A federal judge in Kentucky upheld an excise-tax formula in the state that direct-broadcast satellite providers challenged as discriminatory.
Judge Karen Caldwell of the U.S. District Court, Eastern District of Kentucky in Frankfort dismissed the lawsuit filed by DirecTV Inc. and EchoStar Communications Corp. against Mark Treesh, the state's commissioner of the Department of Revenue.
The DBS companies alleged that the state's two-year-old 5.4% excise tax, applied to cable and satellite providers, is discriminatory because cable operators get to offset the tax with their local franchise fees. DBS companies don't pay franchise fees, so they are not eligible for the offset. Further, the tax and offset treat in-state cable companies differently from the satellite providers.
Caldwell disagreed, writing that the tax does not discriminate geographically. Cable companies, like DBS providers, are headquartered outside the state and are no more "in-state" businesses than DBS is, she wrote in her March 30 opinion.
DirecTV spokesman Robert Mercer noted that the Kentucky decision differed from an opinion in a similar case in Ohio rendered last October. The judge in that state-tax challenge, in a partial summary judgment, said the 5% sales tax there is discriminatory.
"We believe the decision is wrong on the law," Mercer said, adding that the appellate courts will ultimately decide the issue.
Kentucky is in the Sixth Circuit Court of Appeals, which has issued decisions on business issues that DirecTV believes indicates that it may view the company's arguments favorably.
The Kentucky decision lets stand, pending any further challenge, a 3% excise tax, applied to retail purchases and passed through to consumers; and a 2.4% tax on multichannel-video-program providers, which is paid by the content providers.
http://www.multichannel.com/article/CA6321567.html?display=Breaking+News
Judge Karen Caldwell of the U.S. District Court, Eastern District of Kentucky in Frankfort dismissed the lawsuit filed by DirecTV Inc. and EchoStar Communications Corp. against Mark Treesh, the state's commissioner of the Department of Revenue.
The DBS companies alleged that the state's two-year-old 5.4% excise tax, applied to cable and satellite providers, is discriminatory because cable operators get to offset the tax with their local franchise fees. DBS companies don't pay franchise fees, so they are not eligible for the offset. Further, the tax and offset treat in-state cable companies differently from the satellite providers.
Caldwell disagreed, writing that the tax does not discriminate geographically. Cable companies, like DBS providers, are headquartered outside the state and are no more "in-state" businesses than DBS is, she wrote in her March 30 opinion.
DirecTV spokesman Robert Mercer noted that the Kentucky decision differed from an opinion in a similar case in Ohio rendered last October. The judge in that state-tax challenge, in a partial summary judgment, said the 5% sales tax there is discriminatory.
"We believe the decision is wrong on the law," Mercer said, adding that the appellate courts will ultimately decide the issue.
Kentucky is in the Sixth Circuit Court of Appeals, which has issued decisions on business issues that DirecTV believes indicates that it may view the company's arguments favorably.
The Kentucky decision lets stand, pending any further challenge, a 3% excise tax, applied to retail purchases and passed through to consumers; and a 2.4% tax on multichannel-video-program providers, which is paid by the content providers.
http://www.multichannel.com/article/CA6321567.html?display=Breaking+News
