ILNews

Agency erred in taxing certain money

Back to TopE-mailPrintBookmark and Share

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.

ADVERTISEMENT

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  2. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  3. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  4. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  5. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

ADVERTISEMENT