Kentucky Citizens Must Pay Taxes on DirecTV, EchoStar Bills

The U.S. Court of Appeals for the Sixth District has rejected a request by satellite TV companies that it reconsider its earlier ruling upholding taxes on DirecTV and Dish Network programming in Kentucky.

The ruling, filed Sept. 18, said that no judge had voted to support the rehearing request.

DirecTV and EchoStar had joined to fight the tax levy, approved by the state legislature in 2005 and applied in 2006.

The legislature simplified its tax structure as it applies to video providers. Vendors pay a 3% excise tax and a 2.4% tax on gross revenues. The DBS companies sued Mark Treesh, the commissioner for the Kentucky Department of Revenue, to overturn the taxes.

DirecTV and EchoStar argued that since their services are delivered from the sky, and since they have no significant in-state employee base, that state taxes are illegal.

But the appeals court panel ruled in May that the taxes do not violate the U.S. Constitution and upheld their application.

Other states, including Florida, Tennessee, Ohio and North Carolina, have taxed DBS service. Those levies are being challenged in court as well.