Texas Tax Preempted by Federal Law, Court Rules.

The U.S. Court of Appeals held that a federal law preempted the assessment by the Texas Public Utility Commission. The FCC was authorized to impose a fee on interstate service providers to fund federal programs and states were authorized to impose a fee on intrastate providers “on an equitable” basis to fund state programs. Texas imposed its PUC fee on all services. States are permitted to apply their PUC fee to intrastate services only, not on interstate and international services. This caused multi-jurisdictional carriers to pay more tax than others in the state, violating the intent of the federal law. (AT&T Corp. and AT&T Communications of Texas LP v. Public Utility Commission of Texas (Dkt. No. 03-50454))

Posted on October 22, 2004