DirecTV has lost its challenge to Florida's rules governing how it taxes satellite TV operators.
According to Bloomberg BNA, the Florida Supreme Court shot down DirecTV’s later challenge to the laws, with justices ruling 6-0 against the operator’s argument that the tax illegals discriminates against satellite companies, charging them more than cable operators.
The justices agreed with DirecTV’s argument that satellite operators are “similarly situated” relative to cable companies.
However, the court ruled that satellite companies operate largely as “in-state” businesses, while cable companies—due to the nature of their infrastructure—are primarily out-of-state entities.
Dish Network has presented a nearly identical case to Florida courts.
In Florida, cable operators are charged a state communication services tax at a rate of 4.92% of subscription revenue. Satellite providers are assessed at a rate of 9.07%. Most of these taxes are passed on to consumers.
Cable operators, however, are also charged local communications services taxes that aren’t levied upon satellite companies. These fees can account for as much as 5% of subscription revenue.
"Cable companies pay local franchise fees, as well as 'in-kind' compensation, so governments typically tax satellite services at higher rate," said Florida tax attorney Jim Kranjc to the Florida Record. "From a cable company's perspective, it's along the lines of an 'equal protection' argument."