Washington Supreme Court Holds that Tax on Federally Subsidized Wireless Services Violates Supremacy Clause

The Washington Supreme Court reversed a Washington Court of Appeals opinion, holding that the imposition of Washington retail sales tax on funds received by a telecommunication company through a federal program violates the intergovernmental tax immunity doctrine and the Supremacy Clause. The Court found that the transactions involved a buyer that operated as an instrumentality of the federal government, and therefore the tax burden on the federal government was unconstitutional. The intermediary nonprofit involved was created to effect the federal government’s telecom policy objectives, and the Federal Communications Commission played a significant role in its creation.

Source Deloitte

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