Transcript Document 7172580

Communications 101 – Some
Basics and Various Tax Types
Where it all began…
• Monopoly Roots
• Luxury History
• Regulated Rate of
Return
• Break-up in 1984 –
really only 26 years…all
this change
• Cable & DBS almost
exact same story
Everybody in all types of business
Telecom
Internet
Communications
???
Video
What you are and how you sell it…
Voice &
Entertainment &
Data Service
Telecom - just voice
Differing Taxation
Cable
ISP
Entertainment Cos
Web-based Content
Issue has become - who is providing the services, not what the service is?
What’s the big deal?
• One of most heavily taxed
services in US
• Hundreds of tax types,
hundreds of tax bases
• Fed, State & Local, Fed +
State Reg, lifeline, social
treasury…
• Issues:
–
–
–
–
–
Situsing (Goldberg)
Resale
Bundling
Ever-changing technology
What is communications?
• Rate differential over 8%
more vs. standard TPP*
* Per latest COST Study
What is Communications?
• Texas
– generally defined as “the
electronic or electrical
transmission, conveyance,
routing, or reception of sounds,
signals, data, or information
utilizing wires, cable, radio
waves, microwaves, satellites,
fiber optics, or any other method
now in existence or that may be
devised, including but not limited
to long-distance telephone
service.”
• Maryland
– “Taxable services” include (1)
cellular telephone or other
mobile telecommunications
service; (2) "900," "976," "915,"
and other "900"- type
telecommunications service; (3)
custom calling service provided in
connection with basic telephone
service; (4) telephone answering
services; (5) pay per view
television service; and (6) a
prepaid telephone calling
arrangement.
M2M/Location-based services
Qualcomm Inc. v. Commissioner, Qualcomm Inc. v. Dep't of
Tenn. Ct. App. (September 26,
Revenue, Wash. Ct. App.
2007)
(August 25, 2009)
TN Court of Appeals affirmed - “true object” of
certain tracking services was transmitting
information regarding the location and
status of vehicles, not version of taxable
telecommunication services.
– service did not replace a truck driver’s
personal cell phone…rarely used to
carry on a conversation between the
driver and the client’s fleet
management center.
– while the system contained the ability
to transmit “free form” text
messages…not the principal aim of its
purchasers…did little more than allow
information concerning a vehicle’s
status to be combined with information
on its location.
WA Court of Appeals held that system, including
the basic automatic position polls, fell within
the definition of a network telephone system.
– the main issue is whether Qualcomm
provides the medium over which the data
are communicated and not whether it
provides new information to its
customers.
– the network management center converts
raw data sent from the trucking
companies' mobile communication
terminals via satellites into a usable
format for the companies without
providing significant new information.
Tightrope
Customer Class Action Lawsuits
Competitors/New Entrants
Audit Liability
Technology
Taxes/Fees/Surcharges Imposed on
Communications Services
Communications
Excise/Sales
Taxes
Taxes that operate as or similar
to a sales tax imposed on
specific communications
services. Tax is generally
imposed in lieu of the regular
sales tax.
Examples:
Gross Receipts
Taxes
Taxes (in addition to the sales
tax) imposed on the gross
receipts derived from the sale of
communications services. Tax is
typically imposed on the vendor,
but may be collected from the
customer.
Taxes imposed on end
users/consumers purchasing
communications services. User
taxes are generally required to
be collected and remitted by the
seller.
Examples:
Examples :
Florida communications
services tax
New York 186-e gross receipts
tax
Illinois telecommunications
excise tax
Florida gross receipts tax
Virginia communications sales
tax
Washington business &
occupation tax
Pennsylvania gross receipts tax
District of Columbia
toll/wireless
telecommunications tax
User Taxes
California local utility user taxes
Washington local utility user
taxes
Taxes/Fees/Surcharges Imposed on
Communications Services
Industry Specific
Fees
Taxes, fees, and surcharges
imposed by a state taxing or
regulatory bodies (such as the
Public Utilities Commission) on
local or intrastate
communications services.
Examples:
911 Fees
Taxes or fees imposed by
relevant state or local
governmental body to fund 911
emergency services. Taxes and
fees are typically line-based
charges but can also be a
percentage of gross receipts.
Examples:
License Fees
Taxes and fees imposed
generally, or on specific
communications service
providers, for the privilege of
doing business in the
jurisdiction.
Examples:
State universal service /high
cost fund contributions
California 911 fee (.5% of gross
receipts)
Clark County, Nevada business
license fee
State TRS surcharges
Indiana wireless 911 surcharge
($0.50/line/month)
Missouri local license fees
PUC cost reimbursements
Other “social” purpose funds
(example: Texas poison control)
Jefferson County, Louisiana 911
surcharge ($1.24/line/month)