Supreme Court rejects Verizon's $51M tax appeal

The U.S. Supreme Court has effectively ended Verizon's (NYSE: VZ) fight with the IRS to avoid paying $51 million in taxes for an obsolete service connected to dial-up modems.

The Supreme Court received the case after a federal appeals court in New York rejected Verizon's argument that it shouldn't have to pay about $51 million, including $26 million in back taxes, to the IRS over a disputed service originally owned by WorldCom. That service was used to access the Internet via dial-up technology, but, the IRS said, it was liable for an excise tax because the same equipment could be used to deliver voice services.

Verizon had support from corporate trade groups that told the Supreme Court that the appeals court ruling could give the IRS the power to impose a tax on Internet data services. The court disagreed and rejected Verizon's bid for a $25 million refund and, apparently, another $26 million in back taxes and interest the IRS also wants, according to court papers filed by Verizon.

For more:
- Bloomberg has this story

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