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Court says gambling ships not taxable outside state waters
Associated Press
Published February 18, 2005
TALLAHASSEE - Gambling jaunts known as cruises to nowhere don't owe taxes on commercial activity that happens beyond state territorial waters, the Florida Supreme Court ruled Thursday.
Backing a lower court, the justices rejected the state's argument that New Sea Escape's gambling trips fall under intrastate commerce rules because its ships never reach a foreign port.
The court found the Bahamian company can operate under state law on foreign or interstate commerce, meaning it must pay only the state's 6-cent sales and use tax for commerce conducted within the state's territorial boundaries.
The Department of Revenue had argued New Sea Escape owed $1.3-million in back taxes and penalties for cruises from September 1996 through April 1998.
The ships, which leave from Fort Lauderdale, allow gambling after they travel 3 miles off Florida's coast, beyond state waters.
Florida's cruises-to-nowhere industry has grown from one ship to 17 in the last 20 years, with an estimated 4.4-million passengers. The industry paid the state $5.4-million in taxes and fees in 2002.
David Bruns, a Revenue Department spokesman, said the ruling would apply to other cruise operators. Some companies have settled cases confidentially and would not be bound by Thursday's ruling, he said.
New Sea Escape also argued it should escape state taxation completely, but the high court rejected that argument.
[Last modified February 18, 2005, 00:13:08]
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