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

Home enforcement?

[wo1verin3]

I would guess that the people pushing for enforcement don't really understand what they're asking for and that it will cost their offices as well.

Re:Home enforcement?

[macdaddy]

It's not that they don't understand (which they don't); it's that they don't care. All they see is yet another unharnessed source of income. I bet you that the law is so vaguely worded that it could describe the connection between you and your provider (DSL), you and your cable company for TV or cable modem, cordless multi-unit telephones (like the pair Sam's sold last X-mas that could have more handsets added to the setup), and even the datalink between your PDA and your desktop. Hell I bet it could even be applied to your USB hub and devices. I bet this law is that vague. They really don't care what the impact is. They just want more money.

Re:Home enforcement?

[mar1boro]

My paranoia is asserting iteself, again.
I'm pretty sure they know exactly what they
are doing. Identifying any specific device
for taxation (ie. automobiles) makes it much
easier to keep track of.

Re:Home enforcement?

[b0r0din]

Well this is Florida too. Let's just call him a LAN Shark.

"Who is it?"

"Plumber."

"I didn't hire a plumber. Who is it?"

"Candygram."

"You're...that crazy LAN Shark I've been hearing about on Slashdot, aren't you?!"

"No ma'am, I'm...I'm just a dolphin."

Won't work...

[Grant29]

Nowadays home LANs are pretty common. Try to enforce it on individuals and all hell will break loose. I expect them to go after the large companies first, and when they strike it down, the home users won't worry about having to fight it.

--
Retail Retreat

Re:Won't work...

[wo1verin3]

As silly and far fetched as this sounds.... I'm sure we remember when everyone said the RIAA will never really start going after individuals.

program named 'Why you should leave Florida'

[hoggoth]

The Florida Tax Revenue office is naming this new effort 'Why your business should leave Florida' and including helpful tips on moving your business to another state that doesn't do such stupid things as tax your internal computer network.

Jobs will migrate...

[bunyip]

Well, first, I was giong to suggest, "Dude, April Fool's Day was, like, 2 weeks ago", but then I read the article.

Clearly, companies that rely on LANs will go to places that don't tax LANs. Like neighboring states, or non-neighboring states, or non-neighboring countries. I'm sure the tax assessor is not thinking of the medium to long-term consequences.

Do they tax LANs in India? Russia? Other countries?

Alan.

Re:Jobs will migrate...

[nacturation]

Do they tax LANs in India? Russia? Other countries?

Of course not. In Russia, the LANs tax you!

BREAKING NEW

[MajorDick]

Florida tax auditor found strangled with cat 5 . Police baffled. "Why anyone would use a network cable is beyond us stated........

CEO: What Happen?

[bl4nk]

Admin: Somebody set up us the tax provision.
Admin: We get signal.
CEO: What!
Admin: Main screen turn on.
CEO: It's You!!
Florida: How are you gentlemen!!
Florida: All your LAN are belong to us.
Florida: You are on the way to taxation.
CEO: What you say!!

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.

Knock, knock, knock...

[Anonymous Coward]

Who is it?

Plumber!

I didn't call a plumber. Who is it!?

Flowers!

Flowers for who?

Plumber!

Why you're that crazy Landshark aren't you?

No ma'am, I'm just a dolphin. Will you let me in please?

A dolphin? OK.

Aaaaaaaggggggghhhhhhhh!!!!!! You're not a dolphin. You're a filthy A LAN inspector!!!

Re:justification

[Aardpig]

I've yet to see a good ROI for my tax money.

Sometimes, it is wrong-headed to judge ROI in purely financial terms. Both the Lincoln and Washington monuments were funded using public money; yet I don't think you will find many arguing that this money was wasted. There are areas where public funding can meet a need, for which there is no private-enterprise motivation to address.

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.