The Iowa Supreme Court has ruled that the major hard wire phone provider in the state still has monopoly status and can be charged a different tax rate than wireless providers. Qwest communications initiated the suit after the Iowa Department of Revenue assessed its property in 2006.
Qwest argued it no longer has the monopoly on phone service it once had and it is unconsitutional to tax its equipment and personal property in Iowa while not imposing the same tax on wireless providers. The Iowa Supreme Court ruled that the difference in the tax treatment is rationally related to legitimate state interests in encouraging the development of new competitive telecommunications infrastructure.
The Supreme Court acknowledged that the number of wireless phone customers has rapidly increased and surpassed the number of hard line customers, but it said that Qwest still maintains a monopoly on hardline customers. It was noted that at the time of the suit, 85-percent of the wireless customers still had a hard line, so wireless lines are not necessarily a susbstitute for hard lines.
The Supreme Court ruling reversed the judgement of the district court and upheld the State Board of Tax Review’s assessment on Qwest. The assessment of Qwest’s property had originally been over one-billion dollars, but was later dropped to $780-million.
Qwest is now known as CenturyLink after a company merger.
See the complete ruling here: Qwest tax ruling PDF