Free Joint Status Report - District Court of Federal Claims - federal

Case 1:03-cv-02754-TCW

Document 66

Filed 09/07/2007

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ______________ No. 03-2754 T (JUDGE WHEELER) XO COMMUNICATIONS, INC., Plaintiff v. THE UNITED STATES, Defendant ______________ JOINT STATUS REPORT ______________ Pursuant to their status report of July 3, 2007, the parties submit the following report. As previously reported, the parties have been examining invoices, tariffs, contracts, and other relevant documents to determine which of the telephone services purchased by XO are comparable to the incoming-only services determined to be non-taxable in USA Choice Internet Service, LLC v. United States, 73 Fed. Cl. 780 (2006), appeal pending, No. 07-5077 (Fed. Cir. Feb. 8, 2007). To date, defendant has not been able to determine whether a substantial portion of XO's nation-wide telephone services are incoming-only because the documentation does not clearly establish the exact configuration of the services purchased by XO. Accordingly, defendant was preparing to seek the assistance of a telecommunications expert in an effort to resolve the uncertainty. On August 17, 2007, however, a decision was rendered in Comcation v. United States, ___ Fed. Cl. ___, 2007 WL 2389395 (2007), in favor of the United States. (Copy submitted -1-

Case 1:03-cv-02754-TCW

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herewith.) The court held that the telephone service utilized by Comcation, an Internet service provider, to connect its customers to its network constituted taxable local service irrespective of whether the telephone service was configured as incoming-only service and the service did not qualify as a tax exempt private communication service. Accordingly, the holding in Comcation is directly contrary to the decision in USA Choice Internet Service, which held that similar incoming-only telephone service was not taxable local telephone service. USA Choice Internet Service is currently on appeal to the United States Court of Appeals for the Federal Circuit and it is presumed that the Federal Circuit will resolve the conflict between USA Choice Internet Service and Comcation. Accordingly, the parties believe that proceedings in this case should be suspended until the Federal Circuit resolves the conflict so as to avoid spending time and money to determine whether XO's service's are incoming-only, which may be unnecessary if USA Choice Internet Service is reversed. Respectfully submitted, September 7, 2007 Date s/Anthony C. Gulotta Anthony C. Gulotta, Esquire Anderson & Gulotta, P.C. 1110 North Mountain Road Harrisburg, PA 17112 (717) 635-7145 Fax (717) 541-5434 [email protected] Attorney for Plaintiff s/ G. Robson Stewart G. ROBSON STEWART U.S. Department of Justice, Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 -2-

September 7, 2007 Date

Case 1:03-cv-02754-TCW

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(202) 307-6493 RICHARD T. MORRISON Acting Assistant Attorney General DAVID GUSTAFSON Chief, Court of Federal Claims Section Steven I. Frahm Assistant Chief September 7, 2007 Date s/Steven I. Frahm Of Counsel Attorneys for Defendant

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