Progress for DBS Ops vs. Ohio Tax

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DirecTV Inc. and EchoStar Communications Corp. have gained a partial victory in their lawsuit challenging a two-year-old tax applied to direct-broadcast satellite customers in Ohio.

On Oct. 21, Judge Daniel Hogan of the Court of Common Pleas in Columbus issued a summary judgment ruling that the 5% sales tax is discriminatory. That was based on the fact the levy is imposed on programming beamed into the state via satellite but not on local cable operators, which pay other fees.

The case remains open because other issues have yet to be adjudicated, but the two satellite providers jointly issued a statement indicating that they are pleased with the result so far.

The DBS operators have challenged state taxes in multiple jurisdictions, including Florida, Kentucky, North Carolina and Tennessee. The taxes have different names and methods of computation, but DBS companies have challenged them all, arguing that they are compensation for local impacts. Since it has no local infrastructure, DBS should be exempt from these taxes, the companies argued.

The Ohio tax was approved in 2000 following a tax-reform-committee recommendation that satellite and cable service be taxed equally. Before the levy was passed, cable operators successfully argued that they were taxed locally and were exempted from the state fee.

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