Two Verizon Corporate Income Tax Cases Highlight Florida Apportionment and Refund Interest Disputes

Two Verizon Corporate Income Tax Lawsuits Spotlight Florida Apportionment and Refund Interest Disputes

Overview

In 2025, Verizon Communications, Inc. & Affiliates filed two separate corporate income tax lawsuits against the Florida Department of Revenue in the Circuit Court of the Second Judicial Circuit in and for Leon County, Florida. Although the cases arise from different tax years and procedural postures, together they illustrate recurring fault lines in Florida corporate income tax administration—particularly in the areas of service sourcing, apportionment mechanics, constitutional limits, and the Department’s statutory obligations to pay refund interest.

One case challenges the denial of a substantial corporate income tax refund for the 2022 tax year and raises complex questions about Florida’s apportionment rules for modern service providers. The other focuses on a narrower but highly consequential issue: whether Florida DOR must pay interest on approved refunds and return excess interest paid during an audit period.

The First Lawsuit: Refund Denial and Apportionment Disputes (2022 Tax Year)

The first case, filed in March 2025, contests a Notice of Proposed Refund Denial issued by the Florida Department of Revenue relating to Verizon’s 2022 Florida corporate income tax return. Verizon sought a refund exceeding $24 million based on changes to how its service receipts were sourced and how its income was apportioned to Florida.

At the core of the dispute is Florida’s treatment of receipts from data, internet, and voice services. Verizon argues that receipts from these services should be sourced using Florida’s cost-of-performance rule rather than being assigned to Florida based on customer location or telecommunications-specific sourcing provisions. The Department, by contrast, maintains that its administrative rules properly attribute those receipts to Florida.

The complaint raised multiple legal theories, including challenges to Florida’s application of its telecommunications sourcing rule to modern data and internet services. Verizon also asserted constitutional claims under the Commerce Clause and the Equal Protection Clause, alleging that Florida’s sourcing regime results in over-apportionment and impermissible discrimination.

In October 2025, Verizon voluntarily dismissed one count of its complaint without prejudice. That dismissed count related solely to the inclusion of certain intercompany receipts in the Florida sales factor. Importantly, the dismissal did not resolve the underlying apportionment case and did not affect Verizon’s remaining claims concerning service sourcing, statutory interpretation, or constitutional limitations.

The Second Lawsuit: Refund Interest and Audit Offset Issues (2018–2020 Audit Period)

The second lawsuit, filed in May 2025, arises from a separate corporate income tax audit covering Verizon’s 2018 through 2020 tax years. Unlike the first case, this litigation does not involve apportionment methodology or service sourcing rules. Instead, it focuses on Florida’s statutory obligation to pay interest on tax refunds and to properly account for interest paid during an audit period.

In this case, the Department issued a Notice of Decision confirming that Verizon was entitled to a refund for the 2019 tax year. However, Verizon alleges that the Department failed to include accrued statutory interest on that approved refund. Verizon also challenges the Department’s failure to return excess interest that Verizon paid with amended returns for other years within the same audit period.

Florida law generally requires the Department to offset overpayments and underpayments within the same audit period and to pay interest on refunds once a complete refund claim has been filed and not timely paid. Verizon’s second lawsuit argues that these statutory requirements are mandatory, mechanical, and not subject to discretionary delay.

Why These Two Cases Matter Together

Although the two Verizon cases involve different tax years and legal theories, they collectively highlight how Florida corporate income tax disputes often arise at multiple stages of the tax lifecycle. One case tests the substantive limits of Florida’s apportionment and sourcing rules for multistate service providers. The other examines the Department’s procedural and financial obligations once a refund has been approved.

Taken together, the cases underscore that corporate income tax exposure in Florida is not limited to audit assessments or refund denials. Delays in refund payments, failure to pay statutory interest, and improper audit offsets can themselves give rise to independent litigation—even where the underlying tax liability has already been resolved.

Broader Implications for Multistate Taxpayers

These lawsuits reflect broader trends affecting multistate businesses operating in Florida, particularly those providing services that do not fit neatly into legacy tax categories. As service delivery models continue to evolve, disputes over sourcing rules and apportionment formulas are likely to remain a focal point of Florida corporate income tax litigation.

At the same time, the refund interest case serves as a reminder that procedural tax rights matter. Even when a taxpayer prevails on the merits of a refund claim, disputes can arise over timing, interest, and the Department’s handling of audit-period offsets.

Conclusion

The Verizon litigation provides a useful case study in both the substantive and procedural dimensions of Florida corporate income tax law. Whether addressing apportionment disputes or enforcing statutory refund interest obligations, these cases demonstrate the importance of closely monitoring Florida Department of Revenue positions at every stage of the controversy process.

© 2025 Jeanette Moffa. All rights reserved.