Satellite TV Sues to Stop N.C. DBS Tax

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Direct-broadcast satellite providers made good on their threat to sue North Carolina over a sales tax on satellite-TV service.

EchoStar Communications Corp. and DirecTV Inc. are suing the state’s Department of Revenue, challenging the constitutionality of a 5% levy. The state has no sales tax on cable-TV services.

The companies previously sued to stop similar taxes in Ohio and Tennessee.

"These discriminatory taxes benefit local cable operators while unfairly burdening satellite-TV customers," EchoStar chief financial officer Michael McDonnell said.

The companies said North Carolina DBS subscribers' tax bill -- $30 million so far --violates the U.S. Constitution's commerce clause forbidding discriminatory taxation. The state rejected the companies' July request for a subscriber refund of the taxes.

Cable argued that the DBS taxes are fair because cable operators, unlike DBS distributors, pay local franchise fees.

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