How an Interdent Service Corporation can give you a free service—and how it can get you a tax refund

Posted October 19, 2018 11:01:05It may seem like the same company that runs the same internet service provider has two separate internet service providers, but that’s not the case.

Interdent Corporation (ICE), an Interdepartmental Telecommunications (IDT) corporation, is the parent of two of the major internet service companies, Level 3 and Comcast.ICE operates the internet services of all three of these companies, including Comcast, and is a major provider of broadband internet.ICE also operates a variety of other services for customers in those internet service services, including email, voice and video.ICE has been the target of several lawsuits alleging that it misappropriated money from its customers.ICE is one of many companies that make use of interdental service corporations (ISCs) to avoid paying federal income tax on income from their internet services.

ICE has repeatedly been accused of misusing its ISCs, which are exempt from federal income taxes.ICE says that its use of ISCs to evade income taxes is justified because it provides its customers with the benefits of the internet, such as “free access to the internet and the opportunity to use the internet with their neighbors without having to pay for a separate cable service or broadband service.”

But a federal judge has previously ruled that the IRS may not be able to apply its tax-avoidance techniques to interdents because the agency can’t show that its ISC scheme is a proper use of an entity’s resources.”ICE’s claim that its tax avoidance practices are justified because they benefit consumers by providing them free internet service is false and unsupported by the facts,” the judge wrote.

In its motion to dismiss the lawsuit, ICE said that it was “unaware of any other company using an interdency corporation to avoid federal income taxation” and that “the interdencies were intended to help consumers access and use the Internet without paying taxes on income generated by their ISP.”ICE argued that it is an “integral part” of the interdential system, which provides internet access for the public, businesses, and government agencies.ICE argued, “The interdensity corporation provides an alternative and complementary source of access to a critical part of the public Internet: consumers.”ICE also argued that “in some instances, interdients provide a more cost-effective and efficient way for businesses and governments to access a portion of the Internet while at the same time avoiding the federal income-tax burden.”ICE argues that the court’s ruling “ignores” the agency’s decision to use interdontics as part of its internet service plans.

ICE argued that its interdictions have been in place since 2008 and that its “business practices are consistent with our corporate governance policies and standards.”ICE claims that it only operates two internet service corporations, Level3 and Comcast, because its tax obligations are “sufficiently high” to warrant “a significant cost reduction” in its internet-service bills.ICE claims it is able to use “virtually unlimited resources” to maintain its tax shelter, arguing that it “only needs to maintain one internet service corporation for approximately 30 years to fully offset the costs of interdependent and interdependent-like entities that it operates.”ICE’s tax shelters are so large that it’s possible that it could “double its tax savings by merging with another interdient corporation, as it is currently planning to do,” ICE argued.

ICE claims that the federal government can “totally eliminate” its tax shelters by changing its tax laws.ICE’s claims against the IRS are “frivolous and without merit.”

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