The U.S. Court of Appeals for the Third Circuit affirmed the District Court of the Virgin Islands' dismissal of consolidated lawsuits filed by six companies seeking excise tax refunds from the U.S. Virgin Islands government. The February 5, 2026 decision involved Apex Construction Co. Inc., Bluewater Construction Inc., MSI Building Supplies Inc., United Corporation, Impex Trading International Inc. d/b/a The Sea Chest, and B&B Manufacturing Inc.
The companies, collectively referred to as the "Taxpayers" in the court's opinion, filed separate lawsuits against the U.S. Virgin Islands seeking refunds of excise taxes paid under territorial law. The district court consolidated the six cases, which originated as separate civil actions filed in 2021 under case numbers 3:21-cv-00039 through 3:21-cv-00052.
At the center of the dispute is 33 V.I.C. § 42(a), a U.S. Virgin Islands statute that requires an excise tax to be imposed on "all articles, goods, merchandise or commodities manufactured in or brought into the Virgin Islands" for personal or business purposes, with limited exceptions. According to the Third Circuit's opinion written by Circuit Judge Freeman, the statute is "facially neutral—applying equally to Virgin Islanders and foreigners."
The case was argued before a three-judge panel consisting of Circuit Judges Restrepo,Freeman, and McKee on April 29, 2025. The opinion, marked as "NOT PRECEDENTIAL," means it cannot be cited as binding precedent in future cases but reflects the court's resolution of the specific legal issues presented.
Representing the appellant companies were attorneys Joseph A. DiRuzzo III and Daniel M. Lader from the Fort Lauderdale-based firm Margulis Gelfand DiRuzzo & Lambson. DiRuzzo argued the case before the appeals court panel. The U.S. Virgin Islands was represented by attorneys from the territorial Department of Justice, including Gordon C. Rhea, Pamela R. Tepper, and Sean P. Bailey, with Bailey presenting oral arguments for the government.
The companies involved in the litigation represent a cross-section of the Virgin Islands business community. Apex Construction and Bluewater Construction are construction companies operating in the territory, while MSI Building Supplies appears to be a supplier to the construction industry. United Corporation and B&B Manufacturing Inc. represent manufacturing interests, and Impex Trading International, operating under the trade name "The Sea Chest," appears to be involved in import/export activities.
The district court proceedings were overseen by District Judge Robert A. Molloy, who initially consolidated the separate cases and ultimately dismissed the consolidated lawsuit. The companies then appealed to the Third Circuit, which has jurisdiction over appeals from the District Court of the Virgin Islands.
The Third Circuit's affirmance of the dismissal suggests the appeals court found no reversible error in the district court's handling of the case. While the full reasoning behind the court's decision is not detailed in the available excerpt, the affirmance indicates the court was not persuaded by the companies' arguments for excise tax refunds.
The case highlights ongoing tensions between local businesses and territorial tax authorities in the U.S. Virgin Islands. The excise tax statute at issue appears to be a significant source of revenue for the territorial government, applying broadly to goods brought into the islands for both personal and commercial use.
For the business community in the Virgin Islands, the decision represents a setback in efforts to challenge territorial tax assessments. The involvement of construction companies, building suppliers, and trading businesses suggests the excise tax burden affects multiple sectors of the local economy.
The designation of the opinion as "NOT PRECEDENTIAL" limits its impact on future litigation, but the Third Circuit's affirmance provides some clarity on the territorial government's authority to impose and collect excise taxes under the current statutory framework.
The consolidated nature of the case, involving six separate companies and civil actions, demonstrates the broader impact of the Virgin Islands excise tax statute on local businesses. The fact that multiple companies pursued similar legal challenges suggests widespread concern within the business community about the application and scope of territorial tax obligations.
The case represents another chapter in the ongoing legal relationship between territorial governments and federal courts, with the Third Circuit exercising its appellate jurisdiction over Virgin Islands district court decisions. The outcome reinforces the territorial government's ability to enforce its tax collection mechanisms against business taxpayers operating within its jurisdiction.