Government study: VoIP, video can be taxed

[SOURCE: C-Net|News.com, AUTHOR: Anne Broache]
State and local governments may be able to tax certain aspects of Internet use under an existing federal law designed to ban such fees, a Government Accountability Office report concluded earlier this week. The Internet Tax Freedom Act, passed in 1998 and renewed in 2004, prevents state and local governments from taxing "a service that enables users to access content, information, electronic mail or other services offered over the Internet." Services like voice over Internet Protocol (VoIP), traditional telephone service and video offerings by Internet service providers remain fair game for taxation under the law, the GAO said. The scope of the moratorium has nothing to do with sales taxes for Internet purchases. At issue is the auditors' finding that the tax ban doesn't apply to "acquired services" -- in short, the actual wires, cables, fibers and other hardware used to carry Internet traffic to customers. That means an Internet service provider that leases fiber from a telecommunications company for its network could theoretically be subject to taxes during that "wholesale" transaction.
http://news.com.com/Government+study+VoIP,+video+can+be+taxed/2100-1028_3-6031256.html?tag=html.alert
* GAO Report:
http://www.gao.gov/cgi-bin/getrpt?GAO-06-273