The First Department, in a full-fledged opinion by Justice Sweeney, determined plaintiff (Sprint) was not a “utility” within the meaning of the relevant statutes and therefore was required to pay both the Utility Tax and the Unincorporated Business Income Tax (UBT). If Sprint were deemed a utility, as opposed to a vendor of utility services, it would have been exempt from the UBT:
The question in Cable & Wireless [Cable & Wireless v City of N.Y. Dept. of Fin. (190 Misc 2d 410, 416 [Sup Ct, NY County 2001])], as it is here, was whether the plaintiff telecommunications firm was a utility or a vendor of utility services. The plaintiff there argued, as plaintiff does here, that, under the plain statutory language, it was “supervised” by the PSC [Public Service Commission] and thus must be classified as a utility. In rejecting plaintiff’s argument, the court conducted an extensive review of the legislative history of the statutes and their amendments, including the history of the circumstances surrounding the statutes’ initial passage in 1933 and their amendments through the 1940s to more recent times. After holding that plaintiff had the burden of proving that it was a supervised utility and thus exempt from the tax at issue, the court held that “in using the words subject to the supervision of the [PSC],’ the City Council did not envision imposing the Utility Tax on gross income on entities such as [the plaintiff] which exhibit none of the characteristics of the monopolies to which the tax was intended to apply” … . The plaintiff was therefore not a utility and was not entitled to an exemption from the UBT.
We find the reasoning in Astoria [Matter of Astoria Gas Turbine Power, LLC v Tax Commn. of City of N.Y. (7 NY3d 451 )] and Cable & Wireless to be equally applicable to the present case. By its own admission, plaintiff is “a competitive entity” that does not enjoy monopoly status. As a result, the “light regulation” by the PSC to which it is subject does not rise to the level of “supervision” necessary to classify it as a utility and thus warrant an exemption from the UBT. Sprint Communications Co., L.P. v City of N.Y. Dept. of Fin., 2017 NY Slip Op 05194, 1st Dept 6-27-17