Did a satellite provider with a cable franchise and fiber crossing public rights-of-way owe Virginia's Public Rights-of-Way Use Fee?

Subject

Taxpayer provides satellite services to the residents in a gated community; Public Rights-of-Way Use Fee

Plain-English summary

Virginia denied the provider's request to waive and refund the Public Rights-of-Way Use Fee. The provider held a cable franchise, delivered bulk service to a gated community, and used its own fiber infrastructure across public rights-of-way.

Those facts made it a cable operator subject to the fee under Va. Code §§ 56-468.1 and 15.2-2108.1:1. It had correctly charged, collected, and remitted the fee and was directed to continue doing so.

The ordinary administrative appeal was filed after the 90-day deadline, so Virginia considered the request as a protective refund claim instead. The claim still failed on the merits.

What this means for you

• Satellite-origin programming can still fall under cable-operator fee rules when delivered through franchised fiber.
• Physical use of public rights-of-way was decisive.
• Missing the 90-day appeal period can change the procedural route but not cure a valid fee.
• This 2008 ruling reflects the communications-fee law then in effect; confirm current rules.

Common questions

Q: Why was the provider a cable operator?
A: It had a cable franchise and used fiber crossing public rights-of-way to deliver service.

Q: Did paying communications sales tax replace the rights-of-way fee?
A: No. The ruling treated the fee as separately applicable.

Q: Why was the refund denied?
A: The provider had correctly collected and remitted the fee it legally owed.

Citations and references

• Va. Code §§ 58.1-1821, 58.1-1824, 56-468.1, and 15.2-2108.1:1 A and B.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-119

Original ruling text

June 26, 2008

Re: § 58.1-1824 Application: Public Rights-of-Way Use Fee

Dear *:

This is in response to your letter submitted on behalf of *(the "Taxpayer") regarding the Public Rights-of-Way Use fee for the period January 2007 through August 2007. I apologize for the delay in responding to your appeal.

FACTS

The Taxpayer provides satellite services to the residents in a gated community in Virginia. The Taxpayer currently has a cable franchise with the FCC and for its service, and it crosses public rights-of-way using a fiber infrastructure that it owns. The Taxpayer takes down the signal from the satellite to a headend located at the property. The signal is then distributed to the single family homes on a bulk basis. The home owners' association is billed for the bulk service. The Taxpayer has filed and paid the Virginia communications tax for the aforementioned period and now seeks a wavier of the Public Rights-of-Way fee.

DETERMINATION

Pursuant to Va. Code § 58.1-1821, "[a]ny person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner." The request for relief filed by the Taxpayer was not filed within the 90-day statute of limitations. Accordingly, the Taxpayer's request for relief will be addressed in accordance with Va. Code § 58.1-1824, which provides a protective claim for refund for "[a]ny person who has paid an assessment of taxes administered by the Department of Taxation" and seeks a refund of such assessment.

Virginia Code § 56-468.1 sets forth the Public Rights-of-Way Use Fee. Section B 2 of the statute provides that the Public Rights-of-Way Use Fee "is imposed on all cable operators that use the public rights-of-way." Virginia Code § 15.2-2108.1:1 A defines a cable operator as:

Any person or group of persons that (i) provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system or (ii) otherwise controls or is responsible for, through any arrangement, the management and operation of a cable system, whether or not the operator has entered into a franchise agreement with a locality. Cable operator does not include a provider of wireless or direct-to-home satellite transmission service.

The statute further defines cable service as:

The one-way transmission to subscribers of (i) video programming as defined in 47 U.S.C. § 522(20) or (ii) other programming service, and subscriber interaction, if any, which is required for the selection of such video programming or other programming service. Cable service does not include any video programming provided by a commercial mobile service provider as defined in 47 U.S.C. § 332(d) and any direct-to-home satellite service as defined in 47 U S.C. § 303(v).

Virginia Code § 15.2-2108.1:1 B provides that "[n]otwithstanding any other provision of law, if a cable operator uses the public rights-of-way the cable operator shall be subject to the Public Rights-of-Way Use Fee as provided in § 56-468.1."

The Taxpayer entered into a cable television franchise agreement with *. Based on this agreement, the Taxpayer is a cable operator that provides cable service to the residents in the gated community. Additionally, the Taxpayer's fiber infrastructure crosses public rights-of-way. Pursuant to Va. Code §§ 56-468.1 and 15.2-2108.1:1, the Taxpayer is liable for the Public Rights-of-Way Use Fee. For the period at issue, the Taxpayer correctly charged, collected and remitted the tax to the Department. Accordingly, the Taxpayer's request for a waiver of tax, penalty and interest remitted during this period is denied. The Taxpayer should continue to charge and collect the fee from its subscribers and should continue to remit the fee to the Department. A copy of the Guidelines and Rules for the Virginia Communications Taxes is enclosed.

If you have any questions about this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2050477649.P