Appeals court rules AOL service exempt from tax - KWWL - Eastern Iowa Breaking News, Weather, Closings

Appeals court rules AOL service exempt from tax

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DES MOINES, Iowa (AP) - The Iowa Court of Appeals has ruled that customers of Internet service provider AOL do not have to pay state sales tax.

The ruling Wednesday upheld a lower court ruling that rejected the Iowa Department of Revenue's argument. The department has said that AOL customers used local phone numbers to call AOL data centers, making it a local service in Iowa.

But the appeals court noted that AOL's data centers are located in Virginia. The court said that simply "placing a local call to a local access point in Iowa would not provide any service whatsoever."

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