On January 8, 2013, the Sutherland State and Local Tax (SALT) Team appeared before the Oregon Supreme Court in an important case concerning the scope of Oregon’s central assessment method of property taxation. Comcast Corporation v. Department of Revenue, Case No. S059764. The issue in the case concerns whether cable television and Internet access services are within the scope of “data transmission services” for ad valorem tax purposes. This case is being followed closely by participants in the Digital Economy (e.g., sellers of Internet access, digital goods and services, and cloud computing providers) and taxing jurisdictions throughout the country.


Businesses that provide “data transmission services” are subject to Oregon’s central assessment method, as opposed to local assessment. The different assessment methodologies can produce significantly different tax results. Centrally assessed taxpayers are taxed on the value of their tangible and intangible personal property, while locally assessed taxpayers are taxed only on the value of their tangible personal property.

Prior to 2009, providers of cable television and Internet access services were subject to local assessment. In 2009, without any legislative action, the Oregon Department of Revenue centrally assessed cable television and Internet access businesses as data transmission services. The change in the assessment regime caused cable television and Internet access providers’ intangible personal property to be taxed and their property tax bills to skyrocket.

The Oregon Tax Court held that “data transmission services” encompasses Internet access service but not cable television service. “Data transmission services,” the tax court said, should be interpreted as applying to those who “transmit the data of others for a fee.” Comcast Corp. v. Dep’t of Revenue, TC 4909 (2011).

The Oregon Supreme Court

If the Oregon Supreme Court determines that “data transmission services” is a catchall, which was intended to include any service that involves the transmission of data for a fee, taxpayers engaged in the Digital Economy could be pulled into Oregon’s central assessment regime. In addition to the substantial uncertainty that would result, taxpayers engaged in electronic commerce would be taxed on the value of their intangible personal property and would see dramatic increases in their property tax bills. A narrow construction of “data transmission services,” however, could result in the reversal of the tax court’s holding and provide authority on the limitations of the central assessment valuation method in other jurisdictions.

We will monitor developments in this case and other Digital Economy developments. Please visit the Sutherland SALT Digital Economy Forum to learn more, and please contact a member of our SALT Team if you have any questions regarding the Forum.