5/9. The U.S. Court of Appeals (3rdCir) issued its opinion [23 pages in PDF] in Reese Brothers v. USA, a case regarding the 3% excise tax on phone service. The Court of Appeals affirmed the judgment of the District Court. The IRS has now lost on this same issue before five circuit courts. There is no split of authority.

The IRS has now lost in the 2nd, 3rd, 6th, 11th Circuits, and DC Circuits. In addition, the IRS has lost in the U.S. District Court (NDCal) and twice in the Court of Federal Claims. There are not yet any appellate opinions in either the 9th Circuit or the Federal Circuit.

Nevertheless, the IRS continues to collect the tax that the courts have ruled that it cannot collect.

There is nothing new or novel about the Reese Brothers case. The Court of Appeals rejected arguments that other courts have also rejected. TLJ has published stories on these prior opinions.

The Court of Appeals wrote in the Reese Brothers case that "The question presented in this appeal is whether the federal communications excise tax set forth in 26 U.S.C. § 4251(a)(1) applies to long-distance telephone services that are priced based on a fixed per-minute, non-distance-sensitive rate. Based upon the plain language and structure of the statute, we conclude that it does not. The District Court granted summary judgment in favor of the taxpayer. We affirm."

It added that "we conclude that the federal communications excise tax does not apply to long-distance telephone services that are priced based on a fixed per-minute, non-distance-sensitive rate. The Government would have us extend the reach of the federal communications excise tax beyond its text. Following the Supreme Court’s analysis in Iselin, and that of our sister circuits in Fortis, OfficeMax, American Bankers, and Amtrak, we decline to do so."

American Bankers: 11th Circuit. The U.S. Court of Appeals (11thCir) issued its opinion [22 pages in PDF] in ABIG v. IRS on May 10, 2005. See also, story titled "IRS Loses Appeal Over 3% Excise Tax on Communications" in TLJ Daily E-Mail Alert No. 1,133, May 11, 2005. This case is American Bankers Ins. Group v. United States, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 04-10720, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 03-21822 CV-PCH. Judge Dubina wrote the opinion of the Court of Appeals, in which Judge Anderson and Black joined. The Court of Appeals opinion is also reported at 408 F.3d 1328. The District Court opinion is also reported at 308 F. Supp. 2d 1360.

Office Max: 6th Circuit. The U.S. Court of Appeals (6thCir) issued its opinion [20 pages in PDF] in Office Max v. US on November 2, 2005. See also, story titled "IRS Loses Another Appeal Regarding 3% Excise Tax" in TLJ Daily E-Mail Alert No. 1,246, November 3, 2005. This case is Office Max, Inc. v. U.S.A., U.S. Court of Appeals for the 6th Circuit, App. Ct. No. 04-4009, an appeal from the U.S. District Court for the Northern District of Ohio, at Cleveland, D.C. No. 03-00961, Judge Patricia Gaughan presiding. The Court of Appeals opinion is reported at 428 F.3d 583.

Amtrak: DC Circuit. The U.S. Court of Appeals (DCCir) issued its opinion [11 pages in PDF] in Amtrak v. US on December 9, 2005. The National Railroad Passenger Corporation is better known as Amtrak. This case is National Railroad Passenger Corp. v. United States, U.S. Court of Appeals for the District of Columbia Circuit, App. Ct. No. 03cv00431, an appeal from the U.S. District Court for the District of Columbia. Judge Tatel wrote the opinion of the Court of Appeals, in which Judges Williams and Griffith joined. This case is reported at 431 F.3d 374.

Fortis: 2nd Circuit. The U.S. Court of Appeals (2ndCir) issued its opinion [PDF] in Fortis v. USA , on April 27, 2006. See also, story titled "2nd Circuit Rules Against IRS on Excise Tax on Phone Service" in TLJ Daily E-Mail Alert No. 1,361, May 1, 2006. This case is Fortis, Inc. v. United States of America, U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-2518-cv, an appeal from the U.S. District Court for the Southern District of New York, D.C. No. 03 Civ. 5137, Judge John Koeltl. The Court of Appeals issued a per curiam opinion of Straub, Sack and Trager.

Trial Court Opinions. The U.S. District Court (NDCal) issued its opinion in Hewlett-Packard Co. v. U.S. on August 5, 2005. It is reported at 2005 U.S. Dist. LEXIS 19972.

The Court of Federal Claims issued its opinion [14 pages in PDF] in America Online, Inc. v. U.S., on March 30, 2005. This case is No. 03-2383-T, Judge Charles Lettow presiding. It is also reported at 64 Fed. Cl. 571.

The Court of Federal Claims issued its opinion [19 pages in PDF] in Honeywell International, Inc. v. U.S. on February 16, 2005. This case is No. 03-1915 T, Judge George Miller presiding. It is also reported at 64 Fed. Cl. 188.

26 U.S.C. § 4251 provides for the 3% excise tax. 26 U.S.C. § 4252 provides the relevant definitions. To be taxable, a "toll telephone service" must include a "toll charge which varies in amount with the distance and elapsed transmission time".

The key word here is "and". The taxpayers in all of these cases assert that "and" means "and". The IRS asserts that "and" means "or".

The Court of Appeals in the Reese Brothers case titled a long section of its opinion "The Meaning of the Word ``And´´". The Court of Appeals held that the meaning of the word "and" is "unambiguous". It means "and".

The Court of Appeals wrote, "Reading the statute as a whole, we conclude that ``and´´ is used in its conjunctive sense in § 4252(b)(1). Accordingly, in order to be taxable under that provision, charges for long-distance telephone services must be based on both distance and elapsed transmission time."

The Court of Appeals added that "four other courts of appeals–the Second, Sixth, Eleventh, and District of Columbia circuits–have considered the meaning of § 4252(b)(1). In each case, the court has rejected the same arguments that the Government advances in this case. ... We agree with the decisions reached by our sister circuits and will join them in ruling in favor of the taxpayer."

The Court of Appeals in this case, as in earlier cases, also rejected all other arguments advanced by the IRS. In the present case, the Court of Appeals tossed in a few colorful words, such as "implausible" and "strains credulity".

Nevertheless, while the Courts have unanimously rejected the argument of the IRS, and the courts have the power to interpret the statutes of the Congress, the IRS continues to collect taxes that it is not authorized by law to collect.

Teresa McLaughlin, the attorney in the Department of Justice's (DOJ) Tax Division who argued the case for the IRS, declined to respond to any questions from TLJ regarding this opinion. A representative of the IRS Office of General Counsel also declined to comment. The IRS press office declined to comment.

A Treasury Department press office person told TLJ that there are "no real updates to give you" and that "they are working on the issue".

This case is Reese Brothers, Inc. v. USA, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 05-2135, an appeal from the U.S. District Court for the Western District of Pennsylvania, D.C. No. 03-cv-00745, Judge Terrence McVerry presiding. Judge Smith wrote the opinion of the Court of Appeals, in which Judges Rendell and Joseph Irenas joined.

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The House will meet at 10:00 AM for legislative business. The House will consider HR 5122, the "National Defense Authorization Act for Fiscal Year 2007". See, Republican Whip Notice.

The Senate will meet at 9:30 AM. It will consider S 1955, the small business health plans bill.

7:45 AM - 3:45 PM. Day two of a two day, partially closed, meeting of the National Science Foundation (NSF). The agenda of the 8:15 AM session on May 10 includes several topics, including "Global Environment for Networking Innovations" and "NSF's Cyberinfrastructure Vision", See, notice in the Federal Register: May 3, 2006, Vol. 71, No. 85, at Pages 26117-26118. Location: 4201 Wilson Blvd, Room 1235, Arlington, VA.

9:00 AM - 5:30 PM. The Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) will host a roundtable meeting regarding the reporting and auditing requirements of the Sarbanes-Oxley Act of 2002, including Section 404 requirements. See, SEC notice. Location: SEC.

8:30 AM - 5:00 PM. The Progress and Freedom Foundation (PFF) will host a conference titled "Internet Security Summit". The speakers will include Federal Trade Commission (FTC) Chairman Deborah Majoras. See, notice. Press contact: Amy Smorodin at 202-289-8928 or asmorodin at pff dot org. Location: Hyatt Regency Washington on Capitol Hill, 400 New Jersey Ave., NW.

9:15 AM - 1:30 PM. The American Enterprise Institute (AEI) will host a conference titled "Key Issues in Telecommunications Policy". See, notice. Press contact: Veronique Rodman at 202-862-4871 or vrodman at aei dot org. Location: 12th floor, 1150 17th St., NW.

9:15 AM - 3:30 PM. The President's National Security Telecommunications Advisory Committee (NSTAC) will meet. Most of this meeting will be closed to the public. From 9:15 through 10:15 AM the NSTAC will discuss in open session the work of the Emergency Communications & Interoperability Task Force, Telecommunications and Electric Power Interdependency Task Force, Legislative and Regulatory Task Force, and Research and Development Task Force. From 10:15 AM through 3:30 PM the NSTAC will meet in closed session to discuss emergency communications & interoperability, international implications of the NGN, and regional coordination, planning, and exercises. See, notice in the Federal Register, April 27, 2006, Vol. 71, No. 81, at Page 24859. Location: Ronald Reagan Building and International Trade Center.

10:30 AM. The House Ways and Means Committee will meet to mark up the Draft Implementing Proposal [49 pages in PDF] of HR __, the "United States-Oman Free Trade Agreement Implementation Act". See, notice. Location: Room 1100, Longworth Building.

10:30 AM. The House International Relations Committee will hold a hearing titled "A Resurgent China:  Responsible Stakeholder or Robust Rival?". The witness will be Robert Zoellick (Deputy Secretary of State). See, notice. Location: Room 2172, Rayburn Building.

12:00 NOON. The Cato Institute will host a panel discussion titled "Parental Power: TV Indecency, the FCC, and the Media's Response". The speakers will include Jack Valenti (former head of the Motion Picture Association of America) and Penny Nance (Special Advisor in the FCC's Office of Strategic Planning and Policy Analysis). Lunch will follow the program. See, notice and registration page. Location: Cato, 1000 Massachusetts Ave., NW.

12:00 NOON - 1:15 PM. The DC Bar Association will host an event titled "Software and Business Method Patentability: A Changing Landscape?". The speakers will include Scott Alter (Wilmer Hale). The price to attend ranges from $10 to $30. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

2:00 PM. The House Commerce Committee's (HCC) Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing titled "Social Security Numbers in Commerce: Reconciling Beneficial Uses with Threats to Privacy". See, notice. The hearing will be webcast by the HCC. Location: Room 2123, Rayburn Building.

Federal Communications Commission (FCC) Auction 65 is scheduled to begin. This is an auction of 800 MHz Air-Ground Radiotelephone Service Licenses.

The House will meet at 10:00 AM for legislative business. The House may continue its consideration of HR 5122, the "National Defense Authorization Act for Fiscal Year 2007". See, Republican Whip Notice.

8:00 AM - 3:30 PM. The National Science Foundation (NSF) will hold a hearing on international science partnerships. See, notice in the Federal Register, May 9, 2006, Vol. 71, No. 89, at Page 26984. Location: George Washington University, 1957 E Street, 7th Floor, City View Room.

9:00 AM. The House Judiciary Committee's (HJC) Subcommittee on Crime will hold a hearing on HR 5318, the "Cyber-Security Enhancement and Consumer Data Protection Act of 2006". The witnesses will be Laura Parsky (Deputy Assistant Attorney General in the Criminal Division), Anne Wallace (Identity Theft Assistance Center of the Financial Services Roundtable), and Joseph LaRocca (National Retail Federation). See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

9:30 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. See, notice. The SJC frequently holds, cancels or postpones meetings without notice. Press contact: 224-5225. Location: Room 226, Dirksen Building.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Charter Communications and Advance/Newhouse Communications v. FCC, a case regarding cable operators and integrated navigation devices. It is App. Ct. No. 05-1237. See, FCC's brief [43 pages in PDF]. Judges Ginsburg, Tatel and Garland will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.

MOVED TO MAY 3. 9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. The event will be webcast by the FCC. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

2:00 - 4:00 PM. The Department of State's International Telecommunication Advisory Committee will meet to prepare for meetings of the Organization for Economic Co-operation and Development (OECD) WPIE and CISP committee meetings of May 29-31, 2006. See, notice in the Federal Register, April 19, 2006, Vol. 71, No. 75, at Pages 20153-20154. Location: Room 2533, Harry Truman Building, 2201 C Street, NW.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the CITEL PCC.I (Telecommunication) meetings on May 23-26, 2006 in San Domingo, Dominican Republic, and on September 12-15, 2006, in Washington DC. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

2:30 PM. The Senate Foreign Relations Committee will hold a hearing on the nomination of Daniel Sullivan to be Assistant Secretary of State for Economic and Business Affairs. See, notice. Location: Room 106, Dirksen Building.

3:00 - 5:30 PM. The Federal Communications Bar Association's (FCBA) Engineering and Technical Practice Committee will host a continuing legal education (CLE) seminar titled "Master Class: Engineering Essentials and the Role of Technology in Telecommunications Policy Reform". See, registration form [PDF]. Location: Hogan & Hartson, 555 13th Street, NW.

Deadline to submit initial comments to the Federal Communications Commission (FCC) regarding ACA International's petition for an expedited clarification and declaratory ruling concerning the Telephone Consumer Protection Act (TCPA) rules. See, notice in the Federal Register, April 26, 2006, Vol. 71, No. 80, at Pages 24634-24635. This is CG Docket No. 02-278.

The Republican Whip Notice states that "there are no votes expected in the House".

10:00 AM. The Federal Communications Commission's (FCC) entity titled "Independent Panel Reviewing the Impact of Hurricane Katrina on Communications Networks" will hold a meeting. See, notice in the Federal Register, April 26, 2006, Vol. 71, No. 80, at Pages 24708-24709. Location: FCC Commission Meeting Room, Room TW-C305,FCC, 445 12th Street, SW.

12:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative (USTR) regarding the proposed free trade agreement (FTA) between the U.S. and Malaysia. The USTR seeks comments on "electronic commerce issues", "trade-related intellectual property rights issues", "barriers to trade in services", and other topics. See, notice in the Federal Register, March 22, 2006, Vol. 71, No. 55, at Pages 14558-14559.

12:00 NOON - 1:15 PM. The DC Bar Association will host a panel discussion titled "Software and Business Method Patentability: A Changing Landscape?". The speakers will include Scott Alter (Wilmer Hale). The price to attend ranges from $10-$30. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

12:15 PM. The Federal Communications Bar Association's (FCBA) Wireless Telecommunications Practice Committee will host a lunch. The topic will be former FCC Bureau Chief's perspectives on the wireless industry. The speakers will be John Muleta, Michele Farquhar, Regina Keeney, and Dan Phythyon. The price to attend is $15. Reservations and cancellations are due by May 9 at 5:00 PM. See, registration form [PDF]. Location: Sidley Austin, 1501 K Street, 6th Floor.

Recommended deadline to submit comments to the Office of the U.S. Trade Representative (USTR) and the Department of Labor regarding the proposed free trade agreement (FTA) between the United States and Malaysia on U.S. employment, including labor markets. See, notice in the Federal Register, March 31, 2006, Vol. 71, No. 62, at Pages 16349-16350.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding pulver.com's and Evslin's petition [18 pages in PDF] for a rulemaking regarding number porting in emergencies. See, FCC notice [PDF] and story titled "Pulver Asks FCC to Require Greater Number Porting in Emergencies" in TLJ Daily E-Mail Alert No. 1,329, March 14, 2006.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Complx Covad Comm v. FCC, App. Ct. No. 05-1095. Judges Ginsburg, Tatel and Garland will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.

12:15 PM. The Federal Communications Bar Association's (FCBA) IP-Based Communications Practice Committee will host a brown bag lunch. The topic will be the Communications Assistance for Law Enforcement Act (CALEA). The speakers will include Matt Brill (Latham & Watkins), Chris Bubb (AOL), Samir Jain (Wilmer Cutler Pickering Hale & Dorr). Location: Pillsbury Winthrop, 2300 N St., NW.

EXTENDED TO MAY 19. Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding privacy of consumer phone records. See, notice in the Federal Register, March 15, 2006, Vol. 71, No. 50, at Pages 13317-13323. The FCC adopted this NPRM on February 10, 2006, and released the text [34 pages in PDF] on February 14, 2006. See, story titled "FCC Adopts NPRM Regarding Privacy of Consumer Phone Records" in TLJ Daily E-Mail Alert No. 1,308, February 13, 2006, and story titled "FCC Rulemaking Proceeding on CPNI May Extend to Internet Protocol Services" in TLJ Daily E-Mail alert No. 1,310, February 15, 2006. This NPRM is FCC 06-10 in CC Docket No. 96-115 and RM-11277.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding mandatory thousands-block number pooling. See, notice in the Federal Register, March 15, 2006, Vol. 71, No. 50, at Pages 13323-13328. This NPRM is FCC 06-14 in CC Docket No. 99-200.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to various petitions for reconsideration of the FCC's Report and Order regarding the equipment authorization requirements for Unlicensed National Information Infrastructure (U-NII) devices employing dynamic frequency selection (DFS). See, notice in the Federal Register, May 3, 2006, Vol. 71, No. 85, at Pages 26004-26006. This proceeding is ET Docket No. 03-122.

TIME? The Federal Communications Commission's (FCC) North American Numbering Council (NANC) will hold a meeting. Location: __.

10:00 AM. The Senate Finance Committee will hold a hearing on the nomination of Susan Schwab to be the U.S. Trade Representative (USTR). See, notice. Location: Room 215, Dirksen Building.

11:30 AM - 1:00 PM. The American Bar Association (ABA) will host a continuing legal education (CLE) program titled "International Licensing: When Technology Crosses Borders". See, notice. Location: teleconference  and audio webcast only.

4:00 PM. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property will hold a hearing on HR __, the "Music Licensing for the Digital Age Act". See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

6:00 - 8:15 PM. The DC Bar Association will host a panel discussion titled "Intellectual Property Primer". The speakers will include Joy Butler (Law Office of Joy Butler), Diana Michelle Sobo (Westerman Hattori Daniels & Adrian), Cathy Futrowsky (Gallop Johnson & Neuman), and Melinda Sossamon (Manning & Sossamon). The price to attend ranges from $10-$20. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) will host a continuing legal education (CLE) seminar titled "Communications Law 202". It will cover the broadcast and cable industries. Reservations and cancellations are due by May 12 at 12:00 NOON. Prices vary. See, registration form [PDF]. Location: Dow Lohnes, 1200 New Hampshire Ave., NW.

? 10:00 AM. The Senate Commerce Committee's Subcommittee on Technology, Innovation, and Competitiveness will hold a hearing titled "Accelerating the Adoption of Health Information Technology". See, notice. Press contact: Aaron Saunders (Stevens) at 202 224-3991 or Andy Davis (Inouye) at 202 224-4546. Location: __.

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the ITU Plenipotentiary Conference 2006 on November 6-24, 2006, in Ankara, Turkey. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

11:30 AM - 1:30 PM. The U.S. Chamber of Commerce will host an event titled "Microsoft Cyber Security Forum". See, notice. Location: Sheraton National Hotel, 900 S. Orme Street, Arlington, VA.

12:15 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch to elect officers. E-mail nominations to Jason Friedrich at jason dot friedrich at dbr dot com or Natalie Roisman at natalie dot roisman at fcc dot gov by May 10. Location: Drinker Biddle & Reath, 1500 K Street, 11th floor.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the CITEL PCC.I (Telecommunication) meetings on May 23-26, 2006 in San Domingo, Dominican Republic, and on September 12-15, 2006, in Washington DC. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

The National Institute of Standards and Technology (NIST) will host a conference titled "CLIX-COTS Logging Information Exchange". See, notice. Location: NIST, Green Auditorium, 100 Bureau Drive, Gaithersburg, MD.