Yeah, I figured that communication must have broken down somewhere in the chain: Locast, Recurly, PayPal, Huntington (my bank) - any one of those could have misinterpreted and/or misreported the type of transaction.
It would be interesting to see how they itemize it. A "service fee" would not be tax-deductible. I can't deduct my Dish bill, right? In years past, Locast was not under as much scrutiny. Now, with the court ruling, and Locast seemingly needing to show how much was collected for "service" to have any chance on appeal, that may change things.
It seems to me that the "service fee" ruling is the worst-case scenario for Locast subscribers: Not only did we not receive the service that we paid for, but now we can't claim the donation as an income tax deduction, either? Yes, this sounds like a class action lawsuit waiting to happen.