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Agency erred in taxing certain money

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The Department of State Revenue erred when it concluded certain money collected from customers of a small, rural telecommunications company were subject to Indiana's utility receipts tax, the Indiana Tax Court ruled Thursday.

In Enhanced Telecommunications Corp. v. Indiana Department of State Revenue, No. 49T10-0801-TA-1, Enhanced Telecommunications challenged the imposition of the URT on subscriber line charges (SLC) and federal universal service contribution recoveries (FUSCR) for the 2003, 2004, and 2005 tax years.

As a telecommunications company, Enhanced is subject to the URT and that tax is imposed on the company's entire taxable gross receipts, per Indiana Code. The Tax Court had to decide if the SLCs and FUSCRs are excluded from Enhanced's gross receipts pursuant to I.C. Section 6-2.3-3-4(b) because they are considered fees or surcharges.

Giving those terms their plain meaning because they are not defined by the legislature in the statute, Judge Thomas Fisher concluded the SLCs and FUSCRs are fees or surcharges separate from and in addition to Enhanced's basic monthly service charges, which aren't included in a taxpayer's gross receipts for purposes of the URT.

The Tax Court also determined the distributions Enhanced received through various federal and state subsidy programs aren't subject to the URT. The Department of State Revenue argued they would be subject to the tax because they are settlements pursuant to I.C. Section 6-2.3-3-3, but only legal settlements are considered subject to the tax. The distributions Enhanced received are settlements, but consistent with the definition of "payments, satisfaction, or final adjustments of its accounts," which aren't subject to the tax, wrote the judge.

The department's argument failed that Enhanced received the distributions as a means to recover costs associated with the use and maintenance of its telephone lines, and are directly related to the delivery of utility services because the departments' argument didn't consider I.C. Section 6-2.3-3-10 in its entirety.

"Here, the distributions clearly do not meet the terms of this statute: they are not receipts received for maintenance services provided to a consumer that are directly related to the utility services of that consumer," wrote Judge Fisher. "Rather, the distributions are governmental subsidies that are used to offset the general costs of overall line use and maintenance."

Judge Fisher rejected the department's other arguments as to why the SLCs and FUSCRs should be considered taxable under the URT because the department repeatedly improperly relied on a statutory snippet to supports its position.

The case is remanded to the department for action consistent with the stipulation between Enhanced and the department to the amount of Enhanced's URT overpayment for each of the taxable years at issue if it should prevail in the appeal.

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  1. Future generations will be amazed that we prosecuted people for possessing a harmless plant. The New York Times came out in favor of legalization in Saturday's edition of the newspaper.

  2. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  3. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  4. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  5. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

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