Telecom Companies Commend Enzi's Sales Tax Fairness Act

The telecommunications providers listed below would like to express our support for the "Sales Tax Fairness and Simplification Act" (S. 2152) and our appreciation for your sponsorship. The Act provides for fair and simple collection of sales tax and other taxes and fees on telecommunications services and will go a long way to reduce the administrative burdens and costs to businesses that currently collect, remit and pay these taxes and fees.

The Council On State Taxation's 50-State Study and Report on the Telecommunications Taxation documents the excessive burdens faced by the telecommunications industry in complying with state and local taxes and fees. A nationwide telecommunications firm may have to file nearly 48,000 state and local transaction tax returns each year. Complying with these taxes and fees is made more difficult due to the lack of rate and boundary information from the taxing jurisdictions. The November 12, 2002 agreement of the Streamlined Implementing States, as amended, contains a number of simplification measures that ensure that businesses have the information they need to properly comply with the state and local sales tax laws. However, the agreement does not apply the same simplification measures to telecommunication taxes and fees.

Tax neutrality principles and the goals of simplification should apply to all forms of electronic commerce, including communications services. The combination of state and local taxes and fees imposed upon communications services imposes significant administrative costs on providers and results in higher costs of service for consumers without any corresponding benefit to state or local governments. The Streamlined Sales and Use Tax Agreement made significant progress in recommending simplifications to the sales and use tax and these simplifications should be applied to transaction taxes on communications services. We support the provisions in your bill that would require states and localities to apply the streamlined sales tax reforms and provisions to all state and local transaction taxes on telecommunications.

The implementing states, along with the other participating states, have shown a sincere effort to address many of the concerns expressed by members of the business community in developing the agreement. We commend the States for their efforts. Thank you for introducing S.2152 and we look forward to working with you in support of the legislation. We hope that Congress will endorse these simplification measures and set forth the minimum simplification requirements that should apply to all transaction taxes on telecommunication services by enacting the "Sales Tax Fairness and Simplification Act."