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Substitute Communications Services Tax Dead - For Now

September 3, 2003

We have just received word that the Department of Revenue (DOR) will not be proceeding with its proposed rule to impose the communications services tax on substitute communications systems.

As you may recall from AIF's previous reports, the rule was written in such a way that it imposed a costly tax burden on virtually every business in the state. Any company with a computer network or an in-house telephone system fell into the grasp of the communications services tax collector.

Thanks to the outcry of the business community, DOR has realized that the rule would create an onerous burden on state employers that would ripple disastrously throughout the economy.

Expect the Legislature to reconsider the portion of the statutes that requires payment of the communications services tax on substitute communications systems. In the next session, lawmakers will be asked either to repeal the language or redraft it in a way that eliminates the problem embedded in the statute as it exists now.

The DOR staff deserves thanks for their willingness to listen to the concerns of the business community and take the appropriate action. And thank you to all AIF members who responded to AIF's request for information on the impact this tax would have had on your business.