House Judiciary Committee Moves on Digital Goods Tax Fairness

Earlier today, the House Judiciary Committee approved the ‘Digital Goods and Services Tax Fairness Act’ (H.R. 1643), paving the way for a House floor vote on the bill. We thank the Representatives Lamar Smith and Steve Cohen for sponsoring this legislation, and the House Judiciary Committee members for making this positive first step.

At the markup, House Judiciary Committee Chairman Bob Goodlatte said:

Unlike a physical purchase from a brick and mortar store, digital goods transactions can involve multiple jurisdictions simultaneously. Consider a Virginia resident downloading a movie from Washington-based Amazon while waiting at Chicago O’Hare Airport in Illinois.  Three states could potentially lay claim to that transaction, creating a real risk of multiple taxation for the consumer. The Digital Goods legislation provides a consistent, uniform sourcing framework to address this problem.

As Chairman Goodlatte pointed out, right now consumers could be taxed by several different jurisdictions for the same digital goods purchase. With state and local governments desperate for new revenue sources, that scenario is quite possible, and there’s currently no law in place to keep that from happening. That’s why it’s important to make sure wireless consumers are treated fairly and that we have a “national framework” or some “rules of the road” for how the digital marketplace is fairly taxed at the state and local levels.

There is still much work to be done to make digital goods tax fairness a reality. The House must now pass the ‘Digital Goods and Services Tax Fairness Act,’ and the Senate needs to act quickly on the companion bill (S. 851) with the same name.

Contact your Representative and Senators today and tell them to pass this much needed legislation!

Take action now!

 


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Florida Legislature Passes Wireless Tax Cuts in Special Session

We have some great news out of Florida! The House and Senate passed a tax cut package yesterday which includes a $100 million annual Communications Service Tax (CST) reduction on wireless services. The total tax savings in the package amounts to $430 million for Florida taxpayers. The bill was signed into law this morning and the wireless tax cuts will take effect on July 1st.

Originally, Governor Rick Scott’s proposal seeking to reduce the state’s CST by $470 million annually was considered by the Florida Legislature. The House passed a version of the plan, but the Senate was unable to vote on the companion bill before the legislative session abruptly ended. Lawmakers returned on June 1st for a 20-day special session to finalize a budget for the coming year and address the tax cuts proposal.

While the approved 1.73 percentage point CST cut doesn’t go as far as Governor Scott’s original call for a 3.6 percentage point reduction, it a great first step in the right direction that will save Floridians nearly $20 a year on every $100 spent on monthly service plans.

These wireless tax cuts are much-needed for Florida’s wireless consumers who currently pay over 22 percent in federal, state and local taxes on their monthly wireless bills. Florida has the 4th highest wireless tax rate in the country, a rate that is three times higher than the general sales tax of other goods and services in the state.

We applaud Governor Rick Scott, Representative Matt Gaetz and Senator Dorothy Hukill for their hard work and leadership on this effort to make wireless more affordable for wireless consumers. Thank you!

 


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House of Representatives passes Permanent Internet Tax Freedom Act

Good news from the U.S. House of Representatives!

The House voted to pass the Permanent Internet Tax Freedom Act (H.R. 235), which is strongly supported bipartisan legislation that permanently protects consumers from having to pay taxes on Internet access.

Now it’s time for the Senate to do the same. The Internet Tax Freedom Forever Act (S. 431), as it’s called in the Senate, is the companion to the bill passed by the House today.

The Internet Tax Freedom Act, as both bills are commonly known, was originally passed in 1998 to foster and encourage the continued expansion of Internet use in the U.S. As we all know, the Internet has revolutionized the way we are able to communicate, learn and do business. This legislation has been incrementally extended over the years, and is scheduled to expire October 1, 2015.

Please take a moment to write your Senators today and urge them to pass S. 431.

Let’s work together to make sure Internet access remains affordable and accessible to everyone, and tax-free forever!

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Digital Goods Fairness and Permanent Internet Access Tax Freedom

Earlier this week the U.S. House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing over several bills focused on the states’ authority to tax. One of the bills examined during the hearing was the “Digital Goods and Services Tax Fairness Act” (H.R. 1643), which was reintroduced in the House and Senate earlier this year. The clear sentiment of the Representatives and witnesses who participated in the hearing was that digital goods and services purchases should not be subject to multiple and discriminatory state and local taxes.

For some background on the issue, right now it’s possible to be taxed by several different jurisdictions for the same digital goods purchase. For example, let’s say you pay your wireless service bill in one area code, but you buy something with your device when you’re in another one, from a company in yet another part of the country. Under today’s tax regulations, you could potentially be taxed by all three jurisdictions!

As some of the witnesses highlighted during the hearing (and we’ve said before), State and local governments are desperate for new revenue sources so the scenario of digital goods purchases being taxed by multiple-jurisdiction is very real. That’s why it’s important to make sure that we have a reasonable tax structure which treats wireless consumers fairly. H.R. 1643 provides that structure, ensuring that consumers won’t get caught up in overly aggressive revenue schemes devised by State or local governments.

This legislation also paves the way for another important bill being considered by the House: “The Permanent Internet Tax Freedom Act” (PITFA – H.R. 235). As House Judiciary Committee Chairman Bob Goodlatte mentioned in his hearing statement:

Also before the Committee is the Digital Goods and Services Tax Fairness Act of 2015. It sets sourcing rules for the purchase of digital goods and services. These rules will help implement the Permanent Internet Tax Freedom Act’s ban on multiple taxes of Internet commerce. This ban expires October 1, 2015, and the Committee will soon move to renew it.

Like the digital goods legislation, PITFA seeks fair tax treatment of Internet commerce. Additionally, it permanently extends the moratorium on taxing Internet access, which is set to expire on October 1st. If the Internet access tax moratorium expires, the high state and local taxes that are already applied to wireless service could be expanded to include Internet-access, increasing the cost of service.

Luckily, PITFA has 179 bipartisan cosponsors in the House – an unmistakable sign of how important it is to keep this critical gateway for education, healthcare, jobs and entrepreneurial opportunities accessible and affordable for all Americans.

It is urgent that Congress pass both the ‘Digital Goods and Services Tax Fairness Act’ and ‘Permanent Internet Tax Freedom Act’ (known as the ‘Internet Tax Freedom Forever Act’ in the Senate) without delay to ensure that digital goods and services are taxed fairly and the Internet remains accessible for all and unhindered by discriminatory, duplicative taxes.

 


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$78 Million Wireless Fee Increase Continues to Advance Through Pennsylvania Legislature

In early May, the Pennsylvania House of Representative passed a troubling piece of legislation, House Bill 911 (HB911), that would increase the state 911 fee on wireless service. The bill will likely be approved by the Senate Veterans Affairs & Emergency Preparedness Committee on June 2nd if your voice is not heard!

HB911 would raise the wireless fee 65%, from  $1.00 to $1.65, representing an annual $78 million fee increase on wireless consumers and a $114 million fee increase on all telecommunications consumers (including home phone and VOIP services), adding up to a staggering $570 million fee increase over 5 years!

As we’ve said before, we believe that 911 should be efficiently funded because it allows emergency personnel to respond when a caller dials 911. However, this fee increase is beyond excessive and discriminatory for wireless consumers – especially those in lower income households.

There are few important facts to bear in mind regarding Pennsylvania’s CURRENT 911 system:

  • Today, wireless consumers in Pennsylvania pay $1.00 per month in 911 fees. According to the National Emergency Number Association (NENA), there are only 7 states with a higher statewide 911 fee.
  • Further, according to Congressional reports, Pennsylvania collected more than $192 MILLION in 911 fees in 2013. This is the second highest collection of 911 fees in the country, just behind Texas.
  • Today, the Commonwealth has the 8th highest wireless tax burden on consumers through a combined federal, state and local tax rate of almost 20%. This is almost triple the average state/local sales tax of 7% on other goods and services.

This is what HB911 would do to Pennsylvania wireless consumers:

  • A family of 4 in Philadelphia with a typical “family share plan” with 4 lines would pay almost $240 per year in taxes and fees just on their wireless plan. Other families throughout the Commonwealth would pay nearly $215 per year.
  • A 911 fee at $1.65 would be the third highest statewide 911 fee in the country, just behind West Virginia and Alabama.
  • The overall wireless tax burden in Pennsylvania would rise to over 21%, sticking Pennsylvania consumers with the 6th highest wireless tax burden in the country.

Wireless consumers in the Commonwealth already pay more than their fair share of state, federal and local taxes and fees. This enormous fee increase is the last thing they need.

HB911 will be voted on by the Senate Committee on Tuesday, June 2nd. Contact your legislators today and tell them to say NO to the current plan to dramatically hike fees in HB911!

Take action now!

 


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