Tax News

CCH (cch.taxgroup.com) reports:

The Washington Supreme Court has affirmed a superior court order prohibiting the city of Bellevue from imposing its utility occupation tax on a network telephone service provider's charges for access to interstate service, charges for interstate services, or federally tariffed charges. The state high court found that RCW 35A.82.060(1) precluded such taxation.
The city disputed the superior court's ruling to the extent it held that customer access line charges; private line, frame relay, and ATM service charges; and other federally tariffed charges were necessarily charges for interstate services. The Supreme Court stated that whether the Federal Communications Commission or the Washington Utilities and Transportation Commission had jurisdiction over certain charges (i.e., whether the charges were for access to interstate or intrastate service) was not determined by looking to the customer's use of the connections, as the city contended. Instead, whether charges were charges for access to interstate, as opposed to intrastate, service was a question of law, and the city's contention that a court needed to conduct factual analysis to determine the interstate or intrastate nature of the charges was erroneous. In addition, the Supreme Court agreed with the company's position that access charges imposed pursuant to federal tariff were by law charges imposed on access to interstate service.
The Washington Court of Appeals had recently interpreted RCW 35.21.714, a statute substantively identical to RCW 35A.82.060, as precluding tax on interstate services only when those charges were to another telecommunications company. (Community Telecable of Seattle, Inc. v. City of Seattle, 149 P.3d 380 (2006)) However, the Supreme Court disagreed with the Court of Appeals' interpretation and found that the legislative history of RCW 35A.82.060(1) supported the conclusion that the statute precluded taxation of charges for interstate service regardless of whether those charges were to another telecommunications company.
Qwest Corp. v. City of Bellevue, Washington Supreme Court, No. 79909-1, August 30, 2007, ¶202-674
Other References:
Explanations at ¶72-001