Union Telecom, LLC v. United States, 20-1052

The IRS taxes toll telephone services; in 2006 it changed its interpretation to require charges to vary by both time and distance to be taxable on prepaid phonecards.
IDT used a multi-entity structure (including a Puerto Rico carrier subsidiary and non‑carrier intermediaries) that the record shows was designed so no entity remitted the federal excise tax.
Union Telecom purchased prepaid cards through that chain and later sued the government for a tax refund after the IRS changed its interpretation.
At a three‑day bench trial before Judge Braden, witnesses (IDT CFO Joseph Farber and Union Telecom CEO Peter Shah) testified; the record contained uncontroverted evidence that IDT did not pay the tax.
The case was reassigned to a successor judge (Judge Wheeler). Union Telecom asked the successor judge to recall the witnesses under Rule 63; the judge denied the request and entered judgment denying the refund on two alternative grounds: (1) no tax had been paid by any entity in the chain, and (2) Union Telecom was not the first non‑carrier transferee.
On appeal the court held the successor judge erred in refusing to recall witnesses without finding a Rule 63 exception, but that error was harmless because rehearing the witnesses could not have changed the outcome; the judgment was affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a successor judge must recall witnesses under Rule 63 when requested	Rule 63’s mandatory language requires recall of material, disputed, available witnesses; Union Telecom asked to recall Farber and Shah	Successor judge claimed familiarity with the record and review of recordings was sufficient to decide without recalling witnesses	Court: Successor judge erred by not invoking one of Rule 63’s three exceptions (immaterial, undisputed, undue burden), but the error was harmless; affirmed
Whether Union Telecom is entitled to a tax refund / has standing as the first non‑carrier transferee	Union Telecom contended it was charged the tax as reflected in industry practice and thus entitled to a refund	Government showed uncontroverted evidence that IDT structured transactions to avoid the excise tax, that no entity paid the tax, and that Union Telecom was not the first non‑carrier	Court: Trial court correctly concluded no refund was warranted because no tax was paid; alternatively Union Telecom lacked standing as first non‑carrier; affirmed

Union Telecom, LLC v. United States, 144 Fed. Cl. 477 (2019) (trial‑level findings that IRS changed its interpretation and that IDT did not include/pay the excise tax)