A study by the U.S. Government Accountability Office has found that it is possible to tax acquired services, like wires, cables, fibers and other hardware belonging to VOIP and ISP providers. The Internet Tax Freedom Act prevents the government from taxing services provided over the Internet.


A study by the U.S. GAO has found that it is possible to tax acquired services, like wires, cables, fibers and other hardware, belonging to VOIP and ISP providers.

The Internet Tax Freedom Act prevents the state from taxing services that enable users to access, content, information, electronic mail or other services offered over the Internet.

“According to GAO’s reading of the law, these taxes are not barred since a tax on acquired services is not a tax on Internet access.” [Source]

According to the GAO study, at the end of 2004, around 70 million U.S adults accessed the Internet during a typical day.

The Congress imposed a moratorium in 1998 which temporarily prevented state and local governments from imposing taxes on Internet access. In 2004, the GAO was required to study the impact of this moratorium on state and local government revenues.

Of the 8 states surveyed in the report, California, North Dakota, Texas and Virginia were found to not collect any tax on such acquired services. Kansas, Mississippi, Ohio and Rhode Island stopped collecting such taxes as of Nov 1, 2005.

To view GAO’s complete report, click here.

You will need Adobe Acrobat to view this file. To download Adobe Acrobat, click here.

 

 

 

 

Sharing is caring