Telecom Tax Blog

    Vermont Votes for Cloud Tax Exemption

    Posted on Thu, Dec 27, 2012 @ 08:03 PM

    Jurisdictions face an on-going balancing act - tax and receive revenue today or defer and hope for growth and more revenue tomorrow.

    In December, Vermont lawmakers, tax officials, and representatives of the business and software communities voted 4-3 on Monday to exempt businesses from a tax on cloud computing services in a set of recommendations to the Legislature.

    The members of the Sales and Use Tax Study Committee who are in favor of a tax on remotely accessed software argued that the state would lose $2 million in potential tax revenue in the first year, and untold millions more in future years, as businesses expanded and scrambled to exploit a tax exemption.

    Those against the tax on cloud computing said the economic benefits of an exemption would outweigh lost tax revenue, by keeping businesses, jobs, and especially software companies in the state.

    So, Vermont Cloud Providers, enjoy the new tax break.  For our clients using SureTax® Telecom for their cloud tax calculations - no worries.  The change in Vermont will be implemented automatically once passed by the Legislature.

    Mainstreet Fairness Act Focuses Need for Online Tax Calculation for eCommerce

    Posted on Mon, Dec 3, 2012 @ 02:47 PM

    SureTax provides real time tax calculation solutions for eCommerce, so we were interested to find this item about the Mainstreet Fairness Act.

    The Mainstreet Fairness Act may come up for a vote quickly.  The Mainstreet Fairness Act would require online retailers to collect sales tax just like brick and mortar stores do.

    The Mainstreet Fairness Act may be added on to the Defense Authorization Act of 2013.  Sen. Richard Durbin (D-Illinois), filed an amendment on Friday to include the Act in the spending bill.  Voting may be as early as next week.

    As states struggle to meet revenue shortfalls, Mainstreet Fairness has gained traction.

    “Sen. Durbin is focused on working with his colleagues to try to get a vote on the bill before the end of this year, whether as a stand-alone bill or part of a larger piece of legislation,” said a Durbin aide. “They are keeping all options on the table at this point.”

    The National Retail Federation supports the act. “As the nature of retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that sales tax collection requirements not discriminate,” NRF Senior Vice President David French said in a letter to senators. “The current collection disparity has tilted the competitive landscape against local stores, creating a crisis for brick-and-mortar retailers around the country.”

     

    For more about SureTax's Real Time Tax Calculation Solution for eCommerce, click here.

    Tags: tax calculation, ecommerce

    VoIP Tax implications as International Internet Tax Discussions Start Monday.

    Posted on Fri, Nov 30, 2012 @ 08:04 PM

    As providers of telecom tax and VoIP tax solutions, we are interested in anything that may change the commercial dynamics of the internet.

    We are looking with great interest at the upcoming meeting of the International Telecommunications Union, beginning December 3 in Dubai.  Today, we take the internet and the free flow of information for granted.  But, for countries around the world, the internet has changed the balance of power and the revenue streams.

    VoIP has displaced landline service around the world, leaving poorer nations to look for new streams of revenue.  The free flow of information has also displaced local media and put governments at risk.  So, this meeting should be interesting, as the governments of less developed countries look to gain more revenue and control, while more developed countries hope to maintain the internet as it is with a "if it ain't broke, don't fix it" approach.

    Amongst the players, the United States is aligned with Canada, Australia, New Zealand, Mexico and others as preferring to keep the internet as it is now. As well as having support from African countries, officials say Russia has backing for some of its proposals from China.

    With over half of world owning smart phones, this is perhaps the most under reported story in the world.  We watch and hope that the internet remains the engine of commerce and prosperity that is has been for the last 20 years.

    Tags: telecom tax, voip tax, telecom taxes, voip taxes

    California PUC prohibited from Regulating VoIP services

    Posted on Wed, Nov 7, 2012 @ 12:35 PM

    As we scanned our VoIP tax news, we noticed this interesting article about VoIP regulation.

    California recently signed Senate Bill 1161 into law.  SB 1161, "Communications: Voice over Internet Protocol and Internet Protocol enabled communications service", prohibits the California PUC from regulating VoIP services until at least 2020.

    As we know from the VoIP tax calculation side, IP services can be complex when it comes to taxation and bundling.  VoIP, an obvious substitute for landline PSTN service, is an IP voice service.   So, is it voice and regulated like the PSTN or is it IP and not regulated by the PUC?

    In California, the answer is clear.  It's not regulated by the PUC.

    California, the leader in tech innovation, knows that government is always a step behind innovation.  This move is designed to allow VoIP to continue to grow and evolve.

    California is now the 25th state to enact a law that clarifies that VoIP services are not subject to state regulation. 

    It is worth noting, however, that nearly all states currently require providers of VoIP services to fund state and local 911 and, in addition, there are at least 22 states requiring providers of either fixed and/or nomadic VoIP services to contribute to certain state programs, such as Universal Service and Telecommunications Relay Service funds.  Indeed, several of the states with laws declaring VoIP services immune from state regulation still require VoIP service providers to Register and Contribute to state programs; California is one such state.  A common misconception is that immunity from State Regulation includes immunity from ALL state-mandated requirements.  A more appropriate way to view laws like the one adopted by California is as follows: If it's good enough for the FCC and if it's required by the FCC, then the same regulation can be adopted by the state regulator without violating the ban on regulation.

     

    Tags: voip tax, telecom taxes, telecommunications tax, voip taxes

    VoIP Tax Change in Wisconsin

    Posted on Tue, Oct 30, 2012 @ 01:55 PM

    Do you sell VoIP Services throughout the US?  If so, make sure you know the state by state taxability statutes.  One example of a change in policy from Wisconsin:  "Changes to the Taxability Status of Nomadic VOIP Service for Purposes of the Wisconsin Universal Service Fund".

    As a result of the same legislation that restricted the definition of the term telecommunications service to now exclude revenue derived from the sale of data and information services from WI USF assessment liability, VOIP providers are now equally required to contribute to the fund. To quote the text of the key statutory provision as a result of being amended by Senate Bill 13:

    “Contributions under this paragraph may be based only on the gross operating revenues from  the provision of broadcast services identified by the commission under subd. 2. and on intrastate telecommunications services in this state of the telecommunications providers subject to the contribution. Contributions based on revenues from interconnected voice over Internet protocol service shall be calculated as provided under s. 196.206(2)(b).”[1]

    “An entity that provides interconnected voice over Internet protocol service in this state shall make contributions to the universal service fund based on its revenues from providing intrastate interconnected voice over Internet protocol service. The revenues shall be calculated using the entity’s actual intrastate revenues, a provider-specific traffic study approved by the commission or federal communications commission, or the inverse of the interstate jurisdictional allocation established by the federal communications commission for the purpose of federal universal service assessments.”[2]

    Why spend your days managing this type of minutia?  As part of SureTax® Telecom, every rate and rule change is automatically updated and release notes are sent to you for your records.



    [1] Wisconsin Statutes § 196.218(3)(a)3m.

    [2] Wisconsin Statutes § 196.206(2).


    Tags: telecom tax, voip tax, telecom taxes, voip taxes

    VoIP Tax, VoIP Revenue and Telephone Numbers

    Posted on Tue, Oct 30, 2012 @ 12:29 PM

    At SureTax®, we're focused on telecom and VoIP tax calculation.  But, we can't help but be amazed at the transformation that the VoIP providers are bringing to the world and the affect that has on our phone numbers.

    It wasn't long ago that 96%+ of American households had a landline phone. In fact, if you didn't have a phone number, you almost couldn't get credit.  A phone number was that important.  It was part of your identity, like your name or address.  In fact, all the names and addresses and phone numbers were published in a big book that came out once a year.  (I throw that it because some kids have never seen a phone book).

    So, what's your phone number? Do you need one? How do you commercialize the connection between communication, technology and identity?

    At one time, your phone number was hard coded to your phone.  It was the physical location of your circuit and the place where your connection to the caller was made.  Now, it's just a number that represents a virtual location, much the same as a domain name reflects a DNS server address. 

    So, as VoIP replaces the Public Switch Telephone Network, what happens to our numbers?  The notion of "your phone number" is changing and causing ripple effects throughout  the economy.  It's affecting how pollsters project elections, how researchers learn about new product acceptance and how neighbors contact neighbors.

    As telecom revenues decline, could phone numbers represent a new opportunity?  After all, the technology may have changed, but our need to project an identity has not.

    Research body Ovum, part of the Datamonitor group, has revealed the results of a new study that show there is due to be a significant impact on telecommunications providers over the coming years as a direct result of the rise of VoIP.  Jeremy Green, principal telecoms strategy analyst at Ovum, said the primary threat to the market is that VoIP has the potential to reduce people's commitment to a certain telephone number.

    "Operators should use telephone numbers as the identifier and address for cloud-based services, allow customers to choose numbers that are relevant to them and develop more application-to-person SMS applications," he suggested.

    The report explained that revenue in the market is falling, but rather than voice traffic reducing it is simply switching to new platforms. Ovum said it is confident that turning people's reliance towards VoIP apps and the latest technology can ensure operators have a healthy future.

    Some providers are said to have taken a pessimistic view of the future and have opted to compete on price in a bid to eke out what they believe will be the last of significant revenues from the telecommunications market. But they have arguably made a mistake, as it is claimed by Mr. Green that many "commercial realities and opportunities" lie in the VoIP sector and are waiting to be realized.

    I wonder what Mr. Green knew about Facebook adding VoIP integration? it will be interesting to see how VoIP, voice and phone numbers re-connect to our identities.

     

       

     

     

    Tags: telecom tax, voip tax, telecom taxes, voip taxes

    Three Common Mistakes Made By VoIP Providers. Part 3 of 3.

    Posted on Mon, Oct 1, 2012 @ 05:01 PM

    Mistake #3: Not representing the proper taxes and fees on the bill.

    The VoIP world got off to a crazy start with offers flying all over the country for unlimited service for a low flat monthly fee. All the service providers were taking the stance that “hey, its internet, it isn’t taxable” so needless to say thousands of new companies were launched with little to no regard for taxation compliance.

    As always, the regulatory agencies were slow to catch up, but as they always do when tax dollars are on the table, they caught up.  Now VoIP providers all over the country are scrambling to understand the tax they should and should not collect based on the type of service they are and how it is billed and delivered.

    However,  while many are catching on that tax is something they should be collecting, the question becomes what taxes?  Along with that question is how do I represent those taxes on the bill?

    As Talk America discovered in 2006, not properly representing the taxes on the bill can be as bad as not collecting them at all.  The FTC is extremely diligent in protecting consumers from what they perceive as being false or misleading statements.

    So what do we do?  Well here is a quick reference list of some things you need to be sure you get right:

    • Understand the difference between provider based taxes, and consumer based taxes. 
    • Understand which of these taxes are pass-through taxes, which are not pass-through taxes and which are optional to be passed through to the consumer.
    • Make sure that you call a fee a fee and not a tax.
    • Make sure you call a surcharge a surcharge and not a tax. 
    • Make sure that you write out the exact nomenclature that the taxing authority expects to see.  Abbreviations or modifications to the bill can cause you problems.

    Nothing prevents a carrier or service provider from charging to recover costs or overhead, but improperly implying that those fees are somehow mandated by the government will get you in more trouble than it is worth.

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    Tags: telecom tax, voip tax, telecom taxes, voip taxes

    Don't Stop at Tax Calculation and Collection - Be Sure to Remit

    Posted on Wed, Sep 26, 2012 @ 11:02 AM

    At SureTax®, we focus on telecom tax calculation.  Calculation is but one step in the process that begins with laws and ends with funds being remitted to the jurisdiction.

    As your business grows and consumes cash in the process, make sure your billing, tax management, and remittance policies are all in place and working properly.  It is easier than you think to find yourself using tax revenue as a source of funds, accidentally or out of a perceived necessity.  While we know that early stage businesses often require creative solutions to the ever occurring challenges, sales tax is one area in which you must have a conservative approach.  

    Here's why:

    As a business, when you collect tax on your service, you are acting as an agent of the taxing authority. So, for example, if you collect state tax in Florida, you are collecting tax on behalf of the State of Florida.  The tax you collect is not your money, it's Florida's money.

    It's not a loan.  It's not profit.  It's not next week's payroll or the new server you need.  It's Florida's money.  Period.  Florida is very serious about this, and so are most jurisdictions throughout the country.

    As an example, here is Florida's legal code, just to make it perfectly clear how this one state feels about their sales tax revenue.

    § 206.56. Unlawful use of tax collected; theft of state funds

    (1) Any person who knowingly obtains or uses, or endeavors to obtain or use, taxes collected pursuant to this chapter, with the intent, either temporarily or permanently, to deprive the state of a right to the funds or a benefit therefrom, or appropriate the funds to his or her own use or to the use of any person not entitled thereto, commits theft of state funds.

       (2)(a) If the total amount of revenue involved is $100,000 or more, the offense is a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

       (b) If the total amount of revenue involved is $20,000 or more, but less than $100,000, the offense is a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

       (c) If the total amount of revenue involved is $300 or more, but less than $20,000, the offense is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

       (d) If the total amount of revenue involved is less than $300, the offense is a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. However, any person who commits theft of state funds involving less than $300 and who has previously been convicted of any theft of state funds is guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083. Any person who commits theft of state funds involving less than $300 and who has previously been convicted two or more times of any theft of state funds is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

    That's right.  If you use over $300 of Florida's sales tax revenue for your own purposes, even TEMPORARILY, you have committed a felony.   

    States, especially Florida, are much more likely to imprison offenders for unlawful conversion of tax revenue than is the federal government.  Here's an example - In August, the State of Florida arrested a Ft. Myers convenience store owner for failing to remit $8,000 in sales tax.  That owner now faces up to 5 years in prison and up to $5,000 in fines as well as potential repayment of stolen tax, penalties, interest, and investigative costs.

    Bottom line...  Remit your tax revenue promptly.  The Governor wants his money, now!

     

     


    Tags: telecom taxes, telecommunications tax, Sales tax

    US Suppliers of Digital Services being Targeted by UK for VAT Tax

    Posted on Fri, Sep 14, 2012 @ 11:08 AM

    Are you selling digital goods and services in the EU?

    We've heard that the UK is targeting US digital services sellers to ensure VAT compliance.  All companies outside of the European Union (like the United States) are required to register, collect and remit VAT tax.

    By digital services, we mean:

    • Software downloads
    • Content like digital music, games and video
    • Online images, databases and information
    • Webhosting
    • Cloud computing
    • eBooks
    • Website subscriptions
    SureTax® provides tax calculation solutions for digital services in the EU.  We can help with your EU tax calculation and compliance needs.

    contactUs_suretax

    Tags: telecom tax, telecom taxes, VAT tax, cloud computing, digital goods, digital services

    Domino Effect as Amazon Begins to Collect Sales Tax in California

    Posted on Thu, Sep 13, 2012 @ 02:54 PM

    Starting this week, Amazon begins collecting sales tax in California.  This is the result of a long fought, bitter battle between the state and Amazon.

    Through agreement, September 15 was set as the date that tax collection begins. 

    As many of you know, sales tax is due on goods sold in the state, but the commerce cause of the US Constitution prohibited the state from forcing Amazon to collect and remit the tax. The voluntary system was not working.  Less than one half of a percent of sales tax revenue was being remitted voluntarily.

    As this next domino in the California “Amazon Law” saga falls, it triggers a series of events.  Amazon, which avoided nexus in California to avoid collecting tax, now has no reason to avoid nexus.  So, as part of the September 15 negotiations, Amazon received incentives for development and construction of a 1 million sq. foot warehouse.  The warehouse will provide next day delivery for most Amazon goods.

    That warehouse is now part of a multi-billion dollar, multi-state drive to expand distribution and decrease delivery time.

    That new delivery capability puts online competitors at a disadvantage, so led by Overstock.com, they are fighting to have the law overturned.  Big box retailers, feeling the heat of Amazon’s low cost/quick delivery push, are scrambling to make their offers more affordable and more attractive.  (Have you noticed the increase of “Site-to-store” delivery?)

    This law, that Amazon dreaded so much, might turn out to be a blessing in disguise.  It could bring new meaning to the term "Amazon Law".  "Amazon Law" may come to mean a law that was seen as a disadvantage, but is really the source of competitive advantage in disguise.

    The other effect of the law is that smaller online retailers that once did not have ecommerce tax solutions will need to develop a solution.

    At SureTax®, with provide ecommerce tax solutions.  We provide a real time tax calculation engine that covers over 10,000 jurisdictions.  Plus, the tax data is powered by CCH – data so accurate that even the IRS uses it.  So, if you need a solution, contact us.

    Learn more here – SureTax® eCommerce.

     

     

     

     

     

    Tags: Sales tax, Amazon Laws, September 15, California

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