Sales/Use/Indirect:
California Appellate Court Affirms that Streaming Companies Don’t Owe Local Franchise Fees
Case No. B321481, Cal. Ct. App. (2/22/24). In a lawsuit filed by a California city against various streaming entertainment companies claiming that they owed local video service provider fees imposed under California’s Digital Infrastructure and Video Competition Act (Act), a California Court of Appeal (Court) affirmed that California localities do not have a right of action under the Act to bring the lawsuit against them. In doing so, the Court explained that although the Act expressly authorizes a local government to sue a franchise holder concerning unpaid or underpaid franchise fees, the Act does not authorize a local government to seek franchise fees from nonfranchise holders. The holding in this case is in line with similar court decisions in other states and jurisdictions. Note that this case involves franchise fees and not “City Utility Users Taxes” based upon Pub. Util. Code, § 799 et seq. Please contact us with any questions.
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