Communication Services Tax
HB 428 would create a state and local excise tax on communication services. It would repeal local franchise fees, ROW fees, cell tower fees, occupational taxes, and other sales taxes on communications services and combine them into one communication services tax (CST). HB 428 would provide for 2% state and 2% local rate on communications services, with an additional 2% on satellite services that would be paid to the state only.
Under HB 428, communication services are defined as any transmission of voice, data, audio, or video. However, subscription streaming services such as Netflix, Hulu, or Amazon would be exempt from both the state and local rate. HB 428 taxes subjects digital downloads to state and local sales tax, which is at a higher rate than the prescribed CST rate.
The local portion of CST revenues is allocated to each local government based on a jurisdiction by subscriber.
HB 428 also contains a provision in which local governments must opt in to CST collections by adopting an ordinance and submitting it to DOR by December 31st of the calendar year in order to collect CST revenues in the following year.
In addition to the consolidation of communication services fees and taxes, HB 428 provides providers with a sales and use tax exemption on equipment. HB 428 provides for a cap of $80 million on sales tax exemptions for equipment.
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