For years orbiting satellites have escaped California tax rolls, but a team of lawyers is working to tax the final frontier.
The lawyers want to prove that company property circling 22,300 miles above Earth is subject to the same tax laws as the company laptop computers.
"I think it is clear under the Constitution and statutes of the state of California that (satellites) are taxable," said Rick Auerbach, assessor for Los Angeles County, where the debate began.
The county wants back taxes from Hughes Electronics of El Segundo for eight satellites the company owned from 1991 to 1994. The satellites have since been sold to a Connecticut company, in which Hughes is the majority owner.
It is unclear what the assessment on the satellites would be, but a company spokesman said the eight satellites are worth $350 million to $700 million.
The Los Angeles County lawyers are scheduled to present the issue today to the state Board of Equalization, where a staff lawyer has asserted the satellites are taxable.
State Controller Kathleen Connell, a member of the board, is expected ask for a vote to exempt satellites from state taxes.
"It is a stretch of the imagination to say 22,000 miles above the atmosphere is California," Connell said, adding that Hughes already bears a heavy tax burden.
Connell and two other members of the five-member board voted in June to advise Los Angeles County that they did not support the staff opinion that satellites are taxable. While the board initially was scheduled to revisit the issue in November, she added the item to today's agenda, a move that Los Angeles County officials say will hamper their ability to make their case.
Connell called the effort to tax satellites an example of an "overzealous" county looking for "creative" ways to increase county income.
Furthermore, assessing satellites might hurt the state's competitiveness, as more satellites are put into orbit, Connell said.
Auerbach, however, still has his eyes on the sky and thinks the courts will eventually have to answer the question.
Los Angeles County officials and possibly members of the board's legal staff argue that satellites are taxable by the state because they meet basic taxable property rules, were owned by a California company for the years in question and are not taxable anywhere else.
"The law is, if personal property in not assessable anywhere else, it is assessable here," said Albert Ramseyer, principal deputy county counsel for Los Angeles County.
Ramseyer said Connell was overstepping her authority in suggesting Hughes is overtaxed.
"She's not empowered to take a class of property and exempt it from the tax roll. That is the role of the Legislature," he said.
Hughes asserts that since the satellites have little connection to California before or after the launch, they were never taxable in the first place.
"Hughes never possesses the satellite in California," the company wrote in a statement to the board. "It receives title to the satellite after its launch. The satellite travels to its location in space and remains there, never returning to Earth."
Hughes Electronics, which operates DirecTV home satellite dish programming, sold the satellites to Connecticut-based PanAmSat.
Richard Doré, a spokesman for Hughes, said Connecticut does not assess PanAmSat for its satellites.
"As far as we know, no other state has such an assessment," Doré said.
Florida, where many satellites are launched, has offered tax breaks for the space industry for years, said Edward Ellegood, director of policy and program development for the Florida Space Research Institute.
"We have no such tax. We have exemptions," Ellegood said. "Anything that flies on a rocket is exempt from sales and use tax."
Traditional tax foes are also critical of efforts to tax satellites.
"The state of California needs to exercise great caution with how it taxes technology," said Larry McCarthy of the California Taxpayers Association. "We run the risk of damaging the state's competitiveness. We ought to be fostering it -- not chasing it away."