Florida Ponders Communication Tax on LANs

victor_the_cleaner writes "Here in Florida, a little known tax provision may lead to LANs being taxed. According to the article, 'The provision was intended to make sure companies operating their own land line communication systems, which two decades ago was limited to large utilities and railroads, were paying the same taxes paid by those who rely on commercial phone carriers. About 10 companies (in Florida) pay more than $1.2 million annually based on that definition. However, the statute is so broadly worded that it could be interpreted to describe a local area network.' Internal auditors at the city of Tampa noticed a couple of years ago that the substitute communications service provision was still there and asked state officials why it wasn't being enforced. And now people like Sharon Fox, the city of Tampa's tax revenue coordinator are pushing for enforcement."

Comments

Longest dupe I can remember

[Omega Hacker]

From August 25th, 2003

The Offending Statute

[MajroMax]

The article was unclear of the exact law involved here. Searching through the Florida statutes gave me this:

202.15 Special rule for users of substitute communications systems.--Any person who purchases, installs, rents, or leases a substitute communications system must register with the department and pay the taxes imposed or administered pursuant to s. 202.12 annually pursuant to rules prescribed by the department.

and

202.11 Definitions.--As used in this chapter:
...
(16) "Substitute communications system" means any telephone system, or other system capable of providing communications services, which a person purchases, installs, rents, or leases for his or her own use to provide himself or herself with services used as a substitute for any switched service or dedicated facility by which a dealer of communications services provides a communication path.

Section 12 says that the tax rate is 6.8% of the sales price, applied yearly.

They should read the law, as I have

[DaveV1.0]

I live in Tampa and read the law. This is what I found to be important:

(3) "Communications services" means the transmission, conveyance, or routing ... The term does not include:

(a) Information services.
...
(h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line computer services.

And

(7) "Information service" means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, using, or making available information via communications services, including, but not limited to, electronic publishing, web-hosting service, and end-user 900 number service.

And

(16) "Substitute communications system" means any telephone system, or other system capable of providing communications services, which a person purchases, installs, rents, or leases for his or her own use to provide himself or herself with services used as a substitute for any switched service or dedicated facility by which a dealer of communications services provides a communication path.

IANAL, but the way I read this, computer networks can not be "Substitute communications system" because "communications services" does not include "Information services", "Internet access service", "similar on-line computer services".

This is just another instance of government officials not understanding the technology they are trying to tax, regulate, and legislate.

Re:justification

[Idarubicin]

Or maybe I could interest you in a $1000 hammer?

The $1000 hammer is a myth. Actually, it's even a badly reported myth--the usual figure cited by the media back in the Eighties was $600, and the real number on the books is $435.

Still, that seems rather shocking...until you dig deeper and realize that the hammer's actual cost was fifteen dollars. Sydney Freedberg described the issue in Government Executive magazine way back in 1998.

One problem: "There never was a $600 hammer," said Steven Kelman, public policy professor at Harvard University's John F. Kennedy School of Government and a former administrator of the Office of Federal Procurement Policy. It was, he said, "an accounting artifact."

The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list--a bookkeeping exercise that had no effect on the price the Pentagon paid overall--they simply treated every item the same. So the hammer, originally $15, picked up the same amount of research and development overhead--$420--as each of the highly technical components, recalled retired procurement official LeRoy Haugh. (Later news stories inflated the $435 figure to $600.)

"The hammer got as much overhead as an engine," Kelman continued, despite the fact that the hammer cost much less than $420 to develop, and the engine cost much more?"but nobody ever said, 'What a great deal the government got on the engine!' "

Thus retold, the legend of the $600 hammer becomes a different kind of cautionary tale. It is no longer about simple, obvious waste. The new moral is that numbers, taken as self-explanatory truths by the public and the press, can in fact be the woefully distorted products of a broken accounting system.

I don't for a minute deny that waste exists in some government programs, but it's time to put this particular tired old tale to rest. Repeating it just damages the credibility of the speaker.