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Satellite TV Tax Shot Down in Ohio

The nation’s two major satellite service providers have won a tax victory in Ohio, but it may be short lived for the state’s tax collection department intends to appeal the ruling.

Judge Daniel Hogan of the Franklin County Court of Common Pleas in Columbus ruled Nov. 7 that the state’s four-year-old 5% sales tax on satellite television is unconstitutional for it does not apply to cable. The ruling was not unexpected; in October 2005 the judge issued a summary judgment on some of the issues in the case, finding before trial that there were enough facts to invalidate the tax.

A legislative committee designed the tax in 2003, but cable TV providers were carved out of the sales tax when they argued they are subjected to other local fees.

DirecTV and Echostar Communications have been hit with state taxes since 2000 in Florida, Kentucky, North Carolina and Tennessee. The providers have challenged all of the in-state taxes, arguing they are compensation for local business impact. Since their product is delivered from the sky, local taxes should not apply, the direct-broadcast satellite companies have argued.

Ohio’s Department of Taxation has indicated it will appeal the judge’s decision, and ask the court to allow the tax to be collected as the appeal is pending.