Apple owes state of Maine over $500,000 in taxes, a court rules

Tim Cook
Tim Cook (Image credit: Apple)

What you need to know

  • Apple owes the state of Maine over half-a-million dollars in tax, a court has ruled.
  • Apple should have paid tax on iPhones sold at a discount when bought with a carrier contract as if they were full price.
  • The State Supreme Judicial Court has overturned a previous ruling in favor of Apple.

Apple will have to pay the state of Maine over $500,000 in taxes and fines after a court ruled it should have paid tax on the full price of iPhones sold at a discount when bought with a carrier plan.

From News Center Maine:

Maine's State Supreme Judicial Court has ruled that Apple should have paid state taxes on the full price of iPhones sold at discounted prices through wireless carriers over a three-year period at its stores in Maine.The court unanimously overturned a judge's decision that had sided with Apple after the state tax assessor argued that taxes were underpaid by tens of thousands of dollars.

According to an audit, the total figure is $430,000 in sales tax, as well as $100,000 in fines. An Apple attorney declined to comment.

The report notes that from May 2010 through April 2013, Apple sold iPhones in its stores at a discount when they were bought with a mobile plan. For instance, an iPhone that might retail at $649 was sold for $199 as part of a two-year contract with a carrier. Apple reportedly taxed consumers on the discounted price, rather than the full price as the state would understandably prefer. The ruling only applies to phones sold directly from Apple, where a separate bill was generated for the phone and wireless plan. Because carriers don't separate the bills the way Apple did, a judge found no problem with phones sold through carriers.

Despite the financial blow, the court did find favor with Apple in agreeing to keep various documents used in the case confidential.

Stephen Warwick
News Editor

Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design.

Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple. Follow him on Twitter @stephenwarwick9

1 Comment
  • Merits aside, $500,000 isn't a financial blow. That's what Lady Gaga offers as a reward for her dogs return.