TRENTON – A cable TV company has won a partial victory in tax court over use tax exemptions.
Comcast of South Jersey won its argument that converter boxes should be exempt from the use tax, but lost its argument that remotes also should be exempt, according to a tax court decision today. Also, it lost an argument on payment of penalties.
Ruling in a case that goes back years, the tax court issued a summary judgment in favor of Comcast’s converter arguments, in which it had to scrutinize issues of whether the converters primarily were for transmitting TV information and how much of their function as a “signal security’’ device came into play.
Tax court dismissed the Division of Taxation’s argument that the security function was primary to the transmission function. The court found that the transmission of a signal is the primary function. As such, that created an avenue that led to an exemption as provided for in statutes.
However, the court ruled there was no basis to conclude the Legislature intended to provide an exemption from the use tax for remotes as well.
Also, the court found in favor of the Taxation division, that assessing late and underpayment penalties was within its discretion. Comcast had argued it had reasonable cause not to pay taxes on the remotes, but the court disagreed.