The Iowa Supreme Court says an Arizona company providing phone service via the internet to western Iowa can be taxed as a phone company. Cable One Incorporated provides cable TV services to Sioux City, and in 2006 it began offering what’s called Voice over the Internet Phone service. The Iowa Department of Revenue ruled the internet phone service qualified Cable One as a telephone company and it should pay state property tax.
Cable One argued its wiring was not originally installed to provide telephone service and it should not have to pay the tax. An Administrative Law Judge, and a later Polk County District Court ruled Cable One was operating a cable broadband network and not phone lines, so it shouldn’t be defined as a phone company.
The Iowa Supreme Court looked at the historical interpretation of laws governing technology and says when telephone service began while the telegraph was still being used, phone service was not mentioned in state statutes. But the courts found both services provided communication through wires through different methods are were both subject to taxes. The Supreme Court says even though Cable One’s telephone service is provided through wires originally intended for cable TV, it is still acting as a telephone company.
The Supreme Court sent the case back to the district court for more action.
See the full ruling here: Internet phone ruling PDF