DALLAS, Nov. 12, 2014 /PRNewswire/ -- In City of Florence v. Flanery, Kentucky Court of Appeals, No. 2013-CA001112-MR (November 7, 2014), the Kentucky Court of Appeals ("Court") struck down Kentucky's Multichannel Video Programming and Communications Services Tax ("telecommunications tax") as being unconstitutional, reversing a Circuit Court Opinion and Order. This decision stems from a case brought by several cities in Kentucky in September 2011, which argued that the telecommunications tax violated the Kentucky Constitution Sections 163 and 164.
The telecommunications tax, enacted in 2005, took effect on January 1, 2006. This telecommunications tax imposes a 3% excise tax on all retail purchases of multichannel video programming services, 2.4% tax on the gross revenues received by all providers of these services, and a 1.3% tax on the gross revenues received by providers of communications services. Prior to enactment, local governments collected franchise fees from the telecommunications companies and cable providers, following the Kentucky Constitution Sections 163 and 164.
Under the provisions of the telecommunications tax, local governments are prohibited from collecting on franchise fees. The Court stated telecommunications tax has frustrated local governments' ability to collect franchise fees, which the Court believes can only be accomplished through constitutional amendment. Accordingly, it was held that the telecommunications tax violated the Kentucky Constitution, specifically Sections 163 and 164, by not allowing local governments to assess and collect franchise fees.
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