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Virginia Supreme Court Says ITFA Exempts Certain Internet Services from Local BPOL Taxation
Case No. 210568, Va. (7/14/22). The Virginia Supreme Court (Court) reversed a circuit court ruling to hold that a communications company was entitled to a refund of local business, professional and occupational license (BPOL) taxes paid to a Virginia county on the sale of certain internet access services, because:
The federal Internet Tax Freedom Act (ITFA) preempts the Virginia county’s collection of such taxes, and
ITFA’s “grandfather clause” does not apply to the claims at issue.
In doing so, the Court explained that the ITFA’s grandfather clause essentially provides that certain preexisting taxes on internet access services were exempt from the ITFA’s moratorium if generally imposed and actually enforced prior to October 1, 1998; however, in this case, the Virginia county failed to meet its burden of proving that it had collected the BPOL tax on such services prior to October 1, 1998. Accordingly, the Court remanded the case back to the circuit court for a determination of the refund due to the company. Please contact us with any questions.
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