Level 3 Communications v. STATE CORP. COM'N
282 Va. 41
| Va. | 2011Background
- Level 3 filed applications with the SCC to correct the SCC's certifications of gross receipts to the Department for years beginning in 2002, challenging inclusion of Internet-related revenues.
- SCC concluded it lacked authority to exclude Internet-related revenues from gross receipts and dismissed Level 3's applications on that basis.
- Level 3 argued the ITFA prohibits state taxation of Internet-related revenues and that the SCC must exclude such revenues from gross receipts for minimum tax purposes.
- Department joined the Staff's motion to dismiss, arguing the SCC's role is limited to certifying gross receipts and ITFA does not require exclusion by the SCC; ITFA assigns tax imposition to the Department.
- A hearing examiner suspended proceedings to obtain a ruling from the Department; the Department declined, and the examiner later recommended that the SCC had no authority to exclude Internet-related revenues.
- The SCC, after reviewing, affirmed the dismissal to the extent it barred excluding Internet-related revenues and held ITFA does not affect the SCC's duties because the SCC does not impose tax.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does ITFA reach the SCC's certification function? | Level 3 argues ITFA affects the SCC's certification. | SCC contends ITFA does not touch its non-tax-certification function. | ITFA does not reach the SCC's certification function. |
| May the SCC deduct Internet-related revenues from gross receipts? | Level 3 asserts ITFA requires exclusion of Internet revenues from gross receipts. | SCC has no authority to create deductions not in the statute. | SCC has no authority to deduct Internet-related revenues not enumerated in the statute. |
| What is the SCC's proper role under Virginia law in certifying gross receipts? | Level 3 relies on ITFA to modify the certification impact. | SCC's role is limited to certifying gross receipts; it cannot rewrite tax statutes. | SCC's role is limited to certification; ITFA does not authorize changes. |
| Does ITFA alter Virginia's minimum tax framework as applied by the Department? | Level 3 contends ITFA indirectly affects tax liability via gross receipts. | ITFA prohibits certain taxes on Internet access but does not amend Virginia's tax scheme administered by the Department. | ITFA does not alter the Department's or Virginia's tax framework as to the SCC's certification. |
Key Cases Cited
- Northern Virginia Elec. Coop. v. Virginia Elec. & Power Co., 265 Va. 363 (Va. 2003) (SCC regulatory jurisdiction is not plenary; must follow statutes)
- Potomac Elec. Power Co. v. State Corp. Comm'n, 221 Va. 632 (Va. 1980) (SCC's jurisdiction is limited by statute)
- City of Richmond v. Chesapeake & Potomac Telephone Co., 127 Va. 612 (Va. 1920) (SCC cannot rewrite tax statutes)
- Commonwealth v. Washington Gas Light Co., 221 Va. 315 (Va. 1980) (SCC not authorized to create extra deductions)
- Washington Gas Light Co., 221 Va. 315 (Va. 1980) (precedent on statutory interpretation and SCC limits)
- Virginia Cellular LLC v. Virginia Dep't of Taxation, 276 Va. 486 (Va. 2008) (tax certification framework and minimum tax context)
- Piedmont Env'tl. Council v. Va. Elec. & Power Co., 278 Va. 553 (Va. 2009) (statutory construction and agency authority)
- Halifax Corp. v. First Union Nat'l Bank, 262 Va. 91 (Va. 2001) (plain meaning governs statutory interpretation)
- Arogas, Inc. v. Frederick Cnty. Bd. of Zoning Appeals, 280 Va. 221 (Va. 2010) (statutory interpretation and agency limits)