Florida to Tax Home Networks

R. A. Hettinga rah at shipwright.com
Sun Jun 27 14:31:32 PDT 2004


<http://www.wired.com/news/print/0,1294,63962,00.html>

Wired News


Florida to Tax Home Networks 
By Michelle Delio?

Story location: http://www.wired.com/news/business/0,1367,63962,00.html

02:00 AM Jun. 24, 2004 PT

Florida state officials are considering taxing home networks that have more
than one computer, under a modified 1985 state law that was intended to tax
the few businesses that used internal communication networks instead of the
local telephone company.

 Officials from Florida's Department of Revenue held a meeting on Tuesday
to see whether the law would apply to wired households, and exactly who
would be taxed. About 200 people attended, including community and business
representatives.


 In 1985 the state passed a law to tax businesses using their own
communications networks, because otherwise the state could not collect tax
revenue on the businesses' local telephone service. In 2001, that law was
expanded to make "any system that is used for voice or data that connects
multiple users with the use of switching or routing technology" taxable up
to 16 percent.

 The law is so broad that it would apply to networked computers, wireless
services, two-way radios and even fax machines -- or "substitute
communications systems," as the state calls them. The tax would be
applicable (PDF) to the costs of operating such a substitute communications
system, not to the purchase of the system's components.

 In some cases, it appears the tax would be collected by the providers of
communications services such as wireless companies or voice-over-IP firms.
The tax would be added to the user's bill and then turned over to the
Department of Revenue.

 But some substitute communications services don't require a service plan.
For those, the state could take the tax from the amount deducted on
business, and perhaps personal, tax filings.

 "According to my accountant, the way the law is written, if my tax filing
includes deductions for the repair or maintenance of my two computer and
one printer network, those costs will be subject to state communication
taxes," said graphic artist Linda Kellman, who works from home.
"Self-employed people get slammed with insane taxes everywhere, and I've
sadly but grudgingly accepted that. But this tax, if they ever try to
collect it, would be the last straw. Can I outsource my network to a more
sensible state, do you think?"

 Florida businesses and residents -- and even some officials in the Florida
Department of Revenue -- agree that the wording of the law is too broad.

 In May, the Florida Senate unanimously passed a bill that would have
prevented collection of the tax until 2006, during which time the law could
be carefully reviewed. The bill was then sent to the House, but wasn't
voted on before the summer break, clearing the way for officials to begin
collecting the tax.

 As a result, the Florida Department of Revenue, which, according to local
newspaper reports, was in favor of the bill to delay the collection of the
tax, must now begin to address how the tax should be implemented.

 "The tax language is so broad that virtually any communication
technologies in your home or office could be subject to this tax," said
Chris Hart, spokesman for ITFlorida, a not-for-profit industry organization
for the state's technology professionals. "It's difficult to imagine a more
anti-technology, anti-business tax. It directly attacks the efficient use
of information technology."

 Florida businesses aren't in favor of the tax.

 It also could tax almost any Florida resident who uses any sort of modern
communications technology, something that Florida's battalions of retirees
on fixed incomes have just begun to become aware of, according to Hart.

 "Information on this issue is starting to reach the general public, and it
probably isn't widely understood just yet," he said. "However, once people
do realize how this tax could impact them on a personal level, they wake up
very fast."

 "All my life, I've willingly paid my fair share of taxes in exchange for
community services," said 73-year-old George Fedoro, a retired engineer who
now lives in Boca Raton. "But this tax is not fair and could turn senior
citizens into criminals, because no one that I know can or will pay it."

 Florida Gov. Jeb Bush would have to approve any rule the tax department
suggests. Bush has said he isn't in favor of the tax, but many fear he may
be swayed by city and county government officials. The tax would go, in
part, toward school construction and other projects.

 Additional meetings on the proposed rules for the tax will be held in
other locations around the state later in the year, Department of Revenue
officials said.

 If the law is implemented, Florida would have the most wide-reaching state
tax on technology. But it may not be the last -- state officials estimate
enforcement of the tax could bring in more than $1 billion a year in
revenue for the state.

-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'





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