Level 3 Communications, L.L.C. v. State Corp. Comm’n

Level 3 Communications is a telecommunications company providing wholesale Internet services to major Internet service providers. Level 3 filed applications to correct the amount of its gross receipts certified by the State Corporation Commission (SCC) to the Virginia Department of Taxation Department (Department), asserting that the federal Internet Tax Freedom Act (ITFA) proscribes state taxation of its Internet-related revenues. The SCC concluded that the relevant statutes do not empower the SCC to establish deductions from gross receipts not enumerated in the statutes, and the ITFA does not impact the SCC's duties because the SCC makes no determination of tax liability and imposes no tax. The Supreme Court agreed, holding that the SCC properly declined to allow a deduction for Internet-related revenues that the General Assembly did not provide for in the gross receipts statute and that to allow for such a deduction would have required the SCC to exceed its statutory authority. Affirmed.