Iowa court says no taxes on Internet service - KWWL - Eastern Iowa Breaking News, Weather, Closings

Iowa court says no taxes on Internet service

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DES MOINES (KWWL) - The Iowa Supreme Court has ruled that Iowans don't have to pay an access tax on Internet service.

The case involved a challenge by the Iowa Department of Revenue against Internet provider AOL, but also applies to other Internet companies' services provided in Iowa.

The revenue department argued that under its administrative rules, sales tax should be charged for AOL's services. It contended that the initial modem call to use the service was made in Iowa, meaning the service originated in the state.

AOL argued the rule requires that communication originate and terminate in Iowa, but its services begin and are routed through data centers in Virginia.

The Iowa Supreme Court on Friday sided with AOL, saying revenue officials misinterpreted the department's own administrative rule.

Online News Director Nate Leding

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