Utah Tax Commission Rejects Qwest Call For Statewide Levy


The Utah State Tax Commission has rejected a request by Qwest Communications to tax cable operators in the state like incumbent telephone providers: on a statewide basis, rather than franchise to franchise.

The regulators, who issued their final written order today, noted that as convergence continues, with cable operators selling more and more voice services, taxation should be revised. But that should be taken up by the legislature.

Qwest petitioned the regulators in June, stating that since operators including Comcast Corp., the state's largest provider, now offer telephony services, they should be subject to state taxation because they meet the definition of an entity that falls under the commission's regulation. Rule 62, cited by Qwest, says that commission regulates assessment of "all property which operates as a unit across county lines." Because 

Comcast is now a telephony provider, operating across not only county but state lines, is should be taxed by the state agency, the telco argued.

Comcast countered that only 2% of its tangible personal property is used to deliver voice-over-Internet-protocol services. Its main business continues to be video delivery, which is regulated at the local level. State taxation would result in double taxation, the operator argued.

The commission disagreed with the latter argument, and expressed the belief of its members that cable operators could eventually be taxed by the state for their telephone property "at some point." The commission did not state what the tipping point would be.