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TOPIC: INTERNET TAX FREEDOM ACT
This notice is intended to provide taxpayers and the general public with information concerning the application of Alabama utility tax to Internet access.
The Internet Tax Freedom Act Amendments Act of 2007 prohibits multiple and discriminatory taxes on electronic commerce including Internet access. This act, which became Public Law 110-108, amends the Internet Tax Freedom Act to: (1) extend the moratorium on state taxation of Internet access and electronic commerce and the exemption from such moratorium for states with previously enacted Internet tax laws preserving the grandfather provisions to protect revenues in those states and local governments that currently collect those taxes until November 1, 2011; (2) restrict the authority of certain states claiming an exemption from the moratorium under the Internet Tax Nondiscrimination Act of 2004 to impose Internet access taxes after November 1, 2011; (3) expand the definition of “Internet access” to include related communication services such as e-mails and instant messaging; (4) redefine “telecommunications” to include unregulated non-utility telecommunications such as cable service; and (5) allow a specific exception to the moratorium for certain state business taxes enacted between June 20, 2005, and November 1, 2007, that do not tax Internet access.
The Internet Tax Freedom Act of 1998 enacted a moratorium on the imposition of state and local taxes on Internet access. It was extended by the Internet Tax Nondiscrimination Act and this act, extends it again through November 1, 2014.
According to the new federal legislation, the definition of “Internet access” includes:
(a) a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet;
(b) the purchase, use, or sale of telecommunications by a provider of a service described in(a) to the extent those telecommunications are purchased, used, or sold to provide that service or to otherwise enable users to access content, information or other services offered over the Internet;
(c) services that are incidental to the provision of the service described in (a) when furnished to users as part of that service, such as a home page, electronic mail and instant messaging (including voice and video capable electronic mail and instant messaging), video clips, and personal electronic storage capacity; and
(d) a home page, electronic mail and instant messaging (including voice and video capable electronic mail and instant messaging), video clips, and personal electronic storage capacity, that are provided independently or not packaged with Internet access.
Internet access does not include voice, audio or video programming, or other products and services described in (a), (b), (c), or (d) that utilize Internet protocol or any successor protocol and for which there is a charge that is either separately stated or aggregated with the charge for services in (a), (b), (c), or (d).
Sections 40-21-80 and 40-21-100, Code of Alabama 1975, exempt Internet access charges from utility gross receipts tax and the utility service use tax as enacted by Alabama Act 98-654 in 1998.
The new law amends the definition of Internet access to make clear that a product or service which is delivered by the Internet is not necessarily tax free. The new definition ensures that the state and local tax base is not eroded as more services are delivered by the Internet. When an Internet service provider bundles content, information and services that might otherwise be taxable with Internet access, the new language eliminates the interpretation that the entire bundle is tax exempt.
Section 40-21-82, Code of Alabama 1975, allows providers of telephone services to combine or bundle taxable and nontaxable services on one invoice and charge the customer tax on the taxable charges.
The legislation specifically prohibits taxation of e-mail and instant messaging services that are provided independently or not packaged with Internet access. Telecommunications services such as telephone services, cellular services, paging services and facsimile services that are not used to provide access to the Internet are subject to tax.
Section 40-21-82, Code of Alabama 1975, levies a privilege or license tax against every utility furnishing telegraph or telephone services in the State of Alabama. The amount of the tax is determined by the application of rates against gross sales or gross receipts from the furnishing of such services in the State of Alabama. Alabama code provides no exemption or exclusion for telephone services provided by the Internet.
Voice over Internet Protocol (VoIP) and any other form of telephony and similar services that utilize Internet protocol are excluded from the amended definition of Internet access and are not included in the federal moratorium. These types of telephony and telecommunications services continue to be subject to the Alabama Utility telecommunications services tax.
TOPIC: NEW BUSINESS WORKSHOPS
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TOPIC: SALES TAX HOLIDAY
Beginning in August 2006, a sales tax holiday was enacted pursuant to Act No. 2006-574, whereby no state sales or use tax is due on "covered items" as defined in the Act and in the Sales Tax Holiday Rule 810-6-3-.65. For each year thereafter, the sales tax holiday begins at 12:01 a.m. on the first Friday in August and ends at twelve midnight the following Sunday. The state's third observance of the back-to-school sales tax holiday will be held August 1-3, 2008. A county or municipality may, by resolution or ordinance adopted at least 30 days prior to the first full weekend of August, provide for the exemption of "covered items" from county or municipal sales or use taxes during the same time period, under the same terms, conditions, and definitions as provided for the state sales tax holiday. A list of the counties and municipalities that have notified the Department of their decision to participate or not participate in the Sales Tax Holiday is provided on our website - click here to access the list.
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TOPIC: JEFFERSON-SHELBY TAXPAYER SERVICE CENTER
The Alabama Department of Revenue Birmingham Taxpayer Service Center recently moved to a new office location in the Hoover Municipal Complex on Wednesday, Aug. 1, 2007. The Jefferson-Shelby Taxpayer Service Center is located at 2020 Valleydale Road, Suite 208. The new telephone and fax numbers for the service center are (205) 733-2740 and (205) 733-2989, respectively. The new mailing address for the service center is Post Office Box 1927, Pelham, Ala. 35124.
TOPIC: TAXPAYERS REQUIRED TO MAKE ELECTRONIC TAX PAYMENTS OF $750 OR MORE
Section 41-1-20, Code of Alabama 1975, was amended pursuant to Act No. 2006-552, specifying that for each occasion that a business taxpayer is obligated to make a tax payment of $750 or more to the Alabama Department of Revenue, after October 1, 2006, such payment must be remitted electronically through an electronic funds transfer (EFT) method. Of course, voluntary participation of transactions less than $750 is encouraged.
Guidance and instructions are provided below on making electronic payments for those taxpayers that meet the new EFT threshold requirement and that are required to file the following business taxes through the Alabama Paperless Filing and Payment System: Sales Tax, Sales Tax Direct Pay Permits, Motor Fuel Direct Pay Permits, Consumers Uses Tax, Sellers Use Tax, Rental Tax, Lodgings Tax, Utility Privilege License Tax, Utility Privilege License Direct Pay Permit, Pharmaceutical Provider Tax, Mobile Communication Services Tax, Contractor’s Gross Receipts Tax, and City and County Sales, Use, Lodgings and Rental Taxes. These taxes must be paid electronically utilizing either the EFT ACH Debit or ACH Credit Payment Method specified below.
ACH Debit Payment is the preferred method and does not require pre-registration. Tax return payments made through this EFT method must be initiated through the Alabama Paperless Filing and Payment System upon the filing of the return, through the Internet (http://www.revenue.alabama.gov/salestax/efiling.html) or toll-free through the telephone (1-800-828-1727). If paying electronically for the first time, simply enter your banking information at the payment prompt upon submitting the return. For returns filed early, you can choose to delay or “warehouse” your payment until the due date. For more information about the EFT Debit Payment Method, please visit our Web site at http://www.revenue.alabama.gov/salestax/online/pmtinst.htm. To be considered timely paid, ACH Debit method tax payments must be initiated no later than 4:00 p.m. CST on the due date of the return.
ACH Credit Payment Method requires pre-registration and Department approval. Although the returns must be filed electronically through the Alabama Paperless Filing and Payment System, tax payments made through this EFT method must be initiated through the taxpayer’s financial institution separate from the filing of the return. The TXP Banking Convention Addenda Record must contain the required information provided on our Web site at http://www.revenue.alabama.gov/eft/TXPbanking.pdf. To be considered timely paid, you must initiate your ACH Credit method tax payments with your financial institution so that the payments are immediately available to the State on or before the first banking day following the due date of payment.
Please note that the new law specifically provides that any city or county taxes administered by the Alabama Department of Revenue must be paid electronically if the corresponding state tax is paid electronically.
Paying electronically through EFT is safe, secure and convenient. If you have any questions regarding these electronic payment methods, please contact us either via the telephone at 334-242-1490 or 1-866-576-6531, or via e-mail, and representatives will assist you. |
