On Dec. 5, the Texas Supreme Court heard oral arguments in PRSI Trading, LLC v. Harris County, Texas. Before the Texas Supreme Court is the issue of whether a foreign trade zone (FTZ) subzone was still “activated” for the purposes of a company’s claim for an ad valorem tax exemption when the company was operating the subzone without a formal “operator” designation from U.S. Customs and Border Protection (CBP). In 2005, Pasadena Refining System Inc. (PRSI) entered into an agreement with the Port of Houston to operate a subzone of a FTZ for the manufacturing, blending and storage of petrochemicals and other related products at a refinery. The CBP approved PRS1 as the operator of the subzone. The approval provided the operator all of the rights and benefits of a FTZ, including exemption from state and local ad valorem taxation on goods held in a FTZ for export out of the United States. 

At Issue: a Transfer of Operator Designation Through Company Merger

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