The facts on ' Congress says new tax on all Internet connections is an "option" '

[David Farber <dave () farber net>]

------ Forwarded Message
From: Hank Levine <HLevine () lb3law com>
Date: Sat, 29 Jan 2005 10:06:06 -0500
To: <dave () farber net>
Cc: "'Rosen, Stephen'" <SRosen () lb3law com>
Subject: The facts on ' Congress says new tax on all Internet connections is
an "option" '

As always on telecom/technology tax issues, there is enormous misinformation
floating around about this one.  Here are the facts on this one, from the
lawyer who has been litigating (and winning) most of the cases seeking to
strike down the excise tax on long distance services:
 
1. Since early 2004, one Federal Court has upheld and (as of this count)
four have struck down application of the federal excise tax on
telecommunications to long distance service.  The one case upholding the tax
was appealed; a decision is expected shortly (no predictions, but the judges
hearing the appeal were hostile to the government¹s arguments). The basis
for the suits is the fact that the statute defines taxable toll service as
service where the charge for individual calls varies by elapsed time and
distance, and as everyone knows LD charges no longer vary with distance.
2. The Joint Committee on Taxation is not really a committee (the
tax-writing committee in the House is Ways & Means; in the Senate it¹s
Finance).  It¹s actually a ³holding company² for Congress¹s staff experts on
tax matters.  Influential, but not an operating legislative group, if you
see what I mean. 
3. In light of the growing deficit, etc., the Joint Committee was asked (as
it often is) to come up with (to quote the title of its report) ³Options to
Improve Tax Compliance and Reform Tax Expenditures.²  The Committee¹s staff
report, released on January 27th, generated a lot of headlines, mostly
concerning ³big dollar² moves to crack down on tax shelters, limit the
deductibility of interest on home equity loans that are not first mortgages,
etc. 
4. Buried deep in the Report ­ pages 368-378, to be exact --  are a series
of Options to ³Modify the Federal Excise Tax on Communications Services.²
Three options are identified.
> 1. Under Option 1, the definitions in the tax would be changed to make it
> clear that all long distance and local service is to be taxed regardless of
> whether charges are fixed or vary by distance, time, or both.  No view is
> expressed on whether VOIP, et al, is taxable (though this change would make it
> more likely that such services would be found taxable.).
> 2. Under Option 2, voice communications service would be taxable ³regardless
> of its technical form.²  This would make private networks (currently exempt)
> taxable, and would also tax VOIP.  Interestingly, under Option 2 the Joint
> Committee report recommends broadening the current exemptions for certain
> industries (the press, radio and TV networks, and common carriers like
> trucking and railroad companies, etc).
> 3. Under Option 3, the tax base would be expanded to cover all data
> communications services to end users.
5. Interestingly, the Joint Committee Report makes it clear that the staff
of the Joint Committee views the telecom excise tax with what can best be
described as a jaundiced eye.  The first section in the discussion section
of the Report states, for example, that ³[t]here is no compelling reason for
imposing taxes on communications services.²
 
Please consider circulating this to clean up the
misinformation/rumor/innuendo that is floating around out there.  I¹d be
happy to give more details, or forward the relevant section of the Joint
Committee report.
 

Hank Levine

Levine, Blaszak, Block & Boothby, LLP

2001 L Street NW  Suite 900

Washington, DC 20036

Ph. -- 202-857-2540

Fax -- 202-223-0833

email -- hlevine () lb3law com

 
-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Saturday, January 29, 2005 6:05 AM
To: Ip
Subject: [IP] Congress says new tax on all Internet connections is an
"option"
 
 
------ Forwarded Message
From: Declan McCullagh <declan () well com>
Date: Fri, 28 Jan 2005 17:26:10 -0600
To: <politech () politechbot com>
Subject: [Politech] Congress says new tax on all Internet connections is an
"option" 




http://news.com.com/2100-1028_3-5555385.html

Congress proposes tax on all data
Published: January 28, 2005, 3:50 PM PST
By Declan McCullagh

An influential congressional committee has dropped a political
bombshell by suggesting that a tax originally created to pay for the
Spanish American War could be extended to all Internet and data
connections this year.

The committee, which is deeply involved with writing U.S. tax laws,
unexpectedly said in a report on Thursday that the 3 percent
telecommunications tax could be revised to cover "all data
communications services to end users," including broadband, dial-up,
fiber, cable modems, cellular and DSL (digital subscriber line) links.

Currently the 3 percent excise tax applies only to traditional
telephone service. But because of technological convergence and the
dropping popularity of landlines, the Joint Committee on Taxation
concluded in its review of tax law reforms, it may make sense to
extend the 100-year old levy to new technologies. The committee did
not take a position on whether Congress should approve such an
extension and simply listed it as an "option."

[...] 
_______________________________________________
Politech mailing list
Archived at http://www.politechbot.com/
Moderated by Declan McCullagh (http://www.mccullagh.org/)

------ End of Forwarded Message

 
-------------------------------------
You are subscribed as hlevine () lb3law com
To manage your subscription, go to
  http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/


------ End of Forwarded Message

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To manage your subscription, go to
  http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/