Florida ~ Utilities Tax: Differing Communications Tax Rates Not Unconstitutionally Discriminatory

CCH Tax Day Report

For Florida communications services tax purposes, different rates of tax that applied to services provided by cable companies and by satellite companies for sale of similar services did not unconstitutionally discriminate against interstate commerce in violation of the dormant Commerce Clause. A 2015 appellate decision finding that, because the tax favored communications that use local infrastructure, it had a discriminatory effect on interstate commerce was reversed.

Cable companies and satellite companies were similarly situated for purposes of the dormant Commerce Clause. Even if cable companies provided Internet and phone service while satellite companies did not and the cable industry was more heavily regulated by the federal government, both satellite and cable offered television programming and competed for customers in that market.

Also for purposes of the dormant Commerce Clause, neither cable companies nor satellite companies were in-state interests. Neither of them produced anything in Florida and neither business was headquartered in the state.

Finally, there was no evidence of discriminatory purpose in the text of the law. Rather, examination of legislative materials revealed that there was no intent to favor cable companies and analysts believed that the tax’s impact would have the benefit of a simplified tax structure for all communication providers.

Florida Department of Revenue v. DIRECTV, Inc., Supreme Court of Florida, No. SC15-1249, April 13, 2017, ¶206-278



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