Sample Letter addressing Rights-of-Way
and Taxation Issues
Date
Honorable
United States Senate
Washington, D.C. 20510
RE: Opposition to S. 150
Dear [Senator]:
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On behalf of our colleagues in local government,
we write to express our concerns with S. 150, the "Internet
Tax Non-Discrimination Act." While we understand, and can support,
many of the goals of the amendment’s authors, we fear that
the language of S. 150 will promote litigation and confusion. For,
despite statements to the contrary, some in the industry will seek
to use the language of S. 150 to avoid traditional telecommunications
sales taxes, and/or franchise or right-of-way fees paid as rent
to use the public rights-of-way for infrastructure deployment.
The Supreme Court has sustained the right of state and local governments
to require sales taxes on intra- and interstate telecommunications
services provided within our states and communities. See Goldberg
v. Sweet, 488 US 252, 109 S.Ct. 582 (1989). Such telecommunications
sales taxes are comparable to other general excise taxes paid by
non-telecommunications businesses for the privilege of doing business
within our communities.
Separately, since 1893, the Supreme Court has held that right-of-way
fees are not taxes but payments in the form of rent. See City
of St. Louis v. Western Union Tel. Co., 148 US 92, 99, 13 S.Ct.
485, 488 (1893). More recently, the 5th Circuit in City of Dallas
v. FCC, 165 F.3d 341 (5th Cir. 1999) reiterated the holding
of St. Louis when it found that a franchise fee is not
a tax, but an expense of doing business that is essentially a form
of rent.
We would like to work with you to clarify that in adopting S. 150
and its House counterpart (H.R. 49), the Congress does not intend
to impair the collection of traditional telecommunications sales
taxes, nor rights-of-way fees, nor gross percentage fees collected
in lieu of right-of-way fees. Congress should also clarify that
it does not intend to adversely impact the collection of excise
taxes of general applicability on services that just happen to employ
telecommunications, cellular or cable television facilities that
also offer access to the Internet. We offer the following suggested
language to accomplish these goals:
SEC. 5 No Impact on Rights of Way Fees or Franchise
Fees
Nothing in the Internet Tax Freedom Act shall prevent the imposition
or collection of any fees or charges for use of a state or local
government’s right-of-way, taxes in lieu of right-of-way
fees, or sales and use taxes on telecommunications services. Nothing
shall affect or void the terms of any existing franchise as authorized
by Sections 253, 621 or 622 of the Communications Act of 1934,
as amended.
Sincerely,
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