JetBlue Airways is embroiled in a legal battle with the Florida Department of Revenue, contesting a $631,000 corporate tax assessment. The airline claims that Florida unlawfully extends its geographical boundaries, leading to unconstitutional double taxation.
Geographical Overreach
JetBlue’s lawsuit, filed on July 19, challenges additional corporate income taxes for the years 2019 to 2021. According to the complaint, Florida’s tax statutes extend the state’s geographic boundaries far beyond those defined by state and federal constitutions. The Florida Constitution limits the state’s boundaries to three miles from the Atlantic coast and three leagues from the Gulf coast. However, the Department of Revenue uses a broader area, termed “the box,” to determine revenue miles subject to state tax.
JetBlue argues that this broader interpretation exceeds Florida’s jurisdiction, infringing on the Commerce Clause and the Due Process Clause of the U.S. Constitution. The state calculates taxes based on the revenue miles flown within Florida for flights that either depart from or arrive at its airports. The disputed amount, including interest, totals $631,632.11.
The airline asserts that Florida’s tax statutes purportedly extend up to 450 kilometers into the Gulf and 177 kilometers into the Atlantic, encroaching into parts of Georgia and Alabama. “Substantial portions … are in international waters and fall outside the boundaries of both Florida and the United States,” the complaint states. For instance, the western boundary extends approximately 280 miles beyond Indian Shores Beach outside St. Petersburg, and approximately 110 miles beyond Atlantic Beach outside Jacksonville.
Double Taxation Concerns
JetBlue further contends that including revenue miles from flights over international waters and neighboring states leads to double taxation, as these miles are taxed by other jurisdictions. Moreover, the airline argues that Florida does not provide services related to these flights, questioning the legitimacy of the tax assessment.
The airline calculated and paid its taxes based on constitutionally defined borders. However, during an audit, Florida’s Department of Revenue applied a broader interpretation of the state’s borders, identifying a shortfall and issuing a tax notice in March. The notice included $483,827 in unpaid taxes and $147,805.11 in interest.
The lawsuit seeks to invalidate the assessment on several grounds, including the alleged overreach of Florida’s jurisdiction, violation of the federal Supremacy Clause, and the lack of substantial nexus required for state taxation of interstate and foreign commerce. JetBlue is also challenging the fairness of the apportionment method, arguing it imposes an undue burden on its operations and is inconsistent with constitutional principles.
