Controversy and Partial Repeal
On May 10, 2005 The American Bankers Insurance Group won an important victory in the fight against the telephone excise tax, when the United States Court of Appeals for the Eleventh Circuit reversed the decision of the United States District Court for the Southern District of Florida, which had held that the services that ABIG purchased from AT&T were taxable.
This was one of several U.S. Court of Appeals cases that the Internal Revenue Service lost on the same issue. The IRS withdrew only after losing several of such cases and winning none (at the Appeals level or higher).
A key issue in the controversy is the legal definition of "toll telephone service" as defined in section 4252(b) of the Internal Revenue Code, which provides (in part):
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- b) Toll telephone service
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- For purposes of this subchapter, the term “toll telephone service” means—
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- (1) a telephonic quality communication for which
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- (A) there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication
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Read more about this topic: Federal Telephone Excise Tax
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