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PostPosted: Tue Jan 24, 2006 12:27 am    Post subject: Once again Virginia trying to tax VoIP Reply with quote Back to top

Communications taxes bill clears House

The headline is wrong, the bill passed the House Finance Committee. [EDIT: The story headline was changed to Bill to streamline communications taxes clears committee]

The bill is HB568 and can be found on the Commonwealth of Virginia Web Site. You will need to scroll two thirds of the way to Chapter 6.2 VIRGINIA COMMUNICATIONS SALES AND USE TAX.

Some interesting quotes:


"Communications services" means the electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for the transmission or conveyance. The term includes, but is not limited to, (i) the connection, movement, change, or termination of communications services; (ii) detailed billing of communications services; (iii) sale of directory listings in connection with a communications service; (iv) central office and custom calling features; (v) voice mail and other messaging services; and (vi) directory assistance.

"Communications services provider" means every person who provides communications services to customers in the Commonwealth and is or should be registered with the Department as a provider.

Imposition of sales tax


A. Beginning January 1, 2007, there is levied and imposed, in addition to all other taxes and fees of every kind imposed by law, a sales or use tax on the customers of communications services in the amount of 5% of the sales price of each communications service that is sourced to the Commonwealth in accord with § 58.1-649.


(vii) Internet access service, electronic mail service, electronic bulletin board service, or similar services that are incidental to Internet access, such as voice-capable e-mail or instant messaging;

This bill is significantly improved over last years in terms of its understanding of the technology and issues. Vonage service would be taxed in Virginia if a Virginia address was the primary place of use, that is, you could travel with Vonage to Virginia and not be subject to tax. This would be the same for any service that was not billed on a call by call basis.

Vonage could be obligated to register as a communication provider in the Commonwealth simply by advertising on local TV, radio or in a local newspaper. It would then be required to collect the tax. There are plenty of other ways to earn communication provider status.

This bill also adds a separate E911 tax ($0.75 per line).

Services that were completely Internet based (Skype for example) would be exempt by FCC ruling, however the services that provide PSTN connectivity might be taxable if they are advertised or have a presence in Virginia.

Finally since the bill also taxes satellite TV you may see opposition to it from

Stephen P. Cerruti (ISP: TWC)
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