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Tennessee Sales Tax Law Does Not Discriminate Against Satellite Television Providers


 Tennessee court says taxing satellite subscription fees is okay.

DIRECTV, Inc, and EchoStar Satellite Corporation (now DISH Network L.L.C.) took the Tennessee Commissioner of Revenue to Court over a sales tax law that it contends “unconstitutionally discriminates against satellite television providers.” The trial court ruled in favor of the satellite television providers. The Tennessee Court of Appeals at Nashville did not.

As explained in the Court of Appeals opinion, Tennessee law “taxes the entire subscription fee billed to satellite customers while the first $15 of the subscription fee billed to cable customers is exempt.”

In its opinion, the court delves into the challenges to disparate taxation of satellite and cable providers, the history of taxation of satellite and cable providers by Tennessee, and the distinction between satellite and cable providers. Ultimately, it concludes that “satellite providers and cable providers are not substantially similar entities for purposes of the Commerce Clause.” As a result, the court reversed the trial court’s judgment in favor of DIRECTV and DISH. Read the full opinion for additional details.

Unless the decision of the Court of Appeals is challenged, the Tennessee Department of Revenue will expect satellite television providers to remit sales tax on the first $15 of customer subscription fees.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.