[802SEC] Ears get burned on taxing LANs
The Business Journal of Jacksonville - October 6, 2003
Businesses upset by state network taxes
Officials cite misconception
JACKSONVILLE -- The state Department of Revenue is getting a barrage of
negative comments, including a "flamer e-mail from Singapore,"
about an alleged proposal that would hit Florida businesses with a 9.17
percent tax on computer networks, namely local area networks, called
LANs, and wide area networks, called WANs.
But it simply isn't so, said department spokesman David Bruns.
"There has been some misunderstanding," he said. "It's
been portrayed by some of the business associations as the Department of
Revenue creating a law to make people pay. We don't write tax
Rather, the 9.17 percent tax already exists, and has for two years.
Proposed in 2000 and enacted the next year, the communications services
tax streamlined the tax structure, eliminating or consolidating seven
state and local taxes into two: the state communications services tax and
the local communications services tax.
The state tax rate is 6.8 percent plus a gross receipts tax rate of 2.37
percent, for a combined state communications services tax rate of 9.17
percent. Local tax rates vary.
At issue is whether definitions of "substitute communications
systems" should apply to LANs and WANs. Nearly every company with
two or more computers operates on a LAN.
The original definition adopted in 1986 before today's LANs and WANs
existed, included "any system that routes electronic signals that
would be a substitute for a commercially operated communications
line," Bruns said.
The 2000 update broadened the definition to "essentially any
electronic exchange of signals, data or information," he said.
"The question is, does that apply to a local area network [or wide
area network] routing device? The legislation is very broad and so is the
Department officials set out to study how taxing LANs and WANs would
affect businesses, holding a rule developing workshop and inviting
business associations and other interested parties to comment.
Officials got an earful and halted further study until it gets word
from state legislators, who begin committee meetings in October.
If legislators fail to address the issue, the department will resume rule
development after the 2004 legislative session.
© 2003 American City Business Journals Inc.
[arrow] Web reprint information
All contents of this site © American City Business Journals Inc. All
| Geoffrey O.
| Vice Chair, IEEE
| Nortel Networks, Inc. M/S: P79/06/B04 |
| 4655 Great America
| P. O. Box
| Santa Clara, CA 95052-8185
| Phone: +1 408 495
| Fax: +1 408 495
| Please see the IEEE 802 web page at