NEW CINGULAR WIRELESS PCS, LLC, Petitioner, v. INDIANA DEPARMENT OF STATE REVENUE, Respondent.
Case No. 24T-TA-00004
IN THE INDIANA TAX COURT
March 31, 2026
MCADAM, J.
FOR PUBLICATION
BENJAMIN BLAIR
FAEGRE DRINKER
BIDDLE & REATH LLP
Indianapolis, IN
ATTORNEYS FOR RESPONDENT:
THEODORE E. ROKITA
ATTORNEY GENERAL OF INDIANA
LYDIA A. GOLTEN
STEPHEN J. REEN
MICHELLE R. WYATT
DEPUTY ATTORNEYS GENERAL
Indianapolis, IN
ORDER ON PARTIES’ CROSS-MOTIONS FOR SUMMARY JUDGMENT
MCADAM, J.
This is a case of first impression concerning the scope of Indiana’s telecommunications equipment sales and use tax exemption. At the heart of the parties’ dispute is the meaning of the phrase “radio or microwave transmitting or receiving equipment” and whether that phrase includes cell phones. The Department argues that the exemption is limited to equipment that is part of New Cingular’s central network infrastructure, used to provide service to all of its customers, and is within New
FACTS & PROCEDURAL HISTORY1
New Cingular Wireless PCS, LLC is a telecommunications company that sells retail wireless telecommunications services and mobile phones. (See Jt. Stip. at 1–2 ¶¶ 3, 5, 6.) It is a subsidiary of AT&T Inc. and is engaged in business in Indiana and nationally. (Jt. Stip. at 1–2 ¶¶ 1, 3.)
In 2018 and 2019, New Cingular purchased cell phones (also referred to as “mobile handsets” by New Cingular), such as Apple iPhones and Samsung Galaxy devices, for the purpose of reselling the phones to its customers. (Jt. Stip. at 2 ¶¶ 4, 5, 6.) Because the phones were intended for resale, New Cingular did not pay sales tax on its purchase of the phones and, instead, provided the phone suppliers with gross retail tax exemption certificates. (See Jt. Stip. at 2 ¶ 6.) The certificates allowed New Cingular to purchase the phones tax free because it intended to hold them in inventory for resale to its customers at a later time.2 (Jt. Stip. at 2 ¶ 6.)
When New Cingular withdrew the phones used to fulfill these contractual obligations from its inventory, it paid use tax to the Department on the purchase price of the phones in the amount of $2,735,296.43 for 2018 and $2,546,393.04 for 2019. (See Jt. Stip. at 3 ¶¶ 9, 11, 12.) Later, New Cingular requested a full refund for the use tax it paid for 2018 and 2019, claiming the phones were statutorily exempt from use tax. (Jt. Stip. at 3 ¶13, 4 ¶ 17; Jt. Stip. Ex. A; Jt. Stip. Ex. B.) New Cingular argued that the cell phones were exempt under
The Department’s Utility Refunds Division denied New Cingular’s refund claims on identical grounds, rejecting the claimed exemption under Section 13 and concluding that New Cingular owed sales and use tax on the phones it used to fulfill its contractual
After the Refunds Division issued its denials, New Cingular filed administrative protests with the Department’s Legal Division. (Jt. Stip. at 4 ¶¶ 16, 20.) The Legal Division affirmed the refund denials by the Refunds Division on the grounds that the Section 13 exemption does not apply to either use of the cell phones by New Cingular. (See Jt. Stip. Ex. C at 4; Jt. Stip. Ex. D at 4.) The Legal Division stated:
IC § 6-2.5-5-13 provides an exemption to a specific list of equipment used in providing telecommunication services. The exemption includes “radio or microwave transmitting or receiving equipment,”
and cell phones are that type of equipment. However, the use of the phones as radio or microwave transmitting or receiving equipment is performed by Taxpayer’s customers and not by Taxpayer itself. Taxpayer’s “use” of the phones is to provide the phones to customers via new contracts or replacement warranties while the exemption provided under
IC § 6-2.5-5-13 is applicable to equipment used in providing telecommunication services. Taxpayer does not operate the cell phones as radio or microwave transmitting or receiving equipment; rather Taxpayer’s customers use the phones in that manner. Further, the cell phones do not perform a function similar to the function performed by any of the property described inIC § 6-2.5-5-13(1)(A) as plainly required byIC § 6-2.5-5-13(1)(B) . Ultimately, Taxpayer’s reliance onIC § 6-2.5-5-13 is misplaced and this statute does not apply to Taxpayer’s purchase and disposition of the cell phones under protest.
(Jt. Stip. Ex. C at 4; accord Jt. Stip. Ex. D at 4.) In conjunction with the Legal Division’s protest determination, the Department also issued final orders denying both of New Cingular’s refund claims. (Jt. Stip. at 4 ¶ 21.)
New Cingular appealed both denial orders to this Court. The parties have now filed cross motions for summary judgment asking the Court to grant summary judgment on all issues in this matter. (See Pet’r’s Mot. Summ. J. at 2–3; Resp’t’s Mot. Summ. J. at 2.) Both parties agree that there are no genuine issues of material fact and that the motions turn entirely on questions of law. (See Pet’r’s Mot. Summ. J. at 1; Resp’t’s Mot. Summ. J. at 1–2.) This Court heard oral arguments on the parties’ motions and subsequently requested additional briefing on a pair of questions raised by the cross motions.
STANDARD OF REVIEW
Summary judgment is proper only when the designated evidence demonstrates that no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). Summary judgment is appropriate “if
DISCUSSION
The issue presented for the Court’s consideration by the parties is whether New Cingular’s use of cell phones to fulfill its contractual obligations to certain customers is exempt from the use tax by operation of Section 13. The Department asserts that the exemption is not applicable to New Cingular’s use on two separate grounds. It first argues that cell phones are not a type of property covered by the telecommunications exemption because, while cell phones are “radio or microwave transmitting or receiving equipment,” the context of the exemption is limited to a provider’s “central infrastructure” that provides service to all customers and remains within the provider’s custody and control. In the alternative, the Department argues that, even if cell phones are covered,
The Court disagrees with the Department in both instances. Section 13 does not limit the exemption to a subset of “radio or microwave transmitting or receiving equipment.” The exemption includes tools used in and adapted to facilitate the sending or receiving of radio or microwaves. Because the cell phones at issue in this case transmit and receive radio waves and microwaves and are necessary to access New Cingular’s wireless telecommunications services, they qualify for the exemption. Furthermore, New Cingular is the party acquiring the taxable property for the purposes of the exemption because the relevant “acquisition” for purposes of applying the exemption here is New Cingular’s acquisition of the cell phones from its suppliers. For these reasons, the Court grants partial summary judgment to New Cingular.
I. The Exemption under Indiana Code § 6-2.5-5-13 .
The exemption that New Cingular invokes in this case generally exempts specific types of telecommunications equipment acquired by certain persons.4 To receive the exemption, a person must satisfy three elements: (1) there must be a transaction involving tangible personal property; (2) the property must be of a certain type; and (3) the person acquiring the property must either be a telecommunications service provider or use the property to provide certain services.
Transactions involving tangible personal property are exempt from the state gross retail tax, if:
- the property is:
- classified as central office equipment, station equipment or apparatus, station connection, wiring, or large private branch exchanges according to the uniform system of accounts which was adopted and prescribed for the utility by the Indiana utility regulatory commission;
- mobile telecommunications switching office equipment, radio or microwave transmitting or receiving equipment, including, without limitation, towers, antennae, and property that perform a function similar to the function performed by any of the property described in clause (A); or
- a part of a national, regional, or local headend or similar facility operated by a person furnishing video services, cable radio services, satellite television or radio services, or Internet access services; and
- the person acquiring the property:
- furnishes or sells intrastate telecommunication service in a retail transaction described in
IC 6-2.5-4-6 ; or- uses the property to furnish: (i) video services or Internet access services; or (ii) VOIP services.
Id.
The parties’ disagreement on summary judgment exclusively revolves around the second and third elements of the exemption. Neither party disputes that the first element of the exemption is met — that there is a transaction involving tangible personal property. Instead, they disagree (1) whether cell phones are an exempt type of property covered by the phrase “radio or microwave transmitting or receiving equipment” and (2) whether New Cingular can satisfy the third element since it was not the party “acquiring” the phones when it used them to fulfill its contractual obligations to
II. The exemption includes New Cingular’s cell phones.
Resolving the disagreement about the second element of the exemption (i.e., the scope of the statutory phrase “radio or microwave transmitting or receiving equipment”) turns on whether the statutory phrase should be understood according to its plain and ordinary meaning alone or whether that meaning is narrowed by other words in the exemption statute. New Cingular urges this Court to simply apply the plain and ordinary meaning, arguing that the phrase comprises any and all implements which send (“transmit[ ]”) or accept (“receiv[e]”) radio-frequency electromagnetic signals (“radio”) or high-frequency electromagnetic signals (“microwave”) or any combination thereof. The Department contends that the interpretive exercise is more nuanced. It says the term is limited by the surrounding context of the exemption statute and the nature of the other types of property listed in Subpart 1(A) of the exemption. Under the Department’s theory, the exemption applies only to equipment (1) that is within “New Cingular’s custody and control and is used to provide service to all of New Cingular’s customers” and (2) that is “central infrastructure used by New Cingular in their day-to-day business.”5 (Resp’t’s Suppl. Br. at 3, 7–8; see also Resp’t’s Resp. Pet’r’s Suppl. Br. at 2). The Department’s interpretation hinges on both its view of the statute’s overall purpose and how it understands the clause in Section 13, immediately following the
The Court ultimately cannot accept the Department’s proposed interpretation. The phrase “radio or microwave transmitting or receiving equipment” does not include the limitations engrafted by the Department. When the words are understood by their plain and ordinary meaning, the phrase broadly describes items, such as cell phones, that are used in and adapted to facilitate either the sending or receiving of radio waves or microwaves. Since New Cingular’s cell phones contain devices that allow the transmission and reception of radio waves or microwaves and are necessary to access New Cingular’s telecommunications services, (Jt. Stip. at 2 ¶ 5), the exemption applies to the cell phones at issue.
A. The Context of the Statute as a Whole.
The keystone of the Department’s argument is that the “statute as a whole” evinces a legislative intent to limit the exemption to those portions of a telecommunications provider’s central network infrastructure that are within the provider’s custody and control and used to provide service to all customers. (Resp’t’s Br. Supp. Mot. Summ. J. at 11–12; Resp’t’s Suppl. Br. at 7–8.) The Department asserts that all of the other types of exempt property listed in the statute are part of a
The Department, however, takes for granted the meaning of the words used in Section 13. Many of the statutory terms used in the exemption statute carry peculiar meaning specifically derived from the telecommunications industry and thus require reference to industry-specific sources.
To be sure, some of the terms listed in the exemption appear to align with the Department’s proposed interpretive gloss, but others belie its viability altogether. For example, the terms “central office equipment,” “mobile telecommunications switching office equipment,” and “headend” seem to contemplate, at least in part, property and equipment whose function might reasonably be characterized as central network infrastructure controlled by the telecommunications provider and used to serve a portion of the customer base. In the industry,
- “Central office equipment” refers to equipment for a “central office,” or a “[t]elephone company facility where subscribers’ lines are joined to switching equipment for connecting other subscribers to each other, locally and long distance.” Central office, NEWTON’S TELECOM DICTIONARY at 194.
- “Mobile telephone switching office” refers to a “switch that serves to interconnect fixed base station (BS) antennas and, thereby, to interconnect radio cells and the mobile stations (MSs) within them.” Mobile telephone switching office, WEBSTER’S NEW WORLD TELECOM DICTIONARY 324 (2008) [hereinafter WEBSTER’S TELECOM DICTIONARY].7 And,
- “Headend” refers to “[t]he originating point of a signal in cable TV systems” or “[a] central control device required within some [local area
Yet, several other terms (e.g., “station equipment,” “station . . . apparatus,” and “large private branch exchanges”) plainly contemplate small-scale, decentralized, customer-sided equipment, owned and controlled by a telecommunications provider’s customers:
- “Station” refers a “terminal or endpoint on a network, such as a telephone set or data terminal.” Station, WEBSTER’S TELECOM DICTIONARY at 460 (emphasis added). See also Station, NEWTON’S TELECOM DICTIONARY at 930 (“a telephone . . . or a telephone instrument.”).
- “Station equipment” refers to “[t]elephone instruments and associated equipment furnished to subscribers.” Station equipment, NEWTON’S TELECOM DICTIONARY at 931 (emphasis added).
- “Station apparatus” refers to “teletypewriter equipment,8 telephone and miscellaneous equipment, small private branch exchanges and radio equipment (excluding mobile), installed for customer’s use.”9 Common Carrier Services, 51 FED. REG. 43498, 43517 (Dec. 2, 1986) (emphasis added). And,
- “Private branch exchange,” irrespective of whether the adjective “large” appears before it or not, refers to, “[i]n the simplest terms[,] . . . a telephone
In the end, whatever categorical throughline connects the types of property exempted by Section 13, it cannot be said with any certainty that that throughline excludes cell phones. With the technical meanings of these terms front and center, it becomes apparent that the telecommunications exemption embraces a mixture of large and small-scale, centralized and decentralized, provider- and customer-sided property. At a minimum, the inclusion of the terms “station equipment” and “station apparatus,” whose dictionary and statutory definitions refer to telephones and telephone instruments, undermines the Department’s best attempts to pigeonhole the statute as a recitation of only sizable or extensive, centrally-located, and company-facing equipment. And, while the record lacks evidence that would allow the Court to make any definitive findings, common sense and experience in the twenty-first century further suggest that cell phones likely serve a similar purpose in a wireless telecommunications system to
The Court declines the invitation to superimpose a speculative view of the exemption’s purpose onto the statute. It would be improper to “say that since the overall purpose of the statute is to achieve x, any interpretation of the text that limits the achieving of x must be disfavored.” ANTONIN SCALIA & BRYAN GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 168 (2012). The Department’s position simply lacks textual support. The statute does not use the term “infrastructure,” nor does it limit the exemption to property in the custody or control of the provider that is used to serve all of the provider’s customers. And it does not include any express language that would suggest such restrictions. Ultimately, adopting such a limitation would laden the exemption with judicial barnacles more likely to confuse than simplify. See Ames v. Ohio Dep’t of Youth Servs., 605 U.S. 303, 313 (2025) (Thomas, J., with whom Gorsuch, J., joins, concurring) (noting that judge-made doctrines “have a tendency to distort the
B. The Effect of “including, without limitation.”
The Department also argues that the meaning of the term “radio or microwave transmitting or receiving equipment” is limited by the list that immediately follows it. That list modifies the phrase and reads “including, without limitation, towers, antennae, and property that perform a function similar to the function performed by any of the property described in clause (A).”
The word “including” can imply different meanings depending on the context. Ordinarily, the word “including” is used “as a term of limitation, as specifying particularly
Here, the word “including” is used as a term of illustration or enlargement and not of limitation. Section 13 does not use the term “including” in isolation but joins it with the phrase “without limitation.” See
Absent express language to the contrary, the Court will not read the “including, without limitation” clause to narrow the meaning of the phrase “radio or microwave transmitting or receiving equipment.”
C. The meaning of “radio or microwave transmitting or receiving equipment.”
Having addressed the Department’s arguments about the overall context of the statute and its “including, without limitation” clause, the Court must determine whether the cell phones in question qualify as “radio or microwave transmitting or receiving equipment.” As a threshold matter, the Court must first ascertain whether the term, as used in the exemption statute, is properly understood according to its plain and ordinary meaning or whether it should be given a technical, “peculiar . . . meaning.”
Turning to the meaning of the exemption, the Court finds that the composite phrase “radio or microwave transmitting or receiving equipment” includes four subcategories of devices: radio transmitting equipment, radio receiving equipment, microwave transmitting equipment, and microwave receiving equipment. Examining the meaning of each individual word is helpful in piecing together the common meaning of each subordinate term:
- “Radio,” in its adjectival form, means “having to do with electromagnetic wave frequencies between c. 10 kilohertz and c. 300,000 megahertz.” Radio, WEBSTER’S NEW WORLD COLLEGE DICTIONARY 1107 (3d ed. 1996) [hereinafter WEBSTER’S NEW WORLD COLLEGE].
- “Microwave,” in its adjectival form, means “designating or of that part of the electromagnetic spectrum associated with the larger infrared waves and the shorter radio waves: used for radar, communications, etc. and generally regarded as from 300,000 to 300 megahertz.” Microwave, WEBSTER’S NEW WORLD COLLEGE at 857.
“Transmitting” means “send[ing] or caus[ing] to go from one person or place to another, esp. across intervening space or distance; transfer[ing]; dispatch[ing]; convey[ing],” or “send[ing] out (radio or television broadcasts, etc.) by electromagnetic waves.” Transmitting, WEBSTER’S NEW WORLD COLLEGE at 1421. - “Receiving” means “tak[ing] or get[ting] (something given, offered, sent, etc.),” Receiving, WEBSTER’S NEW WORLD COLLEGE at 1120, or “acquir[ing] or tak[ing] (something . . . transmitted).” Receiving, WEBSTER’S II NEW COLLEGE DICTIONARY 924–25 (1995).
- “Equipment” means “the implements (as machinery or tools) used in an operation or activity,” Equipment, WEBSTER’S THIRD INTERNATIONAL DICTIONARY 768 (1961, 2002 reprint) [hereinafter WEBSTER’S THIRD], specifically tools “adapted to facilitate a given work.” Implement, WEBSTER’S THIRD at 1134 It can also refer to a “set of tools, kit, etc., assembled for a specific purpose.” Equipment, COLLINS ENGLISH DICTIONARY AND THESAURUS 379 (1993).
When assembled, the following meanings emerge for each of the subcategories:
- “Radio transmitting equipment” is an item used in and adapted to facilitate the sending of electromagnetic radio wave frequencies.
- “Radio receiving equipment” is an item used in and adapted to facilitate the acquiring of electromagnetic radio wave frequencies.
- “Microwave transmitting equipment” is an item used in and adapted to facilitate the sending of larger infrared or shorter radio electromagnetic wave frequencies.
“Microwave receiving equipment” is an item used in and adapted to facilitate the acquiring of larger infrared or shorter radio electromagnetic wave frequencies.14
While qualifying under at least one subcategory suffices, the subcategories themselves needn’t be mutually exclusive — devices can, for example, both transmit and receive signals. See, e.g., Transceiver, WEBSTER’S NEW WORLD COLLEGE at 1419 (defining “transceiver” as an “apparatus contained in a single housing, functioning alternately as a radio transmitter and receiver”).
From these plain and ordinary meanings, the Court finds that New Cingular’s cell phones qualify for Section 13’s exemption. As the parties jointly stipulate, devices allowing the transmission and reception of telecommunications signals, including radio waves or microwaves, are contained within, or integrated into, the cell phones in question. (See Jt. Stip. at 2 ¶ 5.) And devices like the cell phones in question are required for customers to use New Cingular’s wireless telecommunications services. (See Jt. Stip. at 2 ¶ 4.) These facts demonstrate that the cell phones at issue are used in and adapted to facilitate the sending and receiving of radio or microwave frequencies.
This conclusion aligns with the Department’s own view of the matter. At both the administrative level and before this Court, the Department has consistently maintained that the cell phones at issue “are in fact ‘radio or microwave transmitting or receiving equipment.’” (Resp’t’s Br. Supp. Mot. Summ. J. at 12; Resp’t’s Resp. Pet’r’s Mot. Summ. J. at 2; Jt. Stip. Ex. C at 16, Jt. Stip Ex. D at 16.) (“The exemption includes ‘radio
III. New Cingular is “the person acquiring the property” for use tax purposes.
The Court now turns to the Department’s alternative argument regarding the third and final element of the exemption — that the person acquiring the property either sells retail telecommunications services or uses the property to provide certain other services (i.e., video, internet access, or VoIP). The parties agree that New Cingular sells retail interstate telecommunications services as defined by the exemption, but the Department claims that New Cingular is not entitled to the exemption because it is “not the party ‘acquiring’ the [cell phones]” as required by Subpart 13(2)(A). According to the Department, the exemption does not apply because “New Cingular’s customers . . . acquired and utilized the [cell phones] as ‘transmitting or receiving equipment,’” and not New Cingular, who “only acquired [them] as a means to satisfy its agreements.” (Resp’t’s Resp. Pet’r’s Mot. Summ. J. at 4.) New Cingular responds that the Department’s argument contradicts its position that New Cingular owes use tax on the cell phones in the first instance because, if it was the Department’s contention that New Cingular did not acquire the cell phones, then New Cingular would owe no use tax.
Whether the use, storage, or consumption of taxable property is exempt from use tax depends on whether the acquisition of the property was exempt from sales tax (i.e., the exemption of New Cingular’s use of the phones depends on whether its purchase of the phones was exempt from sales tax). This is because Indiana’s sales and use tax exemptions are expressly styled as sales tax exemptions (i.e., the exemptions apply to transactions, not to use, storage, or consumption), see generally
Turning to the telecommunications exemption in Section 13, then, means the reference in Subpart 13(2) to the “person acquiring the property” is to the person whose acquisition (and subsequent use) is the basis for the sales tax liability in the first transaction. By its text, Section 13 is a sales tax exemption. See
Therefore, New Cingular’s use of the cell phones to fulfill its contractual obligations to its customers is exempt from use tax under Section 13 if its acquisition of the cell phones from its suppliers would be exempt from the sales tax under Section
The Department’s contrary argument conflates these two distinct transactions and incorrectly focuses on the acquisition of the phones (by New Cingular’s customers) in the second transaction instead of the use of the phones (by New Cingular) in the second transaction. But, as explained above, for purposes of whether Section 13 exempts New Cingular’s use, the relevant acquisition is New Cingular’s (from its suppliers) and the relevant use is New Cingular’s (to fulfill its contractual obligations). The acquisition and use of the phones by New Cingular’s customers is a wholly distinct question with its own potential tax consequences. Those customers may accrue their own sales and use tax liabilities as a result of their acquisition and use of the phones.
Having established that the relevant acquisition is New Cingular’s purchase of the phones from its suppliers, the remaining question is whether that acquisition would have been exempt from sales tax under Section 13. It would. The parties have jointly stipulated that, during the relevant tax years, New Cingular was engaged in the
CONCLUSION
For the foregoing reasons, the Court DENIES the Department’s motion for summary judgment and GRANTS New Cingular’s motion for summary judgment, in part. The Court is unable to grant summary judgment to New Cingular insofar as it seeks to have the Court order the Department to refund the use tax paid. The parties have not briefed this issue and, as noted in the Department’s administrative orders, there remain factual questions regarding the amount of tax due.16 Under separate cover, the Court will schedule a case management conference with the parties to develop a case management plan regarding any and all issues that remain.
So ORDERED this 31 day of March, 2026.
Justin L. McAdam
Judge, Indiana Tax Court
Benjamin A. Blair, Lydia A. Golten, Stephen J. Reen, Michelle R. Wyatt