Oregon Tax Court Retroactively Applies Wayfair in E911 Tax Decision

In the recent Oregon Tax Court case, Ooma, Inc. vs. Department of Revenue, the court decided that an out-of-state Voice-over Internet Protocol (VoIP) provider had sufficient nexus with Oregon for the state to impose an emergency telecommunication tax (E911 Tax).


Oregon imposes the E911 Tax on each person with access to the state’s emergency telecommunications system—whether that access is through VoIP or a wired or wireless telecommunications service—as outlined in Oregon Revised Statute Section 403.200(1). 

As such, Oregon Revised Statute Section 403.215 requires a provider of telecommunications services or of equipment with access to the system to collect the E911 tax from customers and remit the tax to the Oregon Department of Revenue (the Department).

For the time period at issue—March 2013 to March 2016—Ooma, Inc. (Ooma) was a VoIP service provider domiciled in California that provided national VoIP services, including services to customers in Oregon. 

While Ooma provided its services in Oregon, none of Ooma’s employees, real property, or personal property were located in Oregon. To that end, Ooma did not have physical presence in Oregon during the periods at issue.

Ooma, therefore, didn’t register with Oregon to collect and remit the E911 Tax under the presumption that the company didn’t have nexus with the state, under the premise that its lack of physical presence caused it to not have nexus with Oregon for this tax. 

The Department audited Ooma for the time period of March 2013 through March 2016 and assessed E911 Tax in the amount of $677,444.88. 

This assessment advanced to litigation in the Regular Division of the Oregon Tax Court.

The Case

Ooma argued Oregon was unable to impose the E911 tax on Ooma’s VoIP services because both the Due Process Clause and the Commerce Clause of the US Constitution prohibit Oregon from imposing the E911 Tax when the taxpayer lacks a physical presence in the state. 

The Oregon Tax Court found the Due Process Clause didn’t prohibit Oregon from imposing the E911 Tax because Ooma had sufficient minimum contacts with Oregon even though the contacts were solely economic.  

By applying the holding of Wayfair, the Court held that the Commerce Clause didn’t prohibit Oregon from imposing the E911 Tax because Ooma had in excess of $600,000 of annual revenue per each year at issue from providing VoIP services to customers in Oregon; this amount exceeded the Wayfair $100,000 sales threshold, thus the court ruled Ooma had substantial nexus with Oregon.


Looking through the litany of constitutional challenges and analysis involved in this case, there are several important takeaways.

The Court applied Wayfair, a US Supreme Court case on the determination of nexus for state sales and use tax purposes, to determine nexus for telecommunications taxes.

To the extent this holding stands in the Oregon Supreme Court, this decision could create a slippery slope of applying Wayfair to determine substantial nexus for state indirect taxes other than sales and use tax.

Retroactive Application of Wayfair

The period at issue in this case was March 2013 to March 2016, which predates Wayfair’s June 21, 2018 holding, the Oregon Tax Court is attempting to retroactively apply Wayfair to prior periods—a practice most states seemed to avoid for state sales and use tax purposes.

We’re Here to Help

If you have questions regarding how the recent decision in Ooma, Inc. v. Department of Revenue could impact your business, or any additional questions about Oregon state taxes, please contact your Moss Adams professional.

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