Justia Communications Law Opinion Summaries

The City of Lakewood, Colorado enacted a business and occupation tax on certain telecommunications providers in 1969, which initially applied only to utility companies maintaining a telephone exchange and supplying local service within the city. Following changes in state and federal law promoting competitive neutrality and prohibiting barriers to entry, the city amended its tax ordinances in 1996 and again in 2015. The 1996 amendment expanded the tax to cover all providers of basic local telecommunications service, including some cellular services, while the 2015 amendment further broadened the scope to include all cellular and wireless voice service providers. Lakewood did not seek voter approval before enacting either amendment.After Lakewood audited MetroPCS California, LLC and assessed more than $1.6 million in unpaid business and occupation taxes, MetroPCS sued in the Jefferson County District Court. The district court granted summary judgment to MetroPCS, ruling that both the 1996 and 2015 Ordinances constituted "new taxes" under Colorado's Taxpayer's Bill of Rights (TABOR), and thus required advance voter approval. The court found the ordinances expanded the tax to previously untaxed providers and services, generating revenue that was not merely incidental or de minimis. Lakewood’s arguments that the ordinances simply clarified or updated the existing tax and did not produce significant new revenue were rejected. The district court declared both ordinances void and unenforceable for lack of voter approval.The Supreme Court of Colorado reviewed the case directly. Applying de novo review, it affirmed the district court’s judgment. The Court held that both the 1996 and 2015 Ordinances imposed new taxes within the meaning of TABOR, as they expanded the tax base to include new classes of providers and services, and the resulting revenue increases were not incidental. Because Lakewood failed to obtain voter approval prior to enacting these ordinances, both were held void and unenforceable. The Court remanded the case for consideration of MetroPCS’s request for appellate fees and costs. View "MetroPCS Cal., LLC v. City of Lakewood" on Justia Law

Several subsidiaries of a major entertainment company providing video streaming services were notified by the City of Santa Barbara that they owed significant sums in unpaid video users’ taxes, penalties, and interest for the period from 2018 to 2020. The City’s demand was based on a 2008 ordinance, approved by local voters, which imposed a tax on those using “video services” in the city. The ordinance defined “video services” broadly, including services delivered by Internet Protocol. The companies argued that their streaming services did not fall under the ordinance because streaming platforms do not provide a “channel” as contemplated by the ordinance, instead relying on customers’ independently obtained Internet services.Following the City’s deficiency notice, the companies appealed administratively. An independent hearing officer upheld the City’s position, concluding that the ordinance applied to video streaming. The companies then sought judicial review in the Superior Court of Santa Barbara County by filing a petition for a writ of administrative mandate. The trial court denied their petition, determining that the ordinance was intended to apply to streaming, that its enforcement did not violate federal or state law, and that the City was not required to provide additional notice before enforcement.On appeal, the California Court of Appeal, Second Appellate District, Division Six, affirmed the lower court’s judgment. The appellate court held that the ordinance, as approved by the electorate, applies to providers of video streaming services and that the ordinary, non-technical meaning of “channel” should govern. The court further held that applying the tax to streaming services does not violate the Internet Tax Freedom Act, the First Amendment, or the California Constitution, nor did the City’s delayed enforcement require additional voter approval or special notice under state law. The judgment denying the companies’ petition was affirmed. View "Disney Platform Distribution, Inc. v. City of Santa Barbara" on Justia Law

Disney Platform Distribution, BAMTech, and Hulu, subsidiaries of the Walt Disney Company, provide video streaming services to subscribers in the City of Santa Barbara. In 2022, the City’s Tax Administrator notified these companies that they had failed to collect and remit video users’ taxes under Ordinance 5471 for the period January 1, 2018, through December 31, 2020, resulting in substantial assessments. The companies appealed to the City Administrator, and a retired Associate Justice served as hearing officer, ultimately upholding the Tax Administrator’s decision.Following the administrative appeal, the companies sought judicial review by filing a petition for a writ of administrative mandate in the Superior Court of Santa Barbara County. The trial court denied their petition, finding that the Ordinance does apply to video streaming services and rejecting arguments that the Ordinance violated the Internet Tax Freedom Act, the First Amendment, and Article XIII C of the California Constitution. The trial court also found there was no violation of Public Utilities Code section 799’s notice requirements, as the City’s actions did not constitute a change in the tax base or adoption of a new tax.On appeal, the California Court of Appeal, Second Appellate District, Division Six, affirmed the trial court’s judgment. The court held that the Ordinance applies to video streaming services, interpreting the term “channel” in its ordinary, non-technical sense and finding that the voters intended technological neutrality. The court further held that the Ordinance does not violate the Internet Tax Freedom Act because video streaming subscriptions and DVD sales/rentals are not “similar” under the Act. Additionally, the court concluded the tax is not a content-based regulation of speech under the First Amendment, and that delayed enforcement did not constitute a tax increase requiring additional voter approval or notice under the California Constitution or Public Utilities Code section 799. View "Disney Platform Distribution v. City of Santa Barbara" on Justia Law

The Supreme Court of the State of Washington heard a case involving Assurance Wireless USA LP, a telecommunications company that provides wireless services to low-income consumers as part of the federal "Lifeline" program. Assurance contested the Department of Revenue's tax assessments on the reimbursements they received for their services, arguing that the transactions were not retail sales. The Board of Tax Appeals (BTA) upheld the tax assessments, finding that the transactions did constitute retail sales and that the tax burden fell on the Universal Service Administrative Company (USAC), the nonprofit appointed by the Federal Communications Commission (FCC) to administer the Lifeline program.The Supreme Court agreed that the transactions were retail sales and that USAC, not the Lifeline consumers or the FCC, bore the legal incidence of the tax. However, the Court concluded that USAC operates as an instrumentality of the federal government, meaning that the retail sales tax violated the intergovernmental tax immunity doctrine as applied in this case. The Court ultimately reversed the decision of the Court of Appeals and remanded the case to the BTA for further proceedings in line with this opinion. View "Assurance Wireless USA, LP v. Dep't of Revenue" on Justia Law

In this case, the United States Chamber of Commerce and three other trade associations sued to stop the enforcement of a new state tax in Maryland known as the Digital Advertising Gross Revenues Tax Act. The law requires large technology companies to pay a tax based on gross revenue they earn from digital advertising in the state. The plaintiffs alleged that the Act violates the Internet Tax Freedom Act, the Commerce Clause, the Due Process Clause, and the First Amendment. The United States District Court for the District of Maryland dismissed three of the counts as barred by the Tax Injunction Act, which prevents federal courts from stopping the collection of state taxes when state law provides an adequate remedy. The court dismissed the fourth count on mootness grounds after a state trial court declared the Act unconstitutional in a separate proceeding. On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of the first three counts, but vacated the judgment to the extent it dismissed those counts with prejudice, ordering that the dismissal be entered without prejudice. The appellate court also vacated the dismissal of the fourth count and remanded for further proceedings, as the plaintiffs' First Amendment challenge to the Act's prohibition on passing the tax onto consumers was not moot. View "Chamber of Commerce of the United States v. Lierman" on Justia Law

In this appeal stemming from a challenge to Maryland's Digital Advertising Gross Revenues Tax Act the Court of Appeals vacated the orders of the circuit court granting a declaratory judgment that a digital advertising tax was unconstitutional and illegal under federal law the Court of Appeals held that the circuit court lacked jurisdiction over the action.At issue was Maryland's Digital Advertising Gross Revenues Tax Act, codified at Title 7.5 of the Tax-General Article, which imposed a tax on annual gross revenues of certain high revenue businesses derived from state digital advertising services. Plaintiffs, various subsidiaries of Comcast Corporation and Verizon Communications, Inc., filed this action seeking a declaratory judgment that the tax was unconstitutional and illegal. The circuit court granted judgment for Plaintiffs. The Court of Appeals vacated the orders below, holding (1) Plaintiffs failed to exhaust mandatory administrative and judicial review remedies provided in the Tax-General Article for the resolution of tax disputes; and (2) absent exhaustion of the available statutory administrative remedies, the circuit court lacked jurisdiction over the challenge. View "Comptroller v. Comcast" on Justia Law

DirecTV and Dish Network (“Defendants”) provide video services in part through the Internet. The City of Creve Coeur filed this class action in Missouri state court on behalf of local government authorities, seeking a declaratory judgment that Defendants are liable under the Video Services Providers Act (“VSPA”) and implementing local ordinances, plus injunctive relief, an accounting of unpaid fees, and damages. Defendants removed the action based on diversity jurisdiction and the Class Action Fairness Act (CAFA). After the state court entered an interlocutory order declaring that VSPA payments are fees, rather than taxes, DirecTV filed a second notice of removal, arguing this order established the required federal jurisdiction. The district court granted Creve Coeur’s motion to remand.   The Eleventh Circuit affirmed on different grounds. The court explained that the district court’s remand order plainly stated that the remand was based on comity principles as articulated in Levin, not on “state-tax based comity concerns.” Comity as a basis to remand was raised and fully argued in the first remand proceeding. Federal courts have long precluded two bites at this apple. Second, the Supreme Court in Levin emphatically stated that the century-old comity doctrine is not limited to the state-tax-interference concerns that later led Congress to enact the TIA. Third, the state court’s December 2020 Order addressed, preliminarily, only the VSPA fee-or-tax issue under state law. It did not address the broader considerations comity addresses. The state court order in no way overruled or undermined the basis for the district court’s first remand order. Therefore, DirecTV failed to establish the essential basis for a second removal. View "City of Creve Coeur v. DirecTV LLC" on Justia Law

Vermont National Telephone Company (VNT) appealed the state Commissioner of Taxes’ determination that, pursuant to Department of Taxes Regulation section 1.5833-1, the capital gain VNT earned from the 2013 sale of two Federal Communications Commission telecommunications licenses was subject to Vermont Tax. Additionally, VNT argued the penalty the Commissioner assessed for VNT's failure to report the 2013 sale violated 32 V.S.A. section 3202(b)(3) and the state and federal Constitutions. Finding no reversible error, the Vermont Supreme Court affirmed the Commissioner. View "Vermont National Telephone Company v. Department of Taxes" on Justia Law

At issue in this appeal was the computation of the broadband credit limits that a taxpayer may use against its franchise-tax and income-tax liabilities. During the tax periods at issue, AT&T Mobility II, LLC, and BellSouth Telecommunications operated telecommunications enterprises and made significant investments in broadband technology developments throughout Mississippi, generating Broadband Investment Credits (Broadband Credits) under Mississippi Code Section 57-87-5. BellSouth Mobile Data, SBC Alloy Holdings, New BellSouth Cannular Holdings, New Cingular Wireless Services, SBC Telecom, and Centennial were all direct or indirect corporate owners of AT&T Mobility II. The taxpayers here each filed a separate franchise-tax return and were included as affiliated group members in the combined corporate income-tax return filed on behalf of the affiliated group. The Mississippi Department of Revenue (MDOR) determined that the broadband credits the taxpayers had claimed had been improperly applied to an amount greater than the credit cap of 50 percent of the taxpayers’ tax liabilities according to Mississippi Code Section 57-87- 5(3) (Rev. 2014). The MDR disallowed portions of the broadband credits claimed by the taxpayers and assessed additional franchise taxes, interest and penalties to the taxpayers separately on several dates between December 22, 2014, and May 20, 2015. The taxpayers argue that each taxpayer is jointly and severally liable for the total combined income-tax liability of the affiliated group, therefore making the income-tax liability of each taxpayer the same as the total combined income-tax liability of the affiliated group. The chancellor granted summary judgment in favor of the taxpayers and ruled that the taxpayer’s tax liabilities under Chapters 7 and 13 of Title 271 of the Mississippi Code was the aggregate of the taxpayer’s separate franchise-tax liability and the total combined income-tax liability of the affiliated group. The Mississippi Supreme Court affirmed the chancellor's ruling on the credit-computation issue. "The plain and unambiguous language of Section 57-87-5 clearly limits broadband credits that a taxpayer may take in any given year to 50 percent of the aggregate of the taxpayers’ franchise-tax liability and the total combined income-tax liability of the affiliated group." View "Mississippi Dept. of Revenue v. SBC Telecom, Inc. et al." on Justia Law

After approximately ten years of litigation, the Georgia Supreme Court granted a second petition for certiorari in a dispute over the refund of millions of dollars in Georgia sales and use taxes that allegedly violated a federal statute. In 2010, New Cingular Wireless PCS, LLC and three other AT&T Mobility subsidiaries (collectively, “AT&T”) filed refund claims with the Georgia Department of Revenue seeking the return of the sales and use taxes that AT&T had collected from its customers and turned over to the Department. In 2015, the Department denied the claims, and AT&T filed a complaint in DeKalb County Superior Court to compel the refunds. In 2016, the trial court dismissed the complaint on grounds: (1) a Georgia regulation required “dealers” like AT&T to return the sums collected from their customers before applying to the Department for a refund of the illegal taxes; (2) AT&T lacked standing to seek refunds of taxes for periods prior to May 5, 2009, the effective date of the General Assembly’s amendment to the refund statutes to allow dealers to seek refunds on behalf of their customers; and (3) AT&T’s claims amounted to a class action barred by the refund statutes. In its first certiorari review, the Georgia Supreme Court reversed that ruling, holding that the regulation, as properly construed, did not require dealers to return the sums collected before applying for a refund. On remand, the Court of Appeals upheld the trial court’s ruling that AT&T lacked standing to seek refunds for periods prior to the effective date of the 2009 amendments to the refund statutes allowing dealers to seek refunds on behalf of their customers. The issue presented in the second petition for certiorari review was whether plaintiffs lacked standing to file the refund claims. The Supreme Court determined AT&T was statutorily granted representational standing to recover wrongfully paid sums on behalf of and for the benefit of its customers. To the extent, therefore, that the Court of Appeals held that AT&T lacked standing to file a claim on behalf of its customers for any taxes for periods before May 5, 2009, the Court of Appeals’ judgment was erroneous and had to be reversed. View "New Cingular Wireless PCS, LLC v. Dept. of Revenue" on Justia Law