Virginia General Assembly Proposes Changes to Telecommunications Tax.

The General Assembly of Virginia has proposed a restructuring of state and local telecommunication taxes and fees so that the tax burden will fall equally on all users of the telecommunication services. Providers of telecommunication services within the state have been asked to come together for this restructuring and assist in the preparation of legislation to create a new statewide telecommunication tax. The idea is to enact a new method of taxation on July 1, 2005 which would repeal the local consumer utility tax on consumers of local exchange and wireless services, the gross receipts tax in excess of 0.5%, the Virginia Relay Center Assessment, and state and local 911 taxes and fees and then implement a retail telecommunication service tax at a standard rate statewide. The General Assembly believes the tax should not be less than 4.5% but should not be greater than the state and local retail sales and use tax rate. This telecommunications tax would replace any other state or local sales and use tax. (Ch. 634, H.B. 1174, Laws 2004, effective July 1, 2004)

Posted on June 15, 2004