Florida Communications Services Tax and the Digital Subscriber Line To Tax or Not to Tax?

The Florida Department of Revenue is deciding whether to tax DSL services under the Florida Communications Services Tax Simplification Act. This could affect how much taxes people pay for these services and how much money the government collects. Municipalities believe the Department has the authority to tax DSL services and that they don’t qualify for exemptions. They have explained their reasons for this at a workshop in Tallahassee. Simply put, local governments have a stake in how communication services taxes are applied. The Florida Department of Revenue (DOR) is responsible for making rules about tax exemptions and exclusions. One issue they are dealing with is whether DSL services should be subject to the communications services tax. The law defines communications services as the transmission of information through various methods. However, it specifically excludes things like internet access and email services from the tax. This is important because it affects how local governments receive compensation for allowing communication providers to use their infrastructure. DSL services involve the transmission of data and providing internet access. If the charge for these services is bundled together, it is subject to a communications services tax in Florida. At a workshop, the Department of Revenue asked for comments on the technology used in DSL services, the Federal Communications Commission’s actions on DSL services, and how these actions and Florida law apply to the tax on DSL services. The government is making rules about how to tax DSL internet services. They are focusing only on DSL services, not other types of internet connections. This is because there are many different technologies for providing internet, and it would be too complicated to make rules for all of them. The government is also being cautious because technology is always changing, and they don’t want to make rules that will be outdated soon. So, they are only making rules for DSL services for now. DSL technology allows for high-speed internet access over traditional telephone lines. Two modems are used, one at the subscriber’s location and one at the telephone company’s central office. The signal is separated at the central office, with voice calls going to the regular phone network and data traffic going to the internet. This allows for fast internet access through a process that involves a modem, a multiplexer, and a network connection to an internet service provider. The FCC is looking at the rules for providing high-speed internet over traditional phone lines. They want to figure out how to classify this service under the law. The FCC is trying to figure out how to classify wireline broadband Internet. They think it’s an “information service” rather than a “telecommunications service.” They also think that providers should still have to pay into the universal service fund based on their revenue. However, they are still asking for feedback on this. The FCC has not finalized its decision on whether DSL services should be classified as “information services,” so state laws still apply to taxes on DSL services in Florida. However, DOR should consider the FCC’s view that DSL services are a combination of transmission and Internet access, and therefore may be subject to taxes. Florida law defines “communications services” broadly, so it is likely that DSL services would fall under this definition and be subject to taxes. The Department of Revenue (DOR) needs to figure out if DSL services should be taxed. DSL allows people to access the internet and also access information. DOR should consider that DSL providers usually charge for both the service that lets you use the internet and the service that lets you communicate. If they charge for both separately, only the communication part should be taxed. It’s like how hotels charge for phone calls and internet access – if they charge one price for both, it’s taxed. DOR should make a rule to cover these situations. The state and local governments should make sure they’re still making the same amount of money from the Communications Services Tax (CST) as they did before, even with new technology like Internet calling becoming more popular. The Department of Revenue (DOR) needs to keep taxable services as part of the tax, even when they’re bundled with nontaxable services. This is important because it affects how much money the governments make. A rule developed by DOR needs to recognize that when a company offers both taxable and nontaxable services together, the whole charge should be subject to the CST. This is an article written by members of a law organization that focuses on representing local governments in telecommunication and cable matters. The authors have experience in this area and are sharing their knowledge. The article is published on behalf of a section of the organization that focuses on city, county and local government law. The main goal of the organization is to promote duty and service to the public and to improve the justice system.

Source: https://www.floridabar.org/the-florida-bar-journal/florida-communications-services-tax-and-the-digital-subscriber-line-to-tax-or-not-to-tax/