Argued October 8, 2015
On Petition for Review of an Order of the District of Columbia Office of Administrative Hearings (OTR-17-13)
Todd A. Lard, with whom Charles C. Kearns was on the brief, for petitioner.
Mary L. Wilson, Senior Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, and Loren AliKhan, Deputy Solicitor General, were on the brief, for respondent.
Before Fisher and Thompson, Associate Judges, and Farrell, Senior Judge.
Farrell, Senior Judge:
Petitioner WRC-TV, LLC (WRC), a television station in the District of Columbia wholly owned and operated by NBC Universal Media LLC, was assessed a tax deficiency of $78, 784.84 in sales and use tax by the District's Office of Tax and Revenue (OTR), on the ground that WRC is not a Qualified High Technology Company (QHTC) as defined by D.C. Code § 47-1817.01 (5)(A)(iii)(II) (2001), hence is not eligible for preferential tax treatment that the District grants to such companies. An Administrative Law Judge (ALJ) of the Office of Administrative Hearings upheld the assessment in a ruling that WRC contends adopted an overly-narrow reading, advanced by the OTR, of what constitutes a QHTC. As relevant here, the statutory definition of a Qualified High Technology Company is not unambiguous, and we thus regard this as a case justifying significant deference to OTR's reasonable understanding of a statute that it administers. See Washington Gas Light Co. v. Pub. Serv. Comm'n, 982 A.2d 691, 710-11 (D.C. 2009); see also District of Columbia Office of Tax & Revenue v. BAE Sys. Enter. Sys., Inc., 56 A.3d 477, 481 (D.C. 2012). Because the limitation OTR has imposed on the meaning of a QHTC is reasonable against the legislative background, we affirm the ALJ's decision.
WRC claims to be a QHTC under § 47-1817.01 (5)(A)(iii) because it derives at least 51% of its gross revenues from:
(II) Information and communication technologies, equipment and systems that involve advanced computer software and hardware, data processing, visualization technologies, or human interface technologies, whether deployed on the Internet or other electronic or digital media. Such technologies shall include operating and applications software; Internet-related services, including design, strategic planning, deployment, and management services and artificial intelligence; computer modeling and simulation; high-level software languages; neural networks; processor architecture; animation and full-motion video; graphics hardware and software; speech and optical character recognition; high-volume information storage and retrieval; data compression; and multiplexing, digital signal processing, and spectrum technologies.
WRC argues specifically that it meets that definition because "it generate[s] its receipts from information and communication technologies" (Reply Br. for WRC at 11; emphasis added), in the sense that it "uses [advanced] technologies, equipment and systems" (id. at 6; emphasis added) to create and transmit the television programming from which it derives most of its revenue through on-air advertising.
OTR's contrary argument to the ALJ was - and is to us - that subsection (5)(A)(iii)(II)'s language requires a much closer nexus between the activities listed in paragraph (II) and a QHTC's revenues than purchase and use of high technology equipment and systems, or else any company otherwise meeting the definition would gain preferred tax treatment by investing heavily in information and communication technologies that it in turn uses to market its products or services. If WRC's sale of advertising via technology-enabled television programming counts as a QHTC activity, OTR maintains, then so would a similar technology-intensive provision of services for fees (in place of advertising) by, for instance, accounting, brokerage, or even law firms, with the resulting danger of a tax exemption swallowing up the taxation rule. OTR contends that the QHTC tax preferences instead were enacted to incentivize companies engaged in the development and marketing of high technology systems and applications to locate in the District of Columbia, rather than provide a boon to companies that purchase the technology to generate revenues from other sources.
The language itself of subsection (5)(A)(iii)(II) furnishes support, though not unqualifiedly, for OTR's understanding. Although the broad reference to "[i]nformation and communication technologies . . . that involve advanced computer software and hardware [etc.]" could be read to include purchaser-users as well as developers or makers of those technologies, other enumerated activities point instead to the originating, enabling or supporting of high-technology use, as, for example, the "design, strategic planning, deployment, and management" of "[i]nternet-related services." We think, though, that the statutory language alone - a long enumeration of activities without specific focus on who, consumer/users or ...