United States Second Circuit

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IRS v. WorldCom, 12-803

The bankruptcy court erred in granting defendant-debtor's objection to the IRS's proof of claim and defendant's motion for a refund of federal communication excise taxes previously paid by defendant, where: 1) the dial-up Internet service purchased by defendant from local telephone companies, known as COBRA, was a "local telephone service" that provided access to a local telephone system, and the privilege of telephonic quality communication with substantially all persons constituting a part of such local telephone system under 26 U.S.C. section 4252(a); 2) defendant must therefore pay the three-percent excise tax federal law imposes on the purchase of any local telephone service; and 3) defendants are not entitled to a refund from the IRS.

Appellate Information

  • Decided 07/22/2013
  • Published 07/22/2013




  • United States Second Circuit


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