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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. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  2. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  3. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

  4. Well, I agree with you that the people need to wake up and see what our judges and politicians have done to our rights and freedoms. This DNA loophole in the statute of limitations is clearly unconstitutional. Why should dna evidence be treated different than video tape evidence for example. So if you commit a crime and they catch you on tape or if you confess or leave prints behind: they only have five years to bring their case. However, if dna identifies someone they can still bring a case even fifty-years later. where is the common sense and reason. Members of congress are corrupt fools. They should all be kicked out of office and replaced by people who respect the constitution.

  5. If the AG could pick and choose which state statutes he defended from Constitutional challenge, wouldn't that make him more powerful than the Guv and General Assembly? In other words, the AG should have no choice in defending laws. He should defend all of them. If its a bad law, blame the General Assembly who presumably passed it with a majority (not the government lawyer). Also, why has there been no write up on the actual legislators who passed the law defining marriage? For all the fuss Democrats have made, it would be interesting to know if some Democrats voted in favor of it (or if some Republican's voted against it). Have a nice day.

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