TAXATION – Federal Telecommunications Act preempting local tax: Directv, Inc. and Echostar Satellite, LLC v. Commissioner, Dept. of Revenue (SC 6.25.2009)

Directv, Inc. and Echostar Satellite, LLC v. Commissioner, Dept. of Revenue and Frankfort Independent School District
2007-SC-000714-DG June 25, 2009
Opinion by Justice Abramson. All sitting; all concur.

Direct broadcast satellite (DBS) television providers brought an action seeking to have KRS 160.140, which imposes a gross receipts tax declared preempted under the federal Telecommunications Act of 1996. The circuit court awarded summary judgment to the DBS providers. The Court of Appeals reversed, holding that because the tax was levied to fund schools, it was, in effect, a state tax, not local, and thus was not preempted by the Act. The Supreme Court reversed the Court of Appeals and reinstated the circuit court’s summary judgment in favor of the DBS providers. The Court held that the tax was of the type expressly prohibited by the Act because the taxes were imposed on a district-by-district basis. The Court noted that the Act’s legislative history buttressed this conclusion.