People's Choice TV Corp., Inc. v. City of Tucson
In People's Choice TV Corp., Inc. v. City of Tucson, 202 Ariz. 401, 46 P.3d 412 (2002), the taxpayer received local and out-of-state programs at its facility outside Tucson and used microwave frequencies to transmit the programs to its customers in Tucson. Id. at 402, P 2, 46 P.3d at 413.
Customers, after paying a fee, received the programming through microwave antennae installed by taxpayer. Id.
The court of appeals upheld the city's imposition of the transaction privilege tax on taxpayer because it "interpreted 42-6004(A)(2) as prohibiting only the taxation of interstate '"transmissions"' of information, not the taxation of the 'services ancillary to the interstate transmission of signals.'" Id. at 403, P 6, 46 P.3d at 414. The court of appeals found taxpayer was being taxed on the provision of services using telecommunication and accordingly the tax was not on "interstate telecommunications services" as prohibited by 42-6004(A)(2). Id.
In reversing and declining to adopt the court of appeals' interpretation of 42-6004(A)(2), the Arizona Supreme Court stated "we believe the phrase 'interstate telecommunications services' requires a more expansive meaning than the court of appeals gave it when interpreting 42-6004(A)(2)." Id.
The supreme court held it was not just "transmissions" that needed to be included in the phrase "interstate telecommunications services" but also the services that were provided. Id. at 403, P 8, 46 P.3d at 414.