Government study: VoIP, video can be taxed

[David Farber <dave () farber net>]

Begin forwarded message:

From: Kurt Albershardt <kurt () nv net>
Date: January 27, 2006 12:31:35 AM EST
To: dave () farber net
Subject: Government study: VoIP, video can be taxed

By Anne Broache
URL: <http://news.zdnet.com/2100-9588_22-6031256.html>

State and local governments may be able to tax certain aspects of  
Internet use under an existing federal law designed to ban such fees,  
government auditors said this week.


The comments came in a new Government Accountability Office study  
<http://www.gao.gov%2Fnew.items% 
2Fd06273.pdf&siteId=22&oId=2102-9588_22-6031256&ontId=9588&lop=nl.ex>  
commissioned by Congress to examine a law known as the Internet Tax  
Freedom Act.

First passed in 1998 and renewed after some debate in 2004, the law  
prevents state and local governments from taxing "a service that  
enables users to access content, information, electronic mail or  
other services offered over the Internet."

Services like voice over Internet Protocol (VoIP), traditional  
telephone service and video offerings by Internet service providers  
remain fair game for taxation under the law, the GAO said. The scope  
of the moratorium has nothing to do with sales taxes for Internet  
purchases.

At issue is the auditors' finding that the tax ban doesn't apply to  
"acquired services"--in short, the actual wires, cables, fibers and  
other hardware used to carry Internet traffic to customers. That  
means an Internet service provider that leases fiber from a  
telecommunications company for its network could theoretically be  
subject to taxes during that "wholesale" transaction.

"We acknowledge that others have different views about the scope of  
the moratorium," the report said. "Congress could, of course, deal  
with this issue by amending the statute to explicitly address the tax  
status of acquired services."

...










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