Justia Communications Law Opinion SummariesArticles Posted in Tax Law
Chamber of Commerce of the United States v. Lierman
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
Comptroller v. Comcast
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
City of Creve Coeur v. DirecTV LLC
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 v. Department of Taxes
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
Mississippi Dept. of Revenue v. SBC Telecom, Inc. et al.
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
New Cingular Wireless PCS, LLC v. Dept. of Revenue
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
BellSouth Telecommunications, LLC v. Cobb County et al.
Cobb and Gwinnett Counties, Georgia, sued telephone companies for their failure to collect and remit to the Counties a charge imposed on subscribers to offset the cost of 911 services. The telephone companies raised various defenses to the Counties’ suits, including that the 911 charge was a tax that the Counties were not allowed to collect by a lawsuit like this one. The trial court rejected that argument and allowed the cases to proceed, but the Court of Appeals vacated that aspect of the trial court’s ruling and remanded because further development of the record was needed to determine whether the charge was a tax. The Georgia Supreme Court concluded the charge was indeed a tax regardless of more factual development, and the Counties lacked legal authority to collect that tax in this lawsuit. View "BellSouth Telecommunications, LLC v. Cobb County et al." on Justia Law
Dish Network, LLC v. Commissioner of Revenue Services
At issue was the extent to which Conn. Gen. Stat. 12-256(b)(2) imposes a tax on gross earnings from a satellite television operator’s business operations in Connecticut, including the transmission of video programming, the sale and lease of equipment required to view that programming, the installation and maintenance of such equipment, DVR services, and payment related fees.The Supreme Court reversed in part the judgments of the trial court sustaining in part Plaintiff’s tax appeals and ordering a refund of taxes previously paid on earnings from the sale of certain goods and services, holding (1) the trial court did not err in determining that Conn. Gen. Stat. 12-268i does not provide the exclusive procedure for challenging a tax assessment for a tax period that has been the subject of an audit; (2) section 12-256(b)(2) imposes a tax on gross earnings from the transmission of video programming by satellite and certain payment related fees, but not the sale, lease, installation, or maintenance of equipment or DVR service; and (3) the trial court did not err in determining that Plaintiff was not entitled to interest on the refund pursuant to section 12-268c. View "Dish Network, LLC v. Commissioner of Revenue Services" on Justia Law
State Tax Assessor v. MCI Communications Services, Inc.
Maine Revenue Services (MRS) assessed MCI Communications Services, Inc. (MCI) $184,873.69 for two types of surcharges - property tax recovery charges (PTRCs) and carrier cost recovery charges (CCRCs) - that MCI imposed upon its Maine customers. The Maine Board of Tax Appeals vacated the imposition of the tax based on its determination that the PTRCs and CCRCs were excluded or exempt from taxation because they were part of the sale of interstate or international telecommunications services. The Supreme Judicial Court affirmed, holding that the PTRCs and CCRCs collected by MCI before July 18, 2008 were excluded from taxation and that those charges collected from MCI from July 18, 2008 forward were exempt from taxation. View "State Tax Assessor v. MCI Communications Services, Inc." on Justia Law
Kentucky CATV Ass’n v. City of Florence
A provision in the Multichannel Video Programming and Communications Services Tax (the Telecom Tax) prohibiting “every political subdivision of the state” from collecting franchise fees or taxes on franchises subject to the Telecom Tax is unconstitutionally void as applied to protesting cities.Four Kentucky cities and the Kentucky League of Cities, Inc. (collectively, Cities) filed a petition for declaratory relief alleging that the Telecom Tax’s Prohibition Provision violated their right to grant franchises and to collect franchise fees as provided in sections 163 and 164 of the Kentucky Constitution. The circuit court dismissed the petition. The court of appeals vacated the judgment of the circuit court and remanded, concluding that the Telecom Tax’s Prohibition Provision violated sections 163 and 164. The Supreme Court affirmed, holding that the Telecom Tax’s Prohibition Provision was unconstitutionally void as applied to the Cities. View "Kentucky CATV Ass’n v. City of Florence" on Justia Law