DIRECTV and ECHOSTAR APPEAL CST TRIAL LOSS NOV 2013
In a case that has spanned almost a decade, the DIRECTV Inc and Echostar vs Florida Department of Revenue case has finally come to an end – at least as far as the trial court is concerned. On October 9, 2013, Judge Lewis ruled on cross motions for summary judgment for the defendants, the Florida Department of Revenue. The heart of the issue (covered in detail in a 2011 article that can be found below) revolves around the fact that out of state satellite companies were being taxes at a higher rate than in-state cable services providers under the newly enacted Communication Services Tax (CST) in 2001. The higher tax rate on satellite companies can be dollar for dollar attributable to the fact that the local cable companies also have a local tax that the satellite companies do not have to pay. So there was a logical reason for the tax difference, although the plaintiff's challenged that the means violated both the commerce clause and the equal protection clause of the US Constitution.
Judge Lewis held for the Florida Department of Revenue (included an award of costs) by finding no commerce clause or equal protection cause violation inherent when "two industries" are taxed at different rates when the overall taxing scheme allowed the industries a practically identical tax rate if the state and local taxes were considered together. The decision is questionable given the US Supreme Court's continued reluctance to consider the "overall scheme" of complimentary taxes to avoid discrimination again out of state companies, at least outside the sales and use tax arena. However, we will have the opportunity to see whether this judgment will stand. On November 8, 2013, DIRECTV AND ECHOSTAR filled an appeal to the trial court summary judgment, details for which can be found below. We will keep you up to date on the progress of the case, presuming we have not all retired by the time the case is finally decided.
ABOUT THE AUTHOR: Mr. Sutton is a Florida licensed CPA and Attorney and a shareholder in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Sutton is in charge of the Tampa office of the firm and his primary practice area is Florida sales and use tax controversy. Mr. Sutton worked in the State and Local Tax department of a "big five" accounting firm for a number of years and has been an adjunct professor at Stetson University College of Law since 2002 teaching State and Local Taxation, Accounting for Lawyers, and Federal Income Tax I. You can read more about Mr. Sutton in his firm BIO.
ADDITIONAL RESOURCES
FLORIDA tax controversy: DIRECTV vs FL DOR – FL Communication Services Tax – Satellite TV Taxed at Higher CST Rate Than Local Cable TV – posted Dec. 13, 2011, by James Sutton, CPA, Esq.
DIRECTV, Inc. n/k/a DIRECTV, LLC et al. vs. State of Florida, Department of etc. et al. Case No. 05-CA-1037 (FL 2nd Cir. Ct), Summary Judgment dated Oct. 9, 2013.
DIRECTV, Inc. n/k/a DIRECTV, LLC et al. vs. State of Florida, Department of etc. et al., Case No. 1D13-544 (FL 1st DCA), filed November 8, 2013.