FET Tax (revisited)

Posts: 281 · Posted: Mon Aug 01, 2005 9:32 am Post subject: FET Tax (revisited)

Does anyone know why Vonage charges a FET tax when other providers like Broadvox/Sunrocket and ViaTalk do not?

Posts: 8 · New Forum Member Joined: Jul 31, 2005 Posts: 8

President George W. Bush signed a law renewing a ban on Internet access taxes, ensuring most customers of Microsoft Corp.'s MSN and Time Warner Inc.'s America Online won't see state and local levies on their monthly bill until at least 2007.

Proponents such as Sen. George Allen, R-Va., have said the moratorium, first enacted in 1998, would allow high-speed broadband technology to expand to rural areas and keep it affordable. Bush, who signed the bill in a private ceremony, has urged Congress to make it permanent.

Starting in 1998, federal law has blocked state and local taxes on Internet connections for customers of such companies as AOL and EarthLink Inc. Since a series of temporary measures lapsed in November 2003, state and local governments have stood pat, hesitant to impose new levies until Congress acted.

"This obviously will help to keep Internet services, broadband services in particular, more affordable and more available to more consumers," said David Baker, vice president of law and policy at Atlanta-based EarthLink, the third-largest U.S. Internet service provider.

The bill preserves access taxes in states that already have them such as Tennessee and Texas. The legislation also makes clear that telephone calls placed over the Internet aren't exempt from taxes. Telephone calls, including long-distance, are subject to a 3 percent federal excise tax.

Opponents of a permanent ban on Internet access taxes, including Sen. Lamar Alexander (R-Tenn.) said the Internet has grown to the point where it doesn't need protection from taxation and that ending state and local levies would drain $18 billion in revenue from state and municipal coffers that the federal government wouldn't replace.

Getting an exemption from Internet-phone taxes "would have been nice, but things don't work out that way," said John Rego, chief financial officer of closely held Vonage Holdings Corp. of Edison, N.J., the largest provider of Internet-calling service. The growth of Vonage and competing products may threaten tax revenue from traditional phone services.

"A lot of states are looking at that as a potential problem," Rego said. "It's just a matter of time" before a state or local government imposes a tax on Internet-phone service, he said. The whole issue may take five to 10 years to resolve, Rego said.

Even so, the law will spur increased use of fast-Internet service, which should drive more customers to Vonage, whose product requires such a connection, Rego said.

Posts: 134 · Vonage Forum Senior Joined: Mar 23, 2005 Posts: 134

The FET tax Vonage charges is misleading. In all actuality it is a charge, not a tax at the present moment.

Posts: 281 · Posted: Tue Aug 02, 2005 7:20 am Post subject:

NHTracker wrote:

The FET tax Vonage charges is misleading. In all actuality it is a charge, not a tax at the present moment.

So where does the money go that they get through this?

Posts: 3198 · Posted: Tue Aug 02, 2005 7:45 am Post subject:

http://www.vonage.com/corporate/commercials.php

Posts: 281 · Posted: Tue Aug 02, 2005 7:49 am Post subject:

So then there really isn't a law requireing them to charge it.... ?

Posts: 3198 · Posted: Tue Aug 02, 2005 7:54 am Post subject:

voip is still unregulated remember. some companies do charge it and some don't.
I was just being cynical, but for all I know they put all those fees in a bank account and do nothing to them in case something comes about where it does become required, esp if it's retroactive. and look, I just found a post that says something similar.
http://www.broadbandreports.com/forum/remark,12333706