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Legislative Memo

BILL:

S.7166 (Wright)

  Support

SUBJECT:

Uniform Sourcing Rules for Telecommunications

 

DATE:

May 21, 2002

 

The Business Council of New York State, Inc., whose membership includes over 4,000 member companies, chambers of commerce, and associations, has reviewed the aforementioned legislation and is proud to strongly support its enactment.

The proposed legislation conforms the sourcing of telecommunications receipts to nationwide uniform sourcing standards and clarifies the tax treatment of charges for telecommunications aggregated with nontaxable charges for telecommunications.

Currently, states across the country use varying methodologies for determining where a telecommunications transaction is taxed. Fifteen states, including New York, use the address of the telecommunications equipment, eight states use the address of a customers account while the rest of the states simply have no definition. Without uniformity, multiple taxation of service or even "nowhere taxation" are possible. This creates serious administrative and compliance burdens for the tax paying carriers and tax administrators.

This proposal doesn't determine whether a call is taxable or not; it simply provides the rules for determining where a call is taxable while maintaining state sovereignty in deciding whether to tax or exempt telecommunication services.

Additionally, this proposal clarifies current uncertainty over the ramifications of bundling aggregated taxable and non taxable telecommunications services for a fixed price. Innovative service offerings should not be hindered because of such uncertainty. For this reason, this legislation provides that when bundling of taxable and nontaxable telecommunications services for a fixed price only those components of the bundle that are taxable will be taxed.

For the above stated reasons the Business Council supports S.7166 and requests it be acted upon favorably this session.