments Did Not Violate the Commerce Clause 

Taxpayers first argue that they cannot be subjected to sales or use tax under the 

Commerce Clause, which gives Congress the power to “regulate Commerce . . . among 

the several States.” U.S. Const. art I, § 8, cl. 3. While the Commerce Clause prevents 

states from discriminating against interstate commerce, “it was not the purpose of the 

commerce clause to relieve those engaged in interstate commerce from their just share of 

state tax burden.” Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). For a 

tax to survive a challenge under the Commerce Clause, it must satisfy the four criteria 

outlined in Complete Auto: the tax (1) is applied to an activity with a substantial nexus 

with the taxing state; (2) is fairly apportioned; (3) does not discriminate against interstate 

commerce; and (4) is fairly related to the services provided by the state. Id. 

Here, Taxpayers do not contest that the sales and use taxes assessed against them 

meet the first three prongs of the Complete Auto test. Rather, they suggest that the taxes 

6 
were not fairly related to the services Missouri provided because their boats did not 

receive any direct services from the state. A tax will satisfy this prong so long as the 

“incidence of the tax as well as its measure . . . [are] tied to the earnings which the State 

. . . has made possible.” Commonwealth Edison Co. v. Montana, 453 U.S. 609, 626 

(1981). The relevant inquiry is not whether the taxpayers have received any “direct 

benefits” from the state, but “whether the state has given anything for which it can ask 

return.” Id. at 622, 625. To this point, a taxpayer can be expected to contribute to a state 

for benefits “derived from his enjoyment of the privileges of living in an organized 

society.” Id. at 623. Such privileges include “police and fire protection, the use of public 

roads and mass transit, and the other advantages of civilized society.” Goldberg v. Sweet, 

488 U.S. 252, 267 (1989). 

 Taxpayers contend that they did not receive any services from the state of 

Missouri because their boats operate exclusively on the waters of the Mississippi River 

and their only connection with the state of Missouri is through Louisiana Dock. This 

argument, however, is anchored in neither law nor fact. 

The state boundary extends to the middle of the Mississippi River, and Missouri 

enjoys concurrent jurisdiction over the western half of the Mississippi River with the 

federal government. See section 7.001; Streckfus Steamers, Inc. v. City of St. Louis, 472 

S.W.2d 660, 664 (Mo. App. 1971). While Taxpayers’ boats are on the western half of the 

river, they are within the state of Missouri. The supplies delivered to the towboats while 

they are on the western portion of the river are delivered in Missouri, whether they were 

delivered by Louisiana Dock or a third-party vendor. As such, Taxpayers received the 

7 
benefit of Missouri roads and docks that facilitated the deliveries of the taxed supplies 

and from Missouri’s law enforcement and judicial systems while in this state. They also 

enjoyed these benefits when they stored supplies in Louisiana Dock’s Missouri facility. 

Importantly, the Taxpayers received these benefits by virtue of their presence in this 

state, not simply because Louisiana Dock is located in Missouri. 

 To support their argument, Taxpayers rely on American River Transportation Co. 

v. Bower, 813 N.E.2d 1090 (Ill. App. Ct. 2004). ARTCO, similar to the instant case, 

involved the question of whether a state can assess use tax on supplies consumed on 

barges that plied the eastern portion of the Mississippi River in Illinois. The ARTCO

court found that because the supplies being taxed were purchased and loaded onto 

tugboats in Missouri, the Illinois use tax failed the fairly related test. Here, however, the 

state in which the deliveries occurred seeks to assess tax liability. The supplies were 

delivered while Taxpayers’ towboats were in Missouri, and the AHC upheld sales and 

use tax assessments on the supplies delivered in Missouri. ARTCO does not support the 

position that Missouri cannot assess sales or use tax on the delivery of goods within its 

own borders. 

 Although Taxpayers argue that they do not receive any direct benefits from 

Missouri, they reap the “advantages of a civilized society.” Further, the AHC decision 

upheld sales and use tax assessments on deliveries that occurred in Missouri, so the taxes 

were tied to the earnings this “state made possible.” The sales and use taxes assessed 

against Taxpayers were fairly related to the services Missouri provides and did not 

violate the Commerce Clause. 

8 
Tax Assessments Did Not Violate the Maritime Transportation Security Act 

The Taxpayers next argue that the Maritime Transportation Security Act, codified 

at 33 U.S.C. § 5(b), prohibits Missouri from imposing any sales or use taxes on the 

supplies delivered to the towboats. That federal statute provides that “[n]o taxes . . . shall 

be levied upon or collected from any vessel or other water craft . . . by any non-Federal 

interest, if the vessel or water craft is operating on any navigable waters subject to the 

authority of the United States.” 

While the taxpayers argue that no taxes means no taxes, this argument fails to 

consider what the state is actually taxing. Missouri is not taxing the barges, towboats, or 

their crews. Rather, it is assessing sales and use tax on the goods and supplies delivered 

to the Taxpayers’ towboats while they are in Missouri. 

In this way, the instant case is similar to Reel Hooker Sportfishing, Inc. v. State 

Dep’t of Taxation, 236 P.3d 1230 (Haw. Ct. App. 2010), in which the state assessed a 

general excise tax against a charter fishing company that navigated the waters 

surrounding various Hawaiian islands. Although the taxpayers argued that this violated 

the Maritime Transportation Security Act, the court found that the general excise tax was 

assessed on the “privilege of doing business in Hawaii” and not on the boats themselves. 

In Missouri, section 144.020 states that a sales tax is levied “for the privilege of 

engaging in the business of selling tangible personal property . . . in this state.” Likewise, 

section 144.610 imposes a use tax “for the privilege of storing, using or consuming 

within this state any article of tangible personal property.” Just as the tax in Reel Hooker 

Sportfishing was assessed for the privilege of doing business in Hawaii, Missouri sales 

9 
and use taxes are assessed for the privilege of carrying on various activities within this 

state. Here, the sales and use taxes were assessed against Taxpayers for buying or using 

supplies within Missouri, not against their vessels. As such, the sales and use taxes 

assessed against Taxpayers do not violate 33 U.S.C. § 5(b). 

Taxes Were Not Assessed Outside of the Statute of Limitations 

The taxpayers finally argue that the statute of limitations barred DOR from 

assessing these taxes. Section 144.220 provides two limitation periods for assessing 

additional tax liability. Under the first provision, if a taxpayer neglects or refuses to file a 

sales tax return or files a fraudulent return, there is no time limit as to when DOR can 

assess tax liability.6

 Section 144.220.1. In all other cases, DOR has three years after the 

return was filed or required to be filed to assess additional sales tax liability. Section 

144.220.3. Section 144.720 sets the same limitation period with respect to use tax 

assessments. 

The Taxpayers point out that Louisiana Dock filed timely sales and use tax returns 

for the audit period. They argue that since Louisiana Dock and ACBL are disregarded 

entities for Missouri tax purposes under section 347.187.2, Louisiana Dock’s tax returns 

satisfied CBL’s obligation to file tax returns for ACBL. Their argument continues that 

DOR only had three years to assess additional tax liability, and any liability assessed after 

that three years is barred by the relevant statute of limitations. 

                                                           

6

 The failure to file a return, in certain situations, can constitute a neglect to file “where the 

taxpayer did not otherwise disclose its operations to the [DOR] and could not rely on previous 

decisions and policy of the [DOR] as an excuse for nondisclosure.” Hewitt Well Drilling & 

Pump Serv., Inc. v. Dir. of Revenue, 847 S.W.2d 795, 798 (Mo. banc 1993). 

10 
11 

 While it is true that Louisiana Dock filed tax returns for the audit period, those 

returns did not accurately reflect the transactions of CBL, its parent company, or ACBL, 

its affiliate, because both Louisiana Dock and ACBL provided inaccurate exemption 

certificates to vendors. Further, neither CBL nor ACBL filed sales or use tax returns in 

Missouri, and their tax liability does not stem from Louisiana Dock’s activities within 

Missouri, but rather from ACBL’s purchase and use of supplies while in Missouri. 

Because the Taxpayers did not file any tax returns or disclose their activities to DOR in 

any other manner, the first statute of limitation provision of section 144.220 – that there 

is no time limitation with respect to when DOR can assess tax liability – attaches. See 

Hewitt Well Drilling & Pump Serv., Inc. v. Dir. of Revenue, 847 S.W.2d 795, 798 (Mo. 

banc 1993). DOR was not barred from assessing taxes against Taxpayers. 

Conclusion 

For the foregoing reasons, the AHC’s decision is affirmed. 

_________________________ 

Mary R. Russell, Chief Justice 

All concur.