from the United States Court of Federal Claims in No.
1:13-cv-00478-EDK, Judge Elaine Kaplan.
Christopher Bartolomucci, Kirkland & Ellis LLP,
Washington, DC, argued for plaintiff-appellant. Also
represented by Christopher George Michel.
Ann Hagley, Tax Division, United States Department of
Justice, Washington, DC, argued for defendant-appellee. Also
represented by Teresa E. McLaughlin, Caroline D. Ciraolo.
Wallach, Chen, and Hughes, Circuit Judges.
Wallach, Circuit Judge.
8x8, Inc. ("8x8") sued Appellee the United States
("Government") in the U.S. Court of Federal Claims,
seeking a refund of more than $1 million in Federal
Communications Excise Tax ("FCET" or "excise
tax"). The parties subsequently filed cross-motions for
summary judgment, and the Court of Federal Claims denied
8x8's Motion and granted the Government's
Cross-Motion, thereby denying 8x8's claim for a refund of
the FCET remitted. See 8x8, Inc. v. United States,
125 Fed.Cl. 322, 331 (2016).
appeals. We have jurisdiction pursuant to 28 U.S.C. §
1295(a)(3) (2012). We affirm.
8x8's VoIP Services
a provider of local and long-distance telephone services over
a broadband internet connection via Voice over Internet
Protocol ("VoIP"). This service allows customers to
make and receive calls over the internet via a digital
terminal adapter ("DTA"), which contains 8x8's
proprietary firmware and software. J.A. 246. Part of
8x8's VoIP service included the use of other transmission
services from Level(3) and Global Crossing-i.e., traditional
telecommunications carriers. J.A. 246. The customer's
call would be switched over to Level(3)'s or Global
Crossing's traditional lines and circuits when
necessary.J.A. 365-66. However, 8x8 did not pay any
FCET to Level(3) or Global Crossing because it provided them
with an "exemption certificate, " which
"represent[ed] that [8x8] was a provider of telephone
service and was exempt from the excise tax in [I.R.C.] §
4253 [(2006)]." J.A. 246.
to a plan offered by 8x8 included several steps. First,
customers seeking access to 8x8's VoIP service needed to
purchase a DTA. J.A. 246. After making the necessary physical
connections to the DTA, the customer then "went to
8x8's website and signed up for a subscription plan,
" which included "accept[ing] 8x8's Terms and
Conditions of Service." J.A. 247. These Terms and
Conditions provided that 8x8 would collect the FCET from its
customers and remit the FCET to the Internal Revenue Service
("IRS") for the customers' use of 8x8's
VoIP domestic telephone service. See J.A. 259
("8x8 will . . . bill all charges invoiced to End
User's account . . . . Such charges shall include . . .
monthly service fees, . . . toll charges, taxes and any other
applicable charges."), 260 ("Prices for the
Services do not include any . . . sales, use, value added,
excise, federal, state, local, public utility or other
similar taxes. All such taxes shall be paid by the End User
and will be added to any amounts otherwise charged[, ] unless
[the] End User provides 8x8 with an appropriate exemption
certificate."). The subscription plans included (1) an
unlimited local and long distance plan permitting calls that
were within "reasonable personal use" for a set
fee, J.A. 247; or (2) plans for a set amount of minutes at a
set price, J.A. 246. After selecting a subscription plan,
"the customer would provide 8x8 with a credit card which
would be used to pay all charges, fees, and taxes for the 8x8
service." J.A. 247. Finally, "the customer
would be provided with a 10 digit code that would be used to
activate the 8x8 service." J.A. 247.
Relevant History of the FCET
VoIP services were subject to the FCET. J.A. 246;
see I.R.C. § 4251(a)(1) (imposing the FCET on
"communications services"); id. §
4251(b)(1) (defining "communications services").
Beginning in 2005, several appellate courts held that §
4251 did not permit the IRS to tax telephone services that
billed customers based on a fixed per-minute,
non-distance-sensitive rate. See, e.g., Reese
Bros., Inc. v. United States, 447 F.3d 229, 234 &
n.2 (3d Cir. 2006) (collecting cases).
response to these rulings, the IRS ceased collecting the FCET
on "amounts paid for time-only service." I.R.S.
Notice 2006-50, § 1(a), 2006-25 I.R.B. 1141 ("2006
No-tice"); see I.R.S. Notice 2007-11,
2007-5 I.R.B. 405 (clarifying and modifying the 2006 Notice).
The IRS also stated that VoIP services were non-taxable, 2006
Notice, § 3(a), (d), and established a process for
taxpayers to seek a refund of the FCET that had been exacted
on non-taxable services during the period between February
2003 and August 2006, id. § 5(d). Finally, the
2006 Notice stated that a "collector" can request a
refund of the FCET collected from customers during the
relevant period if the collector either (1) "establishes
that it repaid the amount of the tax to the person from whom
the tax was ...