DISH Network Pleas for High Court to Strike ‘Protectionist’ Tax

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Jennifer McLoughlin

The U.S. Supreme Court would have to adopt a flawed and narrow view of an underlying court decision to deny DISH Network LLC’s request for review of Florida’s discriminatory tax scheme, according to the satellite TV provider.

The company petitioned the high court to consider whether Florida’s communications services tax might discriminate against it even if it isn’t a purely out-of-state company and the allegedly favored cable industry isn’t purely in-state. The company is contesting a Florida Supreme Court ruling from April that found the tax doesn’t discriminate, in part because the pure in-state versus out-of-state dichotomy didn’t exist.

Responding to the Florida Department of Revenue’s brief opposing review, DISH argued Nov. 27 that the state “whitewashes” the underlying decision ( EchoStar Satellite, LLC v. Fla. Dep’t of Revenue , U.S., No. 17-379, reply brief filed 11/27/17 ).

“It claims that the decision did not really reject DISH’s claim because the cable companies benefiting from the unequal tax are interstate (rather than purely in-state) enterprises. And the court did not really categorically disregard DISH’s evidence of discriminatory purpose,” according to DISH’s reply brief. “If you squint just right, the Department insists, you’ll see that the court meant something different from what it said.”

DISH reiterated its argument that the Florida Supreme Court split from other courts, analyzing the discriminatory effect solely on the basis of domicile. “Contrary to the decision below, unequal taxes discriminate against interstate commerce if they favor local activities and investments over non-local ones—and that is true regardless of where the affected actors happen to reside.”

And should the underlying state court decision stand, it will be a “green light to adopt protectionist measures encumbering the flow of commerce across state lines. Even though Commerce Clause doctrine is a morass—indeed, precisely because it is a morass—it is vital for the Court to step in,” DISH argued.

The Supreme Court will take up DISH’s petition during a Jan. 5 conference.

Favoring Local Interests

The DOR pointed out in its opposition that Congress declined to exercise its commerce clause power to invalidate taxes like Florida’s communications services tax—and argued that the Supreme Court should not consider doing so under the dormant commerce clause.

DISH countered that “federal authorization is a defense to a discriminatory tax, and the question here is the antecedent one—whether the tax is discriminatory.” Furthermore, authorizing a tax that the commerce clause would forbid requires Congress to be “unmistakably clear,” and Congress has never authorized such discrimination against satellite companies, DISH argued.

Recognizing that Congress preempted local taxation of satellite services in the Telecommunications Act of 1996, DISH noted that Congress clarified state rights to share revenue from state-level satellite taxes with localities.

“But Congress surely did not intend to abandon the background anti-protectionism rule and authorize States to tax satellite into oblivion,” according to the brief.

And while the DOR refutes the viability of allegations based on the “discriminatory effects” of a tax, the high court “has held that discrimination is discrimination, ‘whether forthright or ingenious,’” DISH argued. “The very point of the discriminatory-effects doctrine is to stamp out protectionism, not just when States draw geographic distinctions, but when they use facially neutral means to achieve that end.”

Joshua Rosenkranz of Orrick, Herrington & Sutcliffe LLP in New York, lead attorney for DISH, didn’t immediately respond to a request for comment. The Florida attorney general’s office, which is representing the department, also didn’t respond to a request for comment.

To contact the reporter on this story: Jennifer McLoughlin in Washington at

To contact the editor responsible for this story: Cheryl Saenz at

For More Information

Text of DISH Network's reply brief is at

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State