In Re: WorldCom, Inc.

The IRS challenged the district court's judgment upholding the bankruptcy court's decision to grant the objection of the reorganized Worldcom debtors to the IRS's proof of claim for taxes owed and the debtors' refund motion for the taxes WorldCom had already paid. At issue was whether WorldCom must pay federal excise taxes on the purchase of a telecommunications service that connected people using dial-up modems to the Internet. The court held that WorldCom purchased a "local telephone service" when it paid for the telecommunications service and that WorldCom must therefore pay federal communication excise taxes on those transactions. Accordingly, the court reversed and remanded for further proceedings. View "In Re: WorldCom, Inc." on Justia Law