Directv, Inc. v. S.C. Dep't of Revenue
804 S.E.2d 633
S.C. Ct. App.2017Background
- DOR denied refunds for 2006–2008 and assessed taxes, interest, and penalties for 2009–2011.
- DIRECTV, a California corporation, provides satellite TV nationwide with four value drivers: content, distribution, marketing/sales, and customer care.
- Most revenue comes from customer subscriptions and equipment rentals; SC presence was limited to four local facilities and a few SC-based employees.
- DOR initially accepted DIRECTV’s 2006–2008 returns, then DIRECTV amended them to remove SC subscription receipts from the numerator.
- DOR later issued a field audit and assessed taxes for 2009–2011 based on 100% SC subscription receipts in the numerator, leading to contested case proceedings before the ALC.
- ALC, and ultimately the South Carolina Court of Appeals, affirmed the DOR’s sourcing and penalties findings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| IPA defined as the income-producing activity | DIRECTV argues IPA includes more than signal delivery. | DOR contends IPA is delivery of the signal to customers. | IPA is delivery of the signal; 100% SC subscription receipts in numerator. |
| Burden of proof in contested case | DIRECTV claims the ALC applied an improper burden of proof. | DOR maintains the preponderance standard governs. | BURDEN OF PROOF properly applied; DIRECTV failed to prove entitlement to relief. |
Key Cases Cited
- Sloan v. Hardee, 371 S.C. 495, 640 S.E.2d 457 (2007) (statutory interpretation; plain language guideposts)
- Media Gen. Commc'ns, Inc. v. S.C. Dep't of Revenue, 388 S.C. 138, 694 S.E.2d 525 (2010) (scope of apportionment and substantial evidence standards)
- CFRE, LLC v. Greenville Cty. Assessor, 395 S.C. 67, 716 S.E.2d 877 (2011) (statutory interpretation and deference to agency findings)
- Duke Energy Corp. v. S.C. Dep't of Revenue, 415 S.C. 351, 782 S.E.2d 590 (2016) (apportionment policy to reasonably represent activity in SC)
- Lockwood Greene Eng'rs, Inc. v. S.C. Tax Comm'n, 293 S.C. 447, 361 S.E.2d 346 (1987) (place of activity vs. origin of payment; reasonable approximation standard)