Industry challenge to Kentucky wireless tax can move forward

WASHINGTON-A stay has been lifted in the mobile phone industry’s challenge to a Kentucky wireless tax. A federal court has blocked the tax from being enforced.
Industry’s suit and the tax itself have been on hold since December 2005 when the U.S. District Court in Frankfort, Ky., granted industry’s motion for preliminary injunctive relief and suspended legal proceedings pending the outcome of a truth-in-billing case before the 11th U.S. Circuit Court of Appeals. The 11th Circuit last July overturned a Federal Communications Commission’s ruling that pre-empted states from regulating line items on consumers’ bills. The court later rejected FCC and industry requests for the case to be reheard.
With the 11th Circuit case over-though industry next month will ask the Supreme Court to review the appellate decision-the suit in Kentucky can now proceed. At the same time, the injunction preventing the tax from kicking in will remain intact. The tax was to have become effective Jan. 1, 2006.
The nation’s major mobile phone operators argue that the 2005 Kentucky law banning operators from passing onto subscribers a 1.3-percent gross receipts wireless tax represents illegal wireless rate regulation. Congress in 1993 said states could not regulate wireless rates.
The wireless industry hopes to get help from Congress this year on the tax front. Sens. John McCain (R-Ariz.) and Jim DeMint (R-S.C.) introduced legislation in Congress that would mandate a three-year moratorium on new discriminatory wireless taxes by states.