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 Chris Marr
Satellite TV providers including DirecTV LLC lost another challenge to state taxes when the Florida Supreme Court upheld the state’s communications services tax.
The court ruled against the satellite providers in an April 13 opinion, disagreeing with their argument that the tax illegally discriminates against the industry by charging satellite companies a higher tax rate than cable companies. The 6-0 decision overturned a lower state appeals court’s June 2015 ruling ( Fla. Dep’t of Revenue v. DirecTV LLC , Fla., No. SC15-1249, 4/13/17 ).
The justices agreed with the industry that satellite and cable companies are similarly situated companies—one requirement for a discrimination claim under the dormant commerce clause. But they rejected the satellite companies’ argument that cable companies are in-state businesses because of their physical infrastructure and that satellite providers are out-of-state businesses.
“Here, the difference between cable and satellite is not that one is located or primarily operates ‘in-state’ and the other ‘out-of-state,’” Justice Peggy Quince wrote in the opinion. “Instead, it is that their different business models have a different impact on local communities.”
The difference in business models can justify different tax rates, Quince wrote.
The Florida Department of Revenue and an attorney for the plaintiffs didn’t immediately respond to requests for comment. The court docket lists Katherine E. Giddings of Akerman LLP in Tallahassee, Fla., as representing DirecTV.
The Florida case originates in a 2005 lawsuit by the satellite providers in the Circuit Court for Leon County, Fla. After losing at that court, DirecTV and other plaintiffs appealed to the state’s First District Court of Appeal, where a panel of judges ruled 2-1 in favor of the satellite companies.
Satellite providers have consistently lost in challenging their tax treatment in a number of states on similar constitutional grounds.
State and federal courts considering the industry’s challenges have generally found states’ tax policies don’t violate the commerce clause.
“They have found either that cable and satellite are not similarly situated or that cable is not an in-state interest,” Quince wrote. “We agree with those decisions that find cable is not an in-state interest.”
The U.S. Supreme Court in November 2015 decided not to take on a pair of similar cases in which DirecTV and DISH Network LLC challenged taxes in Massachusetts and Tennessee.
To contact the reporter on this story: Chris Marr in Atlanta at cMarr@bna.com
To contact the editor responsible for this story: Ryan C. Tuck at firstname.lastname@example.org
Text of the opinion is at http://src.bna.com/nUL.
Copyright © 2017 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)