- Six of One, Half a Dozen of the Other: Maine Supreme Judicial Court Holds Additional Charges for Telecommunications Services Exempt Before/After Statutory Amendment
- July 10, 2017 | Authors: Charles C. Capouet; Timothy A. Gustafson
- Law Firms: Sutherland Asbill & Brennan LLP - Sacramento Office; Eversheds Sutherland (US) LLP - Washington Office
On June 15, 2017, the Maine Supreme Judicial Court held that property tax recovery charges and carrier cost recovery charges imposed by a telecommunications service provider of long distance telephone service on its customers were not subject to service provider tax for the tax years 2008 – 2010. The charges were calculated with reference to revenue from interstate and international telecommunications services and were not collected from customers with only intrastate services.
As a preliminary matter, the court held that the charges were included within the “sale price” of telecommunications services. Prior to July 18, 2008, Maine excluded the sale price of interstate and international telecommunications services from taxation. Because the charges were only included in the sale price of interstate and international telecommunications services, the charges were also excluded from taxation. Beginning July 18, 2008, Maine instead exempted from service provider tax the “sales of” interstate and international telecommunications services. The court held that the term “sale” is “broader than and inclusive of the price.” Thus, any charge that is part of the sale price of interstate or international services is also part of the sales of those services. As a result, the charges were part of the sales of exempt interstate and international telecommunications services and exempt from service provider tax under the amended statute as well. State Tax Assessor v. MCI Commc’ns Servs., Inc., Dkt. No. Ken-16-358 (Me. June 15, 2017).