2004 State Study and Report On Telecommunications Taxation · League of Cities, and United States Conference of Mayors, renewed discussions with telecommunications providers and other

2004 State Study and Report On Telecommunications Taxation

by the Telecommunications Tax Task Force of the Council On State Taxation (COST)

2004 State Study and Report On Telecommunications TaxationMarch, 2005

by the Telecommunications Tax Task Force of the Council On State Taxation (COST)

CCH INCORPORATEDChicago

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About the Council On State Taxation

The Council On State Taxation (COST) is a non-profit association based in Wash-ington, D.C., which has an independent membership of more than 570 major multistate corporations from all sectors of industry engaged in interstate and inter-national business. COST’s objective is to preserve and promote the equitable and nondiscriminatory state and local taxation of multi-jurisdictional business entities. The members of the COST Telecommunications Tax Task Force who participated in this study consist of numerous companies who offer a broad range of telecom-munications services in every jurisdiction throughout the United States.

Specifically, individuals at the following companies participated in the effort required to prepare the 2004 State Study: ALLTEL Corporation, AT&T Corporation, BellSouth Corporation, Cingular Wireless LLC, Level 3 Communications, Nextel Communica-tions, Qwest Communications, SBC Communications, Sprint Corporation, Telephone and Data Systems, Inc., T-Mobile USA, Verizon Communications, Verizon Wireless. Questions about the study may be directed to COST Tax Counsel, Stephen Kranz at [email protected] or (202) 904-7829. COST would like to express its gratitude to Brandee Tilman, a recipient of the 2004-2005 COST / Georgetown University Law Center Fellowship, for her assistance in the preparation of this report.

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Table of Contents

PART I — Introduction and 50 State Survey . . . . . . . . . . 1

Introduction to the 2004 State Study and Report On Telecommunication Taxation . . . 250 State Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 States Listed Alphabetically . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 States Listed by Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Telecommunication Specific Legislative Activity Since 2001 . . . . . . . . . . . . . . . . . . . . . 18Methodology and Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

PART II — Analysis of Individual States . . . . . . . . . . . . . 22

PART III — Comparison Graphs . . . . . . . . . . . . . . . . . . . 124

Top 10 States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125Ten Largest States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

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© 2 0 0 5 , C O U N C I L O N S TAT E TA X AT I O N C C H I N C O R P O R AT E D

2004 TELECOMMUNICATIONS TAX STUDY

PART I

Introduction and 50 State Survey

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Introduction to the 2004 State Study and Report On Telecommunications Taxation

This 2004 50-State Study and Report on Telecommunications Taxation (‘’2004 State Study’’), prepared by the Telecommunications Tax Task Force of the Council On State Taxation (‘’COST’’), documents the current taxation of telecommunica-tions. The 2004 State Study analyzes changes that have occurred in the taxation of telecommunications since the 2001 State Study.

Background

The concept in developing the original study in 1999 (‘’1999 State Study’’) was to document the complex taxation of telecommunications providers and services under state and local transaction and property taxes, including certain special fees and taxes. The 1999 State Study highlighted the cumbersome and burdensome nature of the situation by comparing the relative tax and administrative burdens imposed on both general business and telecommunications providers and services under state and local transaction and property taxes.

Members of the COST Telecommunications Tax Task Force compiled the 1999 State Study to provide the Advisory Commission on Electronic Commerce (‘’ACEC’’) with information documenting the onerous federal, state, and local level of taxation imposed on telecommunications. The 1999 State Study was presented to the ACEC at its second meeting in New York City on September 14, 1999.

The 1999 State Study highlighted the problems faced by telecommunications pro-viders who are subject to a myriad of taxes imposed on different types of services by a multitude of jurisdictions. It also contained a lengthy discussion of the evolution of the taxation and regulation of the industry, recent developments in telecommunications technology, administrative complexities of the current system, tax policy concerns and options for simplification and/or reduction of taxes.

The original study, and each subsequent version, has generated substantial interest from the public and private sectors. The data documented in the study has been ref-erenced in numerous articles and studies1 and it is the focal point for state and federal policy debates over telecommunications tax reform.

The Federal Discussion

The majority report of the ACEC, presented by Governor Gilmore to Congress in April of 2000, included a number of recommendations related to the taxation of telecommunications. Specifically, it advocated the repeal of the federal excise tax, which was first enacted to fund the Spanish American war.

The majority report also recommended simplification of state and local telecom-munications taxes in accordance with an Option A (single, statewide tax) or an Option B (local taxes may be imposed in accordance with specified rules including a uniform tax base between the state and local tax jurisdictions). The simplification recommen-dations contained in the majority report can be traced to the proposal made by the telecommunications industry at the ACEC meeting in December of 1999,2 after the first study was released.

2004 TELECOMMUNICATIONS TAX STUDY — In t roduct ion

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Finally, the majority report advocated the elimination of the excess tax burden on telecommunications providers and the removal of multiple and discriminatory taxation of telecommunications services and property.

Since the majority report of the ACEC was first presented, federal policy makers have given increasing attention to state taxation of telecommunications services.3 Con-vergence of technologies, regulatory issues and the bundling of telecommunications services with other products and services have spurred a discussion between the impacted industries and federal policy makers on these and related tax issues. This study attempts to quantify some of the data relevant to those discussions.

The State Discussion

As a result of the ACEC recommendations and potential federal legislation the State and Local Government organizations and representatives of the industry began the Telecommunications Tax Reform Initiative (TTRI) in 1999. Those efforts were folded into the Streamlined Sales Tax Project (SSTP). Beginning in December of 2004, the National Governor’s Association, National Conference of State Legislators, The Council of State Governments, National Association of Counties, National League of Cities, and United States Conference of Mayors, renewed discussions with telecommunications providers and other impacted industry members regard-ing communications tax modernization. As documented in the study, a number of states have taken steps to reform parts of their telecommunications tax structure. Much of the discussion at the state level and among the state policymaker associa-tions is based on the data captured in this study.

The 2004 State Study

The process used by the COST Telecommunications Tax Task Force to prepare the 2004 State Study varied slightly from the process used for the prior years. In prior years, the taxes and fees imposed in each state and the District of Columbia were generally compiled by one member of the Task Force and reviewed by a second member. For the 2004 State Study at least one member and in most cases two members of the Task Force reviewed the data from the 2001 state sheet and made revisions to reflect the law as of July 1, 2004. For each state, the data is based on the assumption that the taxpayer is either a statewide general business (i.e., the business would have at least one store in each taxing jurisdiction) or a statewide provider of telecommunications.

Consistent with the earlier versions of the study, the 2004 State Study provides a series of 50-state comparison charts with consolidated state and local data. The study also includes various graphs that display the results for the ten most burdensome states and the ten most populous states. The Study also includes a map comparing equipment sales tax exemptions for manufacturing and telecommunications. New for the 2004 State Study are charts comparing key findings on the number of returns and rates from this study with findings from the 2001 State Study.

Report of Findings

The 2004 State Study shows that the average effective rate of state and local transac-tion taxes for telecommunications services is 14.17%, compared to only 6.12% for

2004 TELECOMMUNICATIONS TAX STUDY — PART I — In t roduct ion

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general businesses nationwide. Transaction taxes for telecommunications services include any state and local taxes applied to the cost of the service or the provision of the line to the consumer. Transaction taxes for general businesses are based on the traditional sales tax imposed on sales of tangible personal property and compa-rable transaction taxes. When accounting for federal transaction taxes the average effective rate for telecommunications services is 18.17% compared to 6.12% for general businesses nationwide.4

The following chart compares the change in the average effective rate from the 2001 study to the 2004 study. The comparison shows a slight decrease in the local rate from 6.8% to 6.5% and a slight increase in the state rate from 7.1% to 7.4%. Two factors account for the majority of the change. First the 2004 study uses a higher average cost for service. As a result the conversion of flat charges to an average effective rate produces a lower average effective tax rate even though the actual tax per line did not change. Second the change reflects the simplification reforms enacted in some states shifting the tax burden from local level taxes to state level taxes.

The total number of taxes imposed on telecommunications services is almost three times greater than for general businesses (123 versus 344). Compared to general busi-nesses, telecommunications providers have 1,103 more transaction tax bases and 6,683 more taxing jurisdictions with which to contend. Telecommunication providers must file 47,921 returns compared to 7,501 returns for general businesses. These inequities stem from outmoded statutes that originated during the era when telecommunications companies were closely regulated monopolies. These outmoded and discriminatory tax schemes no longer work in today’s competitive and highly dynamic environment.

The administrative filing requirements documented in the 2004 State Study reflect a decrease in filing required by telecommunications companies across the nation (47,921 in 2004 compared to 66,918 in 2001). Tax simplification reforms in Florida, Illinois, Ohio, Tennessee, and Utah reduced the number of returns by 18,610. While the

Comparison of Tax Rates, 2001 - 2004: Local & State Rates for Gen Bus vs. Telco

1.3% 1.3%

4.7% 4.8%

6.8%6.6%

7.1%7.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2001 2004

Year

Rat

e

Gen Bus Local

Gen Bus State

Telco Local

Telco State


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simplification reforms reduced the filing burdens for providers of telecommunications services, the filing requirements still exceed the filing requirements for sellers of goods whose burdens also decreased during the comparison period (7,501 in 2004 compared to 8,284 in 2001). The following charts highlight the reduction in filing requirements for providers of telecommunications services.

Total Number of Returns Required Nationwide

66,918

47,921

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

2001 2004

Year

Num

ber

of R

etur

ns

The decrease is due largely to the work undertaken by Florida, Illinois, Ohio, Tennessee and Utah to simplify their telecommunications tax structures.

Decreases in the Number of Telco ReturnsFrom 2000 To 2004

1,640

13 24 86 87 338

3,901

8,988

3,743

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0LA AL DE SC OH UT TN FL IL

Nine Best-Improved States

Num

ber

of F

ewer

Ret

urns


6


Sixteen states do not provide for any vendor compensation for either telecom-munications providers or general businesses. These states account for 88 of the 344 taxes that apply to telecommunications providers and 25 of the 123 that apply to general businesses.

The 2004 State Study also documents the number of states that have telecommuni-cations equipment exemptions or reduced sales tax rates applicable to telecommunica-tions equipment (17 in 2004, from 16 in 2001) as compared to those states that have a manufacturing exemption or reduced rate applicable to manufacturing equipment (37 in 2001 and 2004). A fundamental tenet of tax policy is that tax systems should avoid the pyramiding of taxes (i.e., if a state taxes the final product or service under its sales and use tax, it should not tax the business inputs that comprise the taxable good or service).5 This policy principle has been implemented in the state sales and use tax statutes of 37 states through the enactment of manufacturing equipment exemptions and in 17 states through the enactment of telecommunications equipment exemptions. The same principle should be implemented in the 20 states that have a manufacturing exemption but no telecommunications equipment exemption through the enactment of such exemptions. In addition, the 6 states that do not exempt business inputs should recognize the importance of such exemptions to economic growth and the creation of a sound tax system that avoids the pyramiding of taxes, as they streamline their sales tax systems. Mississippi enacted legislation in 2003 to provide an exemption to machinery and equipment used to provide broadband telecommunications services. Virginia enacted legislation in 2004 that repealed the telecommunications equipment exemption effective in August of 2004. The following map shows the status of sales tax exemptions for manufacturing equipment and telecommunications equipment as of July 1, 2004.


Sales Tax Equipment Exemptions

Both (14)broadband (2)Mfg (23)None (6)No Sales Tax (5)Teleco only (1)

Law in effect July 1, 2004

Sales and Use Tax Equipment Exemptions

Teleco only(D.C.)

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COST Telecommunications Task Force Conclusions

Deregulation of the telecommunications industry, convergence of technologies and providers and increased competition continue to have an impact on the competitive marketplace. The state and local tax laws continue to impose high levels of industry-specific taxation on telecommunications services. While some states have begun the process of reforming the state and local tax structure, much more is needed to reduce the high level of telecommunications taxation and administrative burden imposed at most levels of government. In addition, the equipment exemptions that many state statutes have granted to the manufacturing industry to encourage growth and expansion of business in such states should be extended, as was done by Mississippi, to the telecommunications industry to encourage network expansion in such states. As business and residential consumers become increasingly reliant on communications services provided over the nation’s telecommunications net-works, the burdens and complexities imposed by the existing telecommunications tax system will continue to have a substantial impact on the cost of such services to consumers. The burdens and complexities of the existing telecommunications tax system are evidenced by the data contained in this 2004 State Study.

Currently, the language in many tax statutes results in the imposition of different taxes on similar telecommunications services depending on the historic classification of the business providing the service. New technologies are having an impact on the types of services being provided to customers, the method of delivery and the means of accounting for such services.

The tax system has not kept pace with changes in telecommunications technology, generally rendering the current system inequitable and unworkable. The telecommuni-cations tax system should be overhauled to eliminate the discriminatory administrative and tax burden facing telecommunications providers and services.

Members of the COST Telecommunications Tax Task Force look forward to working with other industries and state and local government representatives to effect legisla-tive changes that would modernize the tax policy with respect to telecommunications services and property.

Footnotes

1 See ‘’Fixing the Phone-Tax Mess before it Gets Worse,’’ Scott Palladino and Stacy Mazer, Telecommunications Tax Policies: Implications for the Digital Age, National Governors’ Association, Washington, D.C., February 2000; Business Week, May 8, 2000; Joseph Cordes, Charlene Kalenkoski, and Harry Watson, The Tangled Web of Taxing Talk: Telecommunications Taxes in the New Millenium, The Progress & Freedom Foundation, September 2000; Jerry Hausman, “Efficiency Effects on the U.S. Economy from Wireless Taxation,” National Tax Journal, Vol. 53 No.3 Part 2, p. 734 (September 2000); Scott Mackey, Telecommunications and the Tangle of Taxes, National Conference of State Legislatures, Denver, Colorado; Stephen Pociask, Telenomic Research “Taxing High-Speed Services: A Quantification of the Effects on the DSL Industry and Universal Service,” New Millennium Research Council (April 26, 2004).

2 See Proposal for State and Local Taxation of the Telecommunications Industry, submitted to the Advisory Com-mission on Electronic Commerce on November 15, 1999.

3 See Rep. Pickering’s (MS) “Wireless Telecommunications Sourcing and Privacy Act” -- H.R. 3489, 106th Cong. (1999). “Streamlined Sales and Use Tax Act” – H.R. 3184, 108th Cong. (2003); Sen. 1736, 108th (2003). Rep. Istook and Sen. Enzi introduced each Act, respectively. VoIP bills introduced in the 108th Congress: S. 2281 (“Sununu bill”), H.R. 3129 (“Pickering bill”) and H.R. 4757 (“Stearns-Boucher bill”) (2003).

4 The federal rate of 4% reflects the federal excise tax on telecommunications plus an additional 1% to reflect the impact of the universal fund surcharges.

5 See COST Special Report: Sales Taxation of Business Inputs, January 25, 2005.


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2004 TELECOMMUNICATIONS TAX STUDY — PART I — 50 Sta te Survey : A lphabet ica l L i s t ing

# State Taxes Total # Taxes

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoAK 1 3 AK 0 4 AK 1 7AL 2 2 AL 1 3 AL 3 5AR 3 6 AR 1 4 AR 4 10AZ 2 2 AZ 1 5 AZ 3 7CA 2 4 CA 1 7 CA 3 11CO 3 4 CO 2 6 CO 5 10CT 0 0 CT 1 4 CT 1 4DE 0 0 DE 1 4 DE 1 4FL 1 2 FL 1 4 FL 2 6GA 1 3 GA 1 4 GA 2 7HI 0 0 HI 1 4 HI 1 4IA 2 3 IA 1 2 IA 3 5ID 2 2 ID 1 2 ID 3 4IL 1 6 IL 1 6 IL 2 12IN 0 1 IN 1 4 IN 1 5KS 1 3 KS 1 3 KS 2 6KY 1 3 KY 1 4 KY 2 7LA 2 4 LA 1 5 LA 3 9MA 0 0 MA 1 3 MA 1 3MD 0 3 MD 1 5 MD 1 8ME 0 0 ME 1 3 ME 1 3MI 0 4 MI 1 2 MI 1 6MN 1 2 MN 1 5 MN 2 7MO 1 3 MO 1 1 MO 2 4MS 1 3 MS 1 4 MS 2 7MT 0 0 MT 0 5 MT 0 5NC 3 1 NC 1 3 NC 4 4ND 2 4 ND 1 3 ND 3 7NE 2 4 NE 1 4 NE 3 8NH 0 0 NH 0 4 NH 0 4NJ 0 0 NJ 1 3 NJ 1 3NM 14 14 NM 1 5 NM 15 19NV 1 3 NV 1 3 NV 2 6NY 1 5 NY 2 8 NY 3 13OH 1 1 OH 4 4 OH 5 5OK 1 1 OK 1 1 OK 2 2OR 0 1 OR 0 4 OR 0 5PA 2 3 PA 1 4 PA 3 7RI 0 0 RI 1 6 RI 1 6SC 2 4 SC 1 4 SC 3 8SD 1 2 SD 1 4 SD 2 6TN 1 5 TN 1 3 TN 2 8TX 1 3 TX 1 7 TX 2 10UT 1 4 UT 1 5 UT 2 9VA 2 4 VA 1 3 VA 3 7VT 0 0 VT 1 3 VT 1 3WA 4 7 WA 2 6 WA 6 13WA DC 0 0 WA DC 1 5 WA DC 1 5WI 2 3 WI 1 4 WI 3 7WV 0 2 WV 1 5 WV 1 7WY 2 2 WY 1 4 WY 3 6

Average 1 3 1 4 2 7

Total 70 136 53 208 123 344

# Local Taxes

COST TELECOMMUNICATIONS TAX STUDY

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Total Local Tax Rate Total State Tax Rate Total Tax Rate Total Tax Rate Incl. Fed

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoAK 2.50% 6.09% AK 0.00% 3.44% AK 2.50% 9.53% AK 2.50% 13.53%AL 4.00% 5.00% AL 4.00% 6.93% AL 8.00% 11.93% AL 8.00% 15.93%AR 2.38% 7.40% AR 6.00% 8.33% AR 8.38% 15.73% AR 8.38% 19.73%AZ 2.25% 3.70% AZ 5.60% 8.05% AZ 7.85% 11.75% AZ 7.85% 15.75%CA 2.10% 8.85% CA 6.00% 3.43% CA 8.10% 12.28% CA 8.10% 16.28%CO 4.00% 10.15% CO 2.90% 6.98% CO 8.00% 14.15% CO 8.00% 18.15%CT 0.00% 0.00% CT 6.00% 8.01% CT 6.00% 8.01% CT 6.00% 12.01%DE 0.00% 0.00% DE 0.72% 6.88% DE 0.72% 6.88% DE 0.72% 10.88%FL 1.00% 8.39% FL 6.00% 9.76% FL 7.00% 18.15% FL 7.00% 22.15%GA 3.00% 13.41% GA 4.00% 4.49% GA 7.00% 17.90% GA 7.00% 21.90%HI 0.00% 0.00% HI 4.00% 8.04% HI 4.00% 8.04% HI 4.00% 12.04%IA 1.50% 6.44% IA 5.00% 5.00% IA 6.50% 11.44% IA 6.50% 15.44%ID 0.00% 5.90% ID 5.00% 0.26% ID 5.00% 6.16% ID 5.00% 10.16%IL 1.75% 11.31% IL 6.25% 9.64% IL 8.00% 20.95% IL 8.00% 24.95%IN 0.00% 3.31% IN 6.00% 7.85% IN 6.00% 11.16% IN 6.00% 15.16%KS 1.45% 12.13% KS 5.30% 10.20% KS 6.75% 22.33% KS 6.75% 26.33%KY 0.00% 8.32% KY 6.00% 6.54% KY 6.00% 14.86% KY 6.00% 18.86%LA 5.00% 9.28% LA 4.00% 3.50% LA 9.00% 12.78% LA 9.00% 16.78%MA 0.00% 0.00% MA 5.00% 9.30% MA 5.00% 9.30% MA 5.00% 13.30%MD 0.00% 16.90% MD 5.00% 10.41% MD 5.00% 27.31% MD 5.00% 31.31%ME 0.00% 0.00% ME 5.00% 6.37% ME 5.00% 6.37% ME 5.00% 10.37%MI 0.00% 13.15% MI 6.00% 7.00% MI 6.00% 20.15% MI 6.00% 24.15%MN 0.50% 0.50% MN 6.50% 8.26% MN 7.00% 8.76% MN 7.00% 12.76%MO 2.70% 18.81% MO 4.23% 4.98% MO 6.92% 23.79% MO 6.92% 27.79%MS 0.25% 7.19% MS 7.00% 7.44% MS 7.25% 14.63% MS 7.25% 18.63%MT 0.00% 0.00% MT 0.00% 5.98% MT 0.00% 5.88% MT 0.00% 9.88%NC 3.00% 12.36% NC 4.50% 6.47% NC 7.50% 18.83% NC 7.50% 22.83%ND 1.00% 3.85% ND 5.00% 7.67% ND 6.00% 11.52% ND 6.00% 15.52%NE 1.00% 11.57% NE 5.50% 13.65% NE 6.50% 25.22% NE 6.50% 29.22%NH 0.00% 0.00% NH 0.00% 8.31% NH 0.00% 8.31% NH 0.00% 12.31%NJ 0.00% 0.00% NJ 6.00% 8.74% NJ 6.00% 8.74% NJ 6.00% 12.74%NM 1.31% 1.31% NM 5.00% 7.28% NM 6.31% 8.59% NM 6.31% 12.59%NV 0.75% 3.49% NV 6.50% 0.48% NV 7.25% 3.97% NV 7.25% 7.97%NY 4.06% 8.97% NY 4.38% 8.32% NY 8.44% 17.29% NY 8.44% 21.29%OH 1.50% 1.50% OH 6.00% 9.05% OH 7.50% 10.55% OH 7.50% 14.55%OK 3.95% 12.00% OK 4.50% 7.97% OK 8.45% 19.97% OK 8.45% 23.97%OR 0.00% 7.00% OR 0.00% 6.20% OR 0.00% 13.20% OR 0.00% 17.20%PA 0.83% 5.89% PA 6.00% 11.44% PA 6.83% 17.33% PA 6.83% 21.33%RI 0.00% 3.00% RI 7.00% 15.81% RI 7.00% 18.81% RI 7.00% 22.81%SC 0.50% 8.66% SC 5.00% 5.99% SC 5.50% 14.65% SC 5.50% 18.65%SD 1.86% 4.00% SD 4.00% 4.58% SD 5.86% 8.58% SD 5.86% 12.58%TN 2.25% 6.67% TN 7.00% 7.19% TN 9.25% 13.86% TN 9.25% 17.86%TX 2.00% 11.12% TX 6.25% 14.17% TX 8.25% 25.29% TX 8.25% 29.29%UT 1.50% 7.55% UT 4.75% 6.81% UT 6.25% 14.36% UT 6.25% 18.36%VA 1.00% 26.99% VA 3.50% 2.78% VA 4.50% 29.77% VA 4.50% 33.77%VT 0.00% 0.00% VT 6.00% 7.27% VT 6.00% 7.27% VT 6.00% 11.27%WA 2.06% 9.33% WA 6.97% 9.93% WA 9.03% 19.26% WA 9.03% 23.26%WA DC 0.00% 0.00% WA DC 5.75% 14.24% WA DC 5.75% 14.24% WA DC 5.75% 18.24%WI 0.60% 1.06% WI 5.00% 6.07% WI 5.60% 7.13% WI 5.60% 11.13%WV 0.00% 9.65% WV 6.00% 13.81% WV 6.00% 23.46% WV 6.00% 27.46%WY 1.50% 3.64% WY 4.00% 8.45% WY 5.50% 12.09% WY 5.50% 16.09%

Average 1.28% 6.59% 4.83% 7.64% 6.12% 14.17% 6.12% 18.17%



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# Local Tax Bases # State Tax Bases Total Tax Bases

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoAK 1 3 AK 0 4 AK 1 7AL 1 2 AL 1 3 AL 2 5AR 2 3 AR 1 4 AR 3 7AZ 13 14 AZ 1 5 AZ 14 19CA 1 15 CA 1 2 CA 2 17CO 9 9 CO 1 1 CO 10 10CT 0 0 CT 1 4 CT 1 4DE 0 0 DE 1 5 DE 1 5FL 1 2 FL 1 4 FL 2 6GA 1 3 GA 1 4 GA 2 7HI 0 0 HI 1 4 HI 1 4IA 1 3 IA 1 1 IA 2 4ID 2 2 ID 1 2 ID 3 4IL 1 3 IL 1 6 IL 2 9IN 0 1 IN 1 4 IN 1 5KS 1 3 KS 1 3 KS 2 6KY 1 35 KY 1 4 KY 2 39LA 64 4 LA 1 5 LA 65 9MA 0 0 MA 1 2 MA 1 2MD 0 28 MD 1 5 MD 1 33ME 0 0 ME 1 2 ME 1 2MI 0 2 MI 1 3 MI 1 5MN 1 1 MN 1 4 MN 2 5MO 1 249 MO 1 3 MO 2 252MS 1 132 MS 1 4 MS 2 136MT 0 0 MT 0 1 MT 0 1NC 2 1 NC 1 3 NC 3 4ND 1 2 ND 1 3 ND 2 5NE 1 2 NE 1 2 NE 2 4NH 0 0 NH 0 4 NH 0 4NJ 0 0 NJ 1 3 NJ 1 3NM 1 18 NM 1 5 NM 2 23NV 1 12 NV 1 4 NV 2 16NY 1 5 NY 1 5 NY 2 10OH 1 1 OH 1 4 OH 2 5OK 576 576 OK 1 1 OK 577 577OR 0 83 OR 0 3 OR 0 86PA 2 3 PA 1 4 PA 3 7RI 0 0 RI 1 6 RI 1 6SC 2 4 SC 1 4 SC 3 8SD 0 2 SD 1 1 SD 1 3TN 1 5 TN 1 3 TN 2 8TX 1 3 TX 1 1 TX 2 4UT 1 2 UT 1 3 UT 2 5VA 95 524 VA 1 3 VA 96 527VT 0 0 VT 1 3 VT 1 3WA 3 6 WA 2 6 WA 5 12WA DC 0 0 WA DC 1 5 WA DC 1 5WI 1 3 WI 1 4 WI 2 7WV 0 2 WV 1 5 WV 1 7WY 1 1 WY 1 1 WY 2 2

Average 16 35 1 3 16 38

Total 793 1,769 48 175 841 1,944



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Total # Returns Total # Taxing Juris.

State Gen. Bus. Telco State Gen. Bus. TelcoAK 7 659 AK 98 92AL 266 1,146 AL 231 307AR 269 1,259 AR 538 835AZ 168 216 AZ 102 102CA 611 2,440 CA 608 824CO 50 1,420 CO 519 519CT 12 24 CT 1 4DE 12 38 DE 1 1FL 12 830 FL 68 312GA 12 1,945 GA 160 481HI 12 16 HI 1 1IA 12 1,148 IA 867 963ID 77 319 ID 11 32IL 12 3,305 IL 131 1,204IN 12 346 IN 1 84KS 12 864 KS 1 262KY 12 3,253 KY 1 272LA 831 1,011 LA 64 177MA 12 14 MA 1 1MD 12 89 MD 1 25ME 12 25 ME 1 1MI 12 113 MI 1 88MN 25 76 MN 12 15MO 12 12 MO 781 781MS 24 845 MS 2 97MT 0 20 MT 0 1NC 0 1,096 NC 0 92ND 12 589 ND 100 134NE 12 2,261 NE 0 572NH 0 40 NH 0 4NJ 12 17 NJ 1 1NM 12 120 NM 274 295NV 12 194 NV 1 64NY 12 5,632 NY 86 588OH 12 16 OH 1 2OK 12 12 OK 577 577OR 0 1,017 OR 0 84PA 12 994 PA 108 182RI 12 43 RI 1 1SC 280 675 SC 269 326SD 12 271 SD 275 339TN 3,936 1,135 TN 328 425TX 12 3,107 TX 1 1,012UT 12 65 UT 275 275VA 12 3,174 VA 96 316VT 12 25 VT 1 1WA 549 4,446 WA 519 848WA DC 12 43 WA DC 1 1WI 12 267 WI 55 124WV 12 1,142 WV 1 93WY 12 107 WY 24 42

Average 147 940 141 272

Total 7,501 47,921 7,196 13,879



12


Real Prop Eff Rate Tangible Prop Eff Rate Eff. Tax Rate on Intang Value

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoAK 1.41% 1.41% AK 1.41% 1.41% AK 0.00% 0.00%AL 1.00% 1.50% AL 1.00% 1.50% AL 0.00% 1.50%AR 1.22% 1.22% AR 1.22% 1.22% AR 0.00% 1.22%AZ 4.20% 4.20% AZ 4.20% 4.20% AZ 0.00% 0.00%CA 1.10% 1.10% CA 1.10% 1.10% CA 0.00% 0.00%CO 1.46% 2.23% CO 1.46% 2.23% CO 1.46% 2.23%CT 3.28% 3.28% CT 3.28% 3.28% CT 0.00% 0.00%DE 1.08% 1.08% DE 0.00% 0.00% DE 0.00% 0.00%FL 2.34% 2.15% FL 2.34% 2.15% FL 0.15% 0.10%GA 1.42% 1.42% GA 1.42% 1.42% GA 0.00% 0.00%HI 1.91% 0.00% HI 0.00% 0.00% HI 0.00% 0.00%IA 3.40% 3.40% IA 0.00% 0.00% IA 0.00% 0.00%ID 1.70% 1.70% ID 1.70% 1.70% ID 0.00% 0.00%IL 5.00% 5.00% IL 0.00% 0.00% IL 0.00% 0.00%IN 2.35% 2.35% IN 2.35% 2.35% IN 0.00% 0.00%KS 2.98% 3.94% KS 2.98% 3.94% KS 0.00% 3.94%KY 1.40% 1.40% KY 1.40% 1.40% KY 0.00% 1.40%LA 2.05% 2.05% LA 2.05% 2.05% LA 0.00% 0.00%MA 3.13% 3.13% MA 3.13% 3.13% MA 0.00% 0.00%MD 1.84% 1.84% MD 4.44% 4.44% MD 0.00% 0.00%ME 2.45% 2.45% ME 2.45% 2.70% ME 0.00% 0.00%MI 3.18% 2.54% MI 3.18% 2.54% MI 0.00% 2.54%MN 4.90% 4.90% MN 0.00% 0.00% MN 0.00% 0.00%MO 3.77% 3.77% MO 3.77% 3.77% MO 0.00% 0.00%MS 2.93% 2.93% MS 2.93% 2.93% MS 0.00% 0.00%MT 1.67% 3.34% MT 1.67% 3.34% MT 0.00% 3.34%NC 1.01% 1.01% NC 1.01% 1.01% NC 0.00% 0.00%ND 2.25% 0.00% ND 0.00% 0.00% ND 0.00% 0.00%NE 1.91% 1.90% NE 1.91% 1.90% NE 0.00% 1.90%NH 2.01% 2.01% NH 0.00% 0.00% NH 0.00% 0.00%NJ 3.62% 3.62% NJ 0.00% 2.76% NJ 0.00% 0.00%NM 1.17% 1.17% NM 1.17% 1.17% NM 0.00% 0.00%NV 1.11% 1.11% NV 1.11% 1.11% NV 0.00% 0.00%NY 2.99% 4.73% NY 0.00% 0.00% NY 0.00% 0.00%OH 2.98% 2.98% OH 2.13% 2.13% OH 0.00% 0.00%OK 1.29% 2.67% OK 1.39% 2.67% OK 0.00% 2.67%OR 1.30% 1.30% OR 1.30% 1.30% OR 0.00% 1.30%PA 2.50% 3.09% PA 0.00% 0.00% PA 0.00% 0.00%RI 3.42% 3.42% RI 4.22% 4.22% RI 0.00% 0.00%SC 3.14% 3.14% SC 3.14% 3.14% SC 0.00% 0.00%SD 2.15% 2.15% SD 0.00% 2.15% SD 0.00% 2.15%TN 1.25% 1.67% TN 1.25% 1.67% TN 0.00% 1.67%TX 2.70% 2.70% TX 2.70% 2.70% TX 0.00% 0.00%UT 1.20% 1.20% UT 1.20% 1.20% UT 0.00% 1.20%VA 1.33% 1.33% VA 3.70% 1.33% VA 0.00% 0.00%VT 2.47% 2.47% VT 2.47% 2.37% VT 0.00% 0.00%WA 1.30% 1.30% WA 1.30% 1.30% WA 0.00% 0.00%WA DC 1.85% 1.85% WA DC 3.40% 3.40% WA DC 0.00% 0.00%WI 2.67% 2.86% WI 2.67% 2.86% WI 0.00% 0.00%WV 0.48% 0.48% WV 0.48% 0.48% WV 0.00% 0.00%WY 0.65% 0.79% WY 0.65% 0.79% WY 0.00% 0.79%

Average 2.19% 2.26% 1.70% 1.85% 0.03% 0.55%



13


# Local Taxes # State Taxes Total # Taxes

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoNM 14 14 NY 2 8 NM 15 19WA 4 7 CA 1 7 WA 6 13AR 3 6 TX 1 7 NY 3 13IL 1 6 CO 2 6 IL 2 12NY 1 5 WA 2 6 CA 3 11TN 1 5 IL 1 6 CO 5 10CO 3 4 RI 1 6 AR 4 10CA 2 4 AZ 1 5 TX 2 10LA 2 4 LA 1 5 LA 3 9ND 2 4 MD 1 5 UT 2 9NE 2 4 MN 1 5 NE 3 8SC 2 4 NM 1 5 SC 3 8VA 2 4 UT 1 5 TN 2 8UT 1 4 WA DC 1 5 MD 1 8MI 0 4 WV 1 5 AZ 3 7IA 2 3 MT 0 5 ND 3 7PA 2 3 OH 4 4 PA 3 7WI 2 3 AR 1 4 VA 3 7AK 1 3 CT 1 4 WI 3 7GA 1 3 DE 1 4 GA 2 7KS 1 3 FL 1 4 KY 2 7KY 1 3 GA 1 4 MN 2 7MO 1 3 HI 1 4 MS 2 7MS 1 3 IN 1 4 AK 1 7NV 1 3 KY 1 4 WV 1 7TX 1 3 MS 1 4 WY 3 6MD 0 3 NE 1 4 FL 2 6AL 2 2 PA 1 4 KS 2 6AZ 2 2 SC 1 4 NV 2 6ID 2 2 SD 1 4 SD 2 6WY 2 2 WI 1 4 MI 1 6FL 1 2 WY 1 4 RI 1 6MN 1 2 AK 0 4 OH 5 5SD 1 2 NH 0 4 AL 3 5WV 0 2 OR 0 4 IA 3 5NC 3 1 AL 1 3 IN 1 5OH 1 1 KS 1 3 WA DC 1 5OK 1 1 MA 1 3 MT 0 5IN 0 1 ME 1 3 OR 0 5OR 0 1 NC 1 3 NC 4 4CT 0 0 ND 1 3 ID 3 4DE 0 0 NJ 1 3 MO 2 4HI 0 0 NV 1 3 CT 1 4MA 0 0 TN 1 3 DE 1 4ME 0 0 VA 1 3 HI 1 4MT 0 0 VT 1 3 NH 0 4NH 0 0 IA 1 2 MA 1 3NJ 0 0 ID 1 2 ME 1 3RI 0 0 MI 1 2 NJ 1 3VT 0 0 MO 1 1 VT 1 3WA DC 0 0 OK 1 1 OK 2 2

Average 1 3 1 4 2 7

Total 70 136 53 208 123 344


2004 TELECOMMUNICATIONS TAX STUDY — PART I — 50 Sta te Survey : By Rank ing

14


Total State Tax Rate Total Tax Rate Total Tax Rate Incl. Fed

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoVA 1.00% 26.99% RI 7.00% 15.81% VA 4.50% 29.77% VA 4.50% 33.77%MO 2.70% 18.81% WA DC 5.75% 14.24% MD 5.00% 27.31% MD 5.00% 31.31%MD 0.00% 16.90% TX 6.25% 14.17% TX 8.25% 25.29% TX 8.25% 29.29%GA 3.00% 13.41% WV 6.00% 13.81% NE 6.50% 25.22% NE 6.50% 29.22%MI 0.00% 13.15% NE 5.50% 13.65% MO 6.92% 23.79% MO 6.92% 27.79%NC 3.00% 12.36% PA 6.00% 11.44% WV 6.00% 23.46% WV 6.00% 27.46%KS 1.45% 12.13% MD 5.00% 10.41% KS 6.75% 22.33% KS 6.75% 26.33%OK 3.95% 12.00% KS 5.30% 10.20% IL 8.00% 20.95% IL 8.00% 24.95%NE 1.00% 11.57% WA 6.97% 9.93% MI 6.00% 20.15% MI 6.00% 24.15%IL 1.75% 11.31% FL 6.00% 9.76% OK 8.45% 19.97% OK 8.45% 23.97%TX 2.00% 11.12% IL 6.25% 9.64% WA 9.03% 19.26% WA 9.03% 23.26%CO 4.00% 10.15% MA 5.00% 9.30% NC 7.50% 18.83% NC 7.50% 22.83%WV 0.00% 9.65% OH 6.00% 9.05% RI 7.00% 18.81% RI 7.00% 22.81%WA 2.06% 9.33% NJ 6.00% 8.74% FL 7.00% 18.15% FL 7.00% 22.15%LA 5.00% 9.28% WY 4.00% 8.45% GA 7.00% 17.90% GA 7.00% 21.90%NY 4.06% 8.97% AR 6.00% 8.33% PA 6.83% 17.33% PA 6.83% 21.33%CA 2.10% 8.85% NY 4.38% 8.32% NY 8.44% 17.29% NY 8.44% 21.29%SC 0.50% 8.66% NH 0.00% 8.31% AR 8.38% 15.73% AR 8.38% 19.73%FL 1.00% 8.39% MN 6.50% 8.26% KY 6.00% 14.86% KY 6.00% 18.86%KY 0.00% 8.32% AZ 5.60% 8.05% SC 5.50% 14.65% SC 5.50% 18.65%UT 1.50% 7.55% HI 4.00% 8.04% MS 7.25% 14.63% MS 7.25% 18.63%AR 2.38% 7.40% CT 6.00% 8.01% UT 6.25% 14.36% UT 6.25% 18.36%MS 0.25% 7.19% OK 4.50% 7.97% WA DC 5.75% 14.24% WA DC 5.75% 18.24%OR 0.00% 7.00% IN 6.00% 7.85% CO 8.00% 14.15% CO 8.00% 18.15%TN 2.25% 6.67% ND 5.00% 7.67% TN 9.25% 13.86% TN 9.25% 17.86%IA 1.50% 6.44% MS 7.00% 7.44% OR 0.00% 13.20% OR 0.00% 17.20%AK 2.50% 6.09% NM 5.00% 7.28% LA 9.00% 12.78% LA 9.00% 16.78%ID 0.00% 5.90% VT 6.00% 7.27% CA 8.10% 12.28% CA 8.10% 16.28%PA 0.83% 5.89% TN 7.00% 7.19% WY 5.50% 12.09% WY 5.50% 16.09%AL 4.00% 5.00% MI 6.00% 7.00% AL 8.00% 11.93% AL 8.00% 15.93%SD 1.86% 4.00% CO 2.90% 6.98% AZ 7.85% 11.75% AZ 7.85% 15.75%ND 1.00% 3.85% AL 4.00% 6.93% ND 6.00% 11.52% ND 6.00% 15.52%AZ 2.25% 3.70% DE 0.72% 6.88% IA 6.50% 11.44% IA 6.50% 15.44%WY 1.50% 3.64% UT 4.75% 6.81% IN 6.00% 11.16% IN 6.00% 15.16%NV 0.75% 3.49% KY 6.00% 6.54% OH 7.50% 10.55% OH 7.50% 14.55%IN 0.00% 3.31% NC 4.50% 6.47% AK 2.50% 9.53% AK 2.50% 13.53%RI 0.00% 3.00% ME 5.00% 6.37% MA 5.00% 9.30% MA 5.00% 13.30%OH 1.50% 1.50% OR 0.00% 6.20% MN 7.00% 8.76% MN 7.00% 12.76%NM 1.31% 1.31% WI 5.00% 6.07% NJ 6.00% 8.74% NJ 6.00% 12.74%WI 0.60% 1.06% SC 5.00% 5.99% NM 6.31% 8.59% NM 6.31% 12.59%MN 0.50% 0.50% MT 0.00% 5.98% SD 5.86% 8.58% SD 5.86% 12.58%CT 0.00% 0.00% IA 5.00% 5.00% NH 0.00% 8.31% NH 0.00% 12.31%DE 0.00% 0.00% MO 4.23% 4.98% HI 4.00% 8.04% HI 4.00% 12.04%HI 0.00% 0.00% SD 4.00% 4.58% CT 6.00% 8.01% CT 6.00% 12.01%MA 0.00% 0.00% GA 4.00% 4.49% VT 6.00% 7.27% VT 6.00% 11.27%ME 0.00% 0.00% LA 4.00% 3.50% WI 5.60% 7.13% WI 5.60% 11.13%MT 0.00% 0.00% AK 0.00% 3.44% DE 0.72% 6.88% DE 0.72% 10.88%NH 0.00% 0.00% CA 6.00% 3.43% ME 5.00% 6.37% ME 5.00% 10.37%NJ 0.00% 0.00% VA 3.50% 2.78% ID 5.00% 6.16% ID 5.00% 10.16%VT 0.00% 0.00% NV 6.50% 0.48% MT 0.00% 5.88% MT 0.00% 9.88%WA DC 0.00% 0.00% ID 5.00% 0.26% NV 7.25% 3.97% NV 7.25% 7.97%

Average 1.28% 6.59% 4.83% 7.64% 6.12% 14.17% 6.12% 18.17%

Total Local Tax Rate



15


# Local Tax Bases # State Tax Bases Total Tax Bases

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoOK 576 576 WA 2 6 OK 577 577VA 95 524 IL 1 6 VA 96 527MO 1 249 RI 1 6 MO 2 252MS 1 132 AZ 1 5 MS 2 136OR 0 83 DE 1 5 OR 0 86KY 1 35 LA 1 5 KY 2 39MD 0 28 MD 1 5 MD 1 33NM 1 18 NM 1 5 NM 2 23CA 1 15 NY 1 5 AZ 14 19AZ 13 14 WA DC 1 5 CA 2 17NV 1 12 WV 1 5 NV 2 16CO 9 9 AR 1 4 WA 5 12WA 3 6 CT 1 4 CO 10 10NY 1 5 FL 1 4 NY 2 10TN 1 5 GA 1 4 LA 65 9LA 64 4 HI 1 4 IL 2 9SC 2 4 IN 1 4 SC 3 8AR 2 3 KY 1 4 TN 2 8PA 2 3 MN 1 4 AR 3 7AK 1 3 MS 1 4 PA 3 7GA 1 3 NV 1 4 GA 2 7IA 1 3 OH 1 4 WI 2 7IL 1 3 PA 1 4 AK 1 7KS 1 3 SC 1 4 WV 1 7TX 1 3 WI 1 4 FL 2 6WI 1 3 AK 0 4 KS 2 6ID 2 2 NH 0 4 RI 1 6AL 1 2 AL 1 3 AL 2 5FL 1 2 KS 1 3 MN 2 5ND 1 2 MI 1 3 ND 2 5NE 1 2 MO 1 3 OH 2 5UT 1 2 NC 1 3 UT 2 5MI 0 2 ND 1 3 DE 1 5SD 0 2 NJ 1 3 IN 1 5WV 0 2 TN 1 3 MI 1 5NC 2 1 UT 1 3 WA DC 1 5MN 1 1 VA 1 3 ID 3 4OH 1 1 VT 1 3 NC 3 4WY 1 1 OR 0 3 IA 2 4IN 0 1 CA 1 2 NE 2 4CT 0 0 ID 1 2 TX 2 4DE 0 0 MA 1 2 CT 1 4HI 0 0 ME 1 2 HI 1 4MA 0 0 NE 1 2 NH 0 4ME 0 0 CO 1 1 NJ 1 3MT 0 0 IA 1 1 SD 1 3NH 0 0 OK 1 1 VT 1 3NJ 0 0 SD 1 1 WY 2 2RI 0 0 TX 1 1 MA 1 2VT 0 0 WY 1 1 ME 1 2WA DC 0 0 MT 0 1 MT 0 1

Average 16 35 1 3 16 38

Total 793 1,769 48 175 841 1,944



16


Total # Returns Total # Taxing Juris.

State Gen. Bus. Telco State Gen. Bus. TelcoNY 12 5,632 IL 131 1,204WA 549 4,446 TX 1 1,012IL 12 3,305 IA 867 963KY 12 3,253 WA 519 848VA 12 3,174 AR 538 835TX 12 3,107 CA 608 824CA 611 2,440 MO 781 781NE 12 2,261 NY 86 588GA 12 1,945 OK 577 577CO 50 1,420 NE 0 572AR 269 1,259 CO 519 519IA 12 1,148 GA 160 481AL 266 1,146 TN 328 425WV 12 1,142 SD 275 339TN 3,936 1,135 SC 269 326NC 0 1,096 VA 96 316OR 0 1,017 FL 68 312LA 831 1,011 AL 231 307PA 12 994 NM 274 295KS 12 864 UT 275 275MS 24 845 KY 1 272FL 12 830 KS 1 262SC 280 675 PA 108 182AK 7 659 LA 64 177ND 12 589 ND 100 134IN 12 346 WI 55 124ID 77 319 AZ 102 102SD 12 271 MS 2 97WI 12 267 WV 1 93AZ 168 216 AK 98 92NV 12 194 NC 0 92NM 12 120 MI 1 88MI 12 113 IN 1 84WY 12 107 OR 0 84MD 12 89 NV 1 64MN 25 76 WY 24 42UT 12 65 ID 11 32RI 12 43 MD 1 25WA DC 12 43 MN 12 15NH 0 40 CT 1 4DE 12 38 NH 0 4ME 12 25 OH 1 2VT 12 25 DE 1 1CT 12 24 HI 1 1MT 0 20 MA 1 1NJ 12 17 ME 1 1HI 12 16 NJ 1 1OH 12 16 RI 1 1MA 12 14 VT 1 1MO 12 12 WA DC 1 1OK 12 12 MT 0 1

Average 147 940 141 272

Total 7,501 47,921 7,196 13,879



17



Tangible Prop Eff Rate Eff. Tax Rate on Intang Value

State Gen. Bus. Telco State Gen. Bus. Telco State Gen. Bus. TelcoIL 5.00% 5.00% MD 4.44% 4.44% KS 0.00% 3.94%MN 4.90% 4.90% RI 4.22% 4.22% MT 0.00% 3.34%NY 2.99% 4.73% AZ 4.20% 4.20% OK 0.00% 2.67%AZ 4.20% 4.20% KS 2.98% 3.94% MI 0.00% 2.54%KS 2.98% 3.94% MO 3.77% 3.77% CO 1.46% 2.23%MO 3.77% 3.77% WA DC 3.40% 3.40% SD 0.00% 2.15%NJ 3.62% 3.62% MT 1.67% 3.34% NE 0.00% 1.90%RI 3.42% 3.42% CT 3.28% 3.28% TN 0.00% 1.67%IA 3.40% 3.40% SC 3.14% 3.14% AL 0.00% 1.50%MT 1.67% 3.34% MA 3.13% 3.13% KY 0.00% 1.40%CT 3.28% 3.28% MS 2.93% 2.93% OR 0.00% 1.30%SC 3.14% 3.14% WI 2.67% 2.86% AR 0.00% 1.22%MA 3.13% 3.13% NJ 0.00% 2.76% UT 0.00% 1.20%PA 2.50% 3.09% ME 2.45% 2.70% WY 0.00% 0.79%OH 2.98% 2.98% TX 2.70% 2.70% FL 0.15% 0.10%MS 2.93% 2.93% OK 1.39% 2.67% AK 0.00% 0.00%WI 2.67% 2.86% MI 3.18% 2.54% AZ 0.00% 0.00%TX 2.70% 2.70% VT 2.47% 2.37% CA 0.00% 0.00%OK 1.29% 2.67% IN 2.35% 2.35% CT 0.00% 0.00%MI 3.18% 2.54% CO 1.46% 2.23% DE 0.00% 0.00%VT 2.47% 2.47% FL 2.34% 2.15% GA 0.00% 0.00%ME 2.45% 2.45% SD 0.00% 2.15% HI 0.00% 0.00%IN 2.35% 2.35% OH 2.13% 2.13% IA 0.00% 0.00%CO 1.46% 2.23% LA 2.05% 2.05% ID 0.00% 0.00%FL 2.34% 2.15% NE 1.91% 1.90% IL 0.00% 0.00%SD 2.15% 2.15% ID 1.70% 1.70% IN 0.00% 0.00%LA 2.05% 2.05% TN 1.25% 1.67% LA 0.00% 0.00%NH 2.01% 2.01% AL 1.00% 1.50% MA 0.00% 0.00%NE 1.91% 1.90% GA 1.42% 1.42% MD 0.00% 0.00%WA DC 1.85% 1.85% AK 1.41% 1.41% ME 0.00% 0.00%MD 1.84% 1.84% KY 1.40% 1.40% MN 0.00% 0.00%ID 1.70% 1.70% VA 3.70% 1.33% MO 0.00% 0.00%TN 1.25% 1.67% OR 1.30% 1.30% MS 0.00% 0.00%AL 1.00% 1.50% WA 1.30% 1.30% NC 0.00% 0.00%GA 1.42% 1.42% AR 1.22% 1.22% ND 0.00% 0.00%AK 1.41% 1.41% UT 1.20% 1.20% NH 0.00% 0.00%KY 1.40% 1.40% NM 1.17% 1.17% NJ 0.00% 0.00%VA 1.33% 1.33% NV 1.11% 1.11% NM 0.00% 0.00%OR 1.30% 1.30% CA 1.10% 1.10% NV 0.00% 0.00%WA 1.30% 1.30% NC 1.01% 1.01% NY 0.00% 0.00%AR 1.22% 1.22% WY 0.65% 0.79% OH 0.00% 0.00%UT 1.20% 1.20% WV 0.48% 0.48% PA 0.00% 0.00%NM 1.17% 1.17% DE 0.00% 0.00% RI 0.00% 0.00%NV 1.11% 1.11% HI 0.00% 0.00% SC 0.00% 0.00%CA 1.10% 1.10% IA 0.00% 0.00% TX 0.00% 0.00%DE 1.08% 1.08% IL 0.00% 0.00% VA 0.00% 0.00%NC 1.01% 1.01% MN 0.00% 0.00% VT 0.00% 0.00%WY 0.65% 0.79% ND 0.00% 0.00% WA 0.00% 0.00%WV 0.48% 0.48% NH 0.00% 0.00% WA DC 0.00% 0.00%ND 2.25% 0.00% NY 0.00% 0.00% WI 0.00% 0.00%HI 1.91% 0.00% PA 0.00% 0.00% WV 0.00% 0.00%

Average 2.19% 2.26% 1.70% 1.85% 0.03% 0.55%


Real Prop Eff Rate

18


Telecommunication Specifi c Legislative Activity Since 2001

The following list identifies significant state and local legislation enacted since the 2001 State Study. These changes are reflected in the state detail sheets.

2002 Illinois – enacted the Simplified Municipal Telecommunications Act replacing three municipal taxes with a centrally administered “simplified municipal telecommunications tax” for all jurisdictions other than the City of Chicago.

2003 Ohio – enacted legislation repealing the gross receipts tax imposed upon local exchange carriers and phasing down the disparate property tax as-sessment ratio.

Utah – enacted legislation that standardized the municipal license tax base, provided for central collection of the locally collected 911 taxes and the city business license taxes and provided for a “cost-based” access to the right of way policy.

South Dakota – enacted legislation imposing a 4% gross receipts tax on providers of wireless telecommunications services.

Pennsylvania – enacted legislation expanding the 5% gross receipts tax base to interstate receipts and also extending the tax to providers of wire-less telecommunications services.

Texas – extended the TIF, which was set to expire in 2003. Oregon – several cities begin imposing local taxes at rates as high as 9%

on telecommunications services provided within the city.

2004 Virginia – enacted legislation eliminating the sales tax exemption applicable to telecommunications equipment.

Virginia – enacted telecommunications reform legislation requiring a study and the drafting of statutory changes to eliminate local taxes and to create one statewide tax.

California – increased city 911 fees. Maine – enacted legislation converting its sales tax as applied to telecom-

munications to a gross receipts type tax. Maryland – City of Baltimore - passed an ordinance changing the 12%

tax on local exchange service to a $3.50 per line charge and extended the tax to each cell phone sourced within the city limits.

Rhode Island – enacted legislation imposing a second 911 fee of $.26 per wireless phone to support the funding needed to deploy GPS location equipment.

South Carolina – the cap on the business license tax for telecommunication service was increased from .75% to 1% for license year 2004 and beyond.

New Jersey – enacted legislation imposing a 911 tax of 90 cents per line on both landline and wireless services.

New York – enacted legislation authorizing counties to impose an additional E911 tax on wireless services.

2004 TELECOMMUNICATIONS TAX STUDY — Leg is la t i ve Act i v i t y S ince 2001

19


Methodology and Assumptions

Methodology

The data used to compile this 2004 State Study is true and accurate to the best knowledge of the COST Telecommunications Tax Task Force members who participated in its preparation. COST cannot and does not attest that the data is absolutely precise. However, COST believes that the data reasonably reflects the existing state and local tax burden imposed on the telecommunications industry.

The participants in the Study identified and quantified each element of the taxing process for sales of tangible personal products (general business) and certain taxable services (telecommunications). The analysis also includes identification of vendors’ col-lection allowances and sales tax equipment exemptions. The participants also identified the applicable property tax rates applied to property, including any exemptions that would impact the effective tax rate. The Study does not include income taxes. For each state, the study contains a worksheet that shows:

Transaction Taxes and Fees:

A list of taxes that apply Whether the tax applies to telecommunications and/or general businessWhether the tax is imposed on the business or customerApplicable tax rates (or ranges of rates) or amounts imposedAverage Effective Rate: Averages the tax rate in the largest city and the capital city. If the tax only applies in one jurisdiction, the average effective tax rate is half of the rate that applies in the one jurisdiction.Statutory Citation for each taxApplicable tax base for each tax (in very general terms)Number of taxing jurisdictions applying each taxNumber of returns required for each tax each yearWhether local tax bases are consistent for a tax (from local jurisdiction to local jurisdiction)Whether local tax exemptions from the taxes are consistentDollar amount of vendor’s comp on $1 million of tax (if applicable)

Property Taxes

A list of taxes that apply Telecommunications Adjusted Rate (Averages the tax rate in the largest city and the capital city) less rate reduction due to creditGeneral Business Effective RateWhether the business is centrally or locally assessedThe methodologies used to determine the fair market values of propertyThe effective tax rates applied to real, tangible personal and intangible property

2004 TELECOMMUNICATIONS TAX STUDY — PART I — Methodo logy and Assumpt ions

20


Equipment Exemptions (for both Property and Sales Taxes)

Description of property (Towers, Poles, etc.)Whether the property is classified as real or personalWhether property is exempt or is credit availableWhether exemption is limited to regulated or public utility customersWhether manufacturers have an exemption for equipment purchases

Summary Sheets

The results of the individual state studies were input into worksheets that group the data by state for both general business and telecommunications businesses. The state-by-state summary data highlights:

The number of state and local taxes (i.e., counts the different types of taxes) The state and local effective tax rates The total effective tax rate including federal taxesThe number of state and local tax bases The number of returns the businesses must file each year The number of different taxing jurisdictionsThe effective property tax rates for real, tangible personal and intangible property (taking into account assessment ratios and rates)

The state by state summary data is sorted and incorporated into several graphs. Two sets of graphs are included. The first set includes comparative data for the top ten highest states (e.g., the ten states with the highest applicable parameter for telecom-munications). The second set includes comparative data for the top ten most populous states (based on 2000 population data).

The summary data is also included in comparison charts that show the results of each parameter by state. The side-by-side comparisons highlight a few parameters where general business has a worse result than telecommunications. For example, general business may pay a tax or fee that telecommunications does not (due to another tax or fee applying in lieu of the tax or fee). In a couple of instances, the administrative burden on general business may be greater for a particular tax. New for the 2004 State Study are charts comparing key findings on tax rates and number of returns from this study with findings from the 2001 State Study.

Assumptions

For each state, the 2004 State Study assumes that the telecommunications business is a statewide service provider and the general business has a store in each taxing jurisdiction. Thus, the study attempts to identify each transaction tax or fee and the property tax applicable in each local jurisdiction in the state (as well as the state level taxes and fees and exemptions).

Given the complexity of the taxation of telecommunications and in order to compare the data, various assumptions were made. Because state and local taxing jurisdictions frequently do not tax all types of telecommunications uniformly, if any segment of the telecommunications industry is taxed, the average of the tax in the largest city and capital city on such service is included in the summary. Note that if the capital is also the state’s largest city, the capital city and second-largest city are used for this purpose.


21


For example, if only local telecommunications service is taxed (not long distance or wireless service), the average effective tax on local service is included in the data.

Similarly, to the extent local jurisdictional tax rates vary, the average effective rates are included. Because there are many taxes and fees that are applied on an access line basis (e.g., many 911 fees), such flat amounts were converted to percentages based on average monthly residential bills (wireline data was captured as of May 2004 and wireless data as of December 2003). The average monthly residential bills used for this study are: A) Wireline Only: $20.23; B) Wireless Only: $49.91; C) Both Services: $35.07.

Changes from Prior State Studies

Listed below are several changes between the methodologies used in compiling the 2004 State Study and the earlier versions of this study. These changes should be considered when comparing the two studies:

A) Effective Tax Rate (for taxes designated as local):

1999 State Study: Highest Tax Rate imposed on such a service among all local jurisdictions is generally used for comparison purposes.

2000, 2001 & 2004 State Studies: Used an average of the largest (most populous) city and the capital city for comparison purposes.

B) Flat Taxes and Fees:

1999 State Study: Flat amounts were converted to percentages based on aver-age monthly residential bills for 1998. (Wireline: $17.41, Wireless: $39.43, Both Services: $28.42)

2000 State Study: Flat amounts were converted to percentages based on aver-age monthly residential bills for 1999. (Wireline: $17.42, Wireless: $41.24, Both Services: $29.33)

2001 State Study: Flat amounts were converted to percentages based on average monthly residential bills for 1998. (Wireline: $17.42, Wireless: $45.27, Both Services: $31.35)

2004 State Study: Flat amounts were converted to percentages based on average monthly residential bills for 2003. (Wireline: $20.23, Wireless: $49.91, Both Services: $35.07)

Because of this change in methodology, flat tax amounts, which remained the same, may result in different effective tax rates.

C) Adjusted Property Tax Effective Rate:

1999 State Study: Effective Tax Rate was not adjusted for a reduction due to incentive type credits.

2000, 2001 & 2004 State Studies: Effective Tax Rate is adjusted for a reduction due to incentive type credits (listed under column “Adjusted Effective Rate”).


22


2004 TELECOMMUNICATIONS TAX STUDY

PART I I

Analysis of IndividualStates

23


Sta

te:

Ala

bam

a

Pre

par

ed b

y (n

ame

and

co

mp

any)

:T

om

Jan

kow

ski /

Jo

n S

toke

s (C

ing

ular

Wir

eles

s) a

nd E

llio

tt T

hom

pso

n (B

ellS

out

h)C

itie

s us

ed t

o C

alcu

late

Lo

cal A

vera

ge

Eff

ecti

ve R

ate:

Cap

ital

Cit

y:M

ont

go

mer

yL

arg

est

Cit

y:B

irm

ing

ham

TR

AN

SA

CT

ION

TA

XE

S &

FE

ES

AB

CD

EF

GH

IJ

KL

MN

OP

QR

Fee

/Tax

Bas

ed o

n R

even

ueR

ate

Ave

rag

e E

ffec

tive

R

ate

Sta

tuto

ry

Cit

atio

n

Tax

ap

ply

to

T

elep

hone

B

usin

ess?

(e

nter

Y o

r N

)

Tax

ap

ply

to

G

ener

al

Bus

ines

s?

(ent

er Y

or

N)

Tax

im

po

sed

on

Bus

ines

s O

r C

usto

mer

?

(ent

er B

or

C)

Tax

ap

ply

to

(A

) in

ter-

, (B

) in

tra,

and

/or

(C)

Lo

cal

serv

ice)

If B

usin

ess

tax,

do

es

cod

e P

rohi

bit

(P

), R

equi

re

(R),

Allo

w (

A),

o

r is

it S

ilent

(S

) re

: P

ass

Thr

u?

If lo

cal t

ax,

is it

file

d

loca

lly?

(ent

er Y

or

N)

# o

f Ju

ris.

th

at a

pp

ly (

if

it is

a s

tate

ta

x in

put

1)

# o

f re

turn

s p

er y

ear

per

ju

risd

icti

on

To

tal #

of

annu

al

retu

rns

(aut

om

atic

)

If lo

cal t

ax,

do

tax

rat

es

vary

?

(e

nter

Y o

r N

)

If lo

cal t

ax,

do

tax

bas

es

vary

by

juri

sdic

tio

n?

(ent

er Y

or

N)

If lo

cal t

ax,

do

tax

ex

emp

tio

ns

vary

by

juri

sdic

tio

n?

(ent

er Y

or

N)

$ A

mo

unt

of

Ven

do

r's

com

p o

n $1

M

of

fees

/tax

/mo

Co

mm

ents

/fo

otn

ote

sU

tilit

y ta

x6.

00%

6.00

% 4

0-21

-86

YN

BA

,B,C

RN

/A1

1212

N/A

N/A

N/A

9,00

0$

911

tax

5% M

ax5.

00%

11-

98-7

YN

CC

AY

7412

888

YN

NV

arie

s

To

tal n

umb

er o

f ju

risd

icti

ons

ob

tain

ed

fro

m V

erte

x.W

irel

ess

911

$0.7

0/m

ont

h1.

40%

11-9

8-7

YN

CN

/AA

N/A

112

12N

/AN

/AN

/A10

,000

$P

UC

Fee

-RC

C0.

185%

0.18

5%37

-2-4

1(b

)Y

NB

B,C

SN

/A1

44

N/A

N/A

N/A

N

Lic

ense

Fee

/tax

Max

$15

,000

-40

-21-

50Y

YB

N/A

SY

230

123

0Y

NN

ND

oes

no

t in

clud

e fi

xed

fee

lic

ense

s at

the

loca

l lev

el.

Sta

te s

ales

tax

-eq

uip

men

t4.

00%

4.00

%40

-23-

26N

YC

N/A

RN

/A1

1212

N/A

N/A

N/A

$90

0 M

axp

er r

etur

n

Lo

cal S

ales

Tax

-E

qui

pm

ent

0%-4

%4.

00%

40-

23-2

6N

YC

N/A

RN

(see

no

te)

212

24Y

NN

10,6

30$

In m

ost

inst

ance

s, t

axre

turn

is f

iled

wit

h th

e A

DO

R o

r A

lata

x.

Dua

l Par

ty R

elay

0.15

per

ac

cess

line

0.74

%37

-1-8

0.2

YN

CN

/AR

N/A

112

12N

/AN

/AN

/AN

0 0 0 0 0 0 0

PR

OP

ER

TY

TA

XE

S

ST

UV

WX

YZ

AA

Pro

per

ty

Tel

co E

ffec

tive

R

ate

Les

s ra

te

red

ucti

on

due

to

cre

dit

Ad

just

ed

Eff

ecti

ve R

ate

Tel

co P

rop

. T

ax L

oca

lly

vs. C

entr

. A

dm

in'd

(ent

er L

or

C)

Tel

co F

MV

b

ased

on

Co

st (

C)

Cap

'd In

c (I)

o

r M

kt (

M)

(ent

er C

, I o

r M

)

Gen

eral

B

usin

ess

Eff

ecti

ve

Rat

e

Gen

. Bus

. L

oca

lly v

s.

Cen

tr.

Ad

min

'd

(e

nter

L o

r C

)

Gen

eral

FM

V

bas

ed o

n C

ost

(C

) C

ap'd

Inc

(I)

or

Mkt

(M

)

(ent

er C

, I o

r M

)R

eal P

rop

erty

1.50

0%0.

00%

1.50

%C

Mix

ture

1.00

%L

C,I,

MT

ang

. Per

s. P

rop

.1.

500%

0.00

%1.

50%

CM

ixtu

re1.

00%

LC

Inta

ng. P

ers.

Pro

p.

1.50

0%0.

000%

1.50

%N

/AN

/AN

/AN

/AN

/A

EQ

UIP

ME

NT

EX

EM

PT

ION

S

CC

DD

EE

GG

HH

II

Pro

per

ty

Rea

l vs.

P

erso

nal

(e

nter

R o

r P

)

Exe

mp

tio

n o

r C

red

it

Ava

ilab

le?

(e

nter

Y o

r N

)

Exe

mp

tio

n lim

ited

to

re

gul

ated

or

pub

lic u

tilit

y co

s? (

ente

r Y

or

N)

Rea

l v.

Per

sona

l P

rop

erty

?

(R o

r P

)

Exe

mp

tio

n o

r C

red

it

Ava

ilab

le?

(Y

or

N)

Exe

mp

tio

n lim

ited

to

re

gul

ated

or

pub

lic u

tilit

y co

s? (

Y o

r N

)T

ow

ers

PN

NR

NN

Po

les/

wir

es/c

ond

uits

PN

NR

See

No

teN

CO

EP

NN

PS

ee N

ote

NM

fg e

qui

pm

ent

PN

NP

See

No

teN

Cel

l sit

e/sw

itch

esP

NN

PS

ee N

ote

NB

road

ban

d e

qm

t.P

NN

PS

ee N

ote

N

Ple

ase

list

any

gen

eral

co

mm

ents

bel

ow

tha

t sh

oul

d b

e no

ted

reg

ard

ing

thi

s st

ate.

Inc

lud

e a

bri

ef d

escr

ipti

on

of

any

law

cha

nges

tak

ing

eff

ect

afte

r Ju

ly 1

, 200

4 th

at w

oul

d c

hang

e th

e in

form

atio

n ab

ove

.

1. W

irel

ess

- A

sses

smen

ts f

or

wir

eles

s co

mp

anie

s ar

e d

one

loca

lly b

ased

on

ori

gin

al c

ost

less

sch

edul

ed d

epre

ciat

ion.

Ass

essm

ent

rati

o f

or

wir

eles

s is

20%

.2.

Wir

elin

e -

Cen

tral

ly a

sses

sed

by

the

Sta

te u

sing

a u

nit

app

roac

h. A

sses

smen

t ra

tio

is 3

0%.

BB

Co

mm

ents

/fo

otn

ote

s:S

ee F

oo

tno

te 1

.S

ee F

oo

tno

te 1

.

FF

JJ

Pro

per

ty T

axS

ales

Tax

If Y

es, P

leas

e D

escr

ibe

If Y

es, P

leas

e D

escr

ibe

Red

uced

tax

rat

e ap

plie

s.R

educ

ed t

ax r

ate

app

lies.

Red

uced

tax

rat

e ap

plie

s.

Red

uced

tax

rat

e ap

plie

s.R

educ

ed t

ax r

ate

app

lies.

2004 TELECOMMUNICATIONS TAX STUDY — PART I I — Ana lys is o f Ind iv idua l S ta tes : A labama

24


2004 TELECOMMUNICATIONS TAX STUDY — PART I I — Ana lys is o f Ind iv idua l S ta tes : A labama

CO

ST

TE

LE

CO

MM

UN

ICA

TIO

NS

TA

X S

TU

DY

- S

tate

Su

mm

ary

Sh

eet

Sta

te

Tot

al #

of

Loc

al

Tax

es

App

lied

to

Sal

es

Tot

al #

of

Sta

te

Tax

es

App

lied

to

Sal

es

Tot

al

Loc

al T

ax

Rat

e A

ppli

ed t

o S

ales

Tot

al

Sta

te T

ax

Rat

e A

ppli

ed t

o S

ales

# of

Loc

al

Tax

Bas

es

that

Mus

t B

e M

aint

aine

d

# of

Sta

te T

ax

Bas

es t

hat

Mus

t B

e M

aint

aine

d

Tot

al #

of

Ret

urns

R

emit

ted

Per

Yea

r

Tot

al #

of

Tax

ing

Juri

sdic

tion

s

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Rea

l P

rope

rty

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Tan

gibl

e

Pro

pert

y

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Inta

ngib

le

Pro

pert

y

Pro

pert

y T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

(IN

PU

T 1

IF

YE

S, 0

IF N

O)

Sal

es T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

IN

PU

T 1

IF Y

ES

, 0

IF N

O

AL

AB

AM

A2

14.

00%

4.00

%1

126

623

11.

00%

1.00

%N

/A-

1

Gen

eral

Bus

ines

s

Tot

al #

of

Loc

al

Tax

es

App

lied

to

Sal

es

Tot

al #

of

Sta

te

Tax

es

App

lied

to

Sal

es

Tot

al

Loc

al T

ax

Rat

e A

ppli

ed t

o S

ales

Tot

al

Sta

te T

ax

Rat

e A

ppli

ed t

o S

ales

# of

Loc

alT

ax

Bas

es t

hat

Mus

t B

e M

aint

aine

d

# of

Sta

te

Tax

Bas

es

that

Mus

t B

e M

aint

aine

d

Tot

al #

of

Ret

urns

R

emit

ted

Per

Yea

r

Tot

al #

of

Tax

ing

Juri

sdic

tion

s

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Rea

l P

rope

rty

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Tan

gibl

e

Pro

pert

y

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Inta

ngib

le

Pro

pert

y

Pro

pert

y T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

IN

PU

T 1

IF Y

ES

, 0

IF N

O

Sal

es T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

IN

PU

T 1

IF Y

ES

, 0

IF N

O

23

5.00

%6.

93%

23

1,14

630

71.

50%

1.50

%1.

50%

-

1

Tel

ecom

mun

icat

ions

25


Sta

te:

Ala

ska

Pre

par

ed b

y (n

ame

and

co

mp

any)

:R

ob

ert

Co

le (

Sp

rin

t) a

nd

Jo

hn

McN

amar

a (A

T&

T)

Cit

ies

use

d t

o C

alcu

late

Lo

cal A

vera

ge

Eff

ecti

ve R

ate:

Cap

ital

Cit

y:Ju

nea

uL

arg

est

Cit

y:A

nch

ora

ge

TR

AN

SA

CT

ION

TA

XE

S &

FE

ES

AB

CD

EF

GH

IJ

KL

MN

OP

QR

Fee

/Tax

Bas

ed o

n

Rev

enu

eR

ate

Ave

rag

e E

ffec

tive

Rat

eS

tatu

tory

C

itat

ion

Tax

ap

ply

to

T

elep

ho

ne

Bu

sin

ess?

(e

nte

r Y

or

N)

Tax

ap

ply

to

G

ener

al

Bu

sin

ess?

(e

nte

r Y

or

N)

Tax

imp

ose

d o

n

Bu

sin

ess

Or

Cu

sto

mer

?

(en

ter

B o

r C

)

Tax

ap

ply

to

(A

) in

ter-

, (B

) in

tra,

an

d/o

r (C

) L

oca

l se

rvic

e)

If B

usi

nes

s ta

x, d

oes

co

de

Pro

hib

it

(P),

Req

uir

e (R

), A

llow

(A

),

or

is it

Sile

nt

(S)

re:

Pas

s T

hru

?

If lo

cal t

ax,

is it

file

d

loca

lly?

(en

ter

Y o

r N

)

# o

f Ju

ris.

th

at a

pp

ly (

if it

is a

sta

te

tax

inp

ut

1)

# o

f re

turn

s p

er y

ear

per

ju

risd

ictio

n

To

tal #

of

ann

ual

re

turn

s (a

uto

mat

ic)

If lo

cal t

ax,

do

tax

rat

es

vary

?

(en

ter

Y o

r N

)

If lo

cal t

ax,

do

tax

bas

es

vary

by

juri

sdic

tio

n?

(e

nte

r Y

or

N)

If lo

cal t

ax,

do

tax

ex

emp

tio

ns

vary

by

juri

sdic

tio

n?

(e

nte

r Y

or

N)

$ A

mo

un

t o

f V

end

or'

s co

mp

on

$1M

o

f fe

es/t

ax/m

oC

om

men

ts/f

oo

tno

tes

911

tax

$.50

-$.7

51.

78%

A.S

. 29.

35.1

31Y

NC

per

acc

ess

line

Y7

1284

YN

N10

,000

$

See

Fo

otn

ote

s 1,

2 a

nd

4.

Sta

te U

SF

(A

K U

niv

ersa

l S

ervi

ce A

dm

in. C

o.)

0.96

0%0.

960%

A.S

. 42.

05.8

40Y

NB

B,C

R1

1212

Un

iver

sal A

cces

s (T

elec

om

Rel

ay S

ervi

ce)

$.27

or

$.54

1.33

% o

r 2.

67%

A.S

. 42

.05.

296(

a)Y

NC

per

acc

ess

line

112

12

$.27

fo

r re

s. &

1-l

ine

bu

s.;

$.54

fo

r m

ulti

-lin

e b

us.

See

F

oo

tno

te 3

.P

ub

. Uti

lity

Reg

. Co

st

Ch

arg

e -

Lo

cal E

xch

ang

e1.

731%

1.29

0%A

.S. 4

2.05

.254

YN

BC

A1

44

Pu

b. U

tility

Reg

ula

tory

C

ost

Ch

arg

e -

IXC

1.29

7%1.

297%

A.S

. 42.

05.2

55Y

NB

BA

14

4

Lo

cal U

tilit

y T

axes

8%0.

00%

A.S

. 29.

35.0

10Y

NC

C (

intr

acit

y)Y

14

4C

ity

of

An

der

son

is o

nly

cit

y w

ith

a lo

cal u

tilit

y ta

x

Lo

cal S

ales

Tax

es1%

- 7

%2.

50%

A.S

. 29.

45.6

50-

29.4

5.71

0Y

YC

A,B

,CY

806.

753

9Y

YY

max

. $50

(J

un

eau

)

An

cho

rag

e h

as n

o s

ales

tax

; Ju

nea

u s

ales

tax

= 5

%

(rem

itte

d m

on

thly

). S

ee

Fo

otn

ote

s 5,

6 a

nd

7.

Foo

tnot

es:

1.

For

mu

nic

ipal

ities

>10

0,00

0 p

opu

latio

n, s

urc

har

ge

may

not

exc

eed

$.5

0; if

pop

ula

tion

<10

0,00

0, s

urc

har

ge

may

not

exc

eed

$.7

5 (A

.S. 2

9.35

.131

(a))

2. S

urc

har

ge

app

lies

to a

max

imu

m o

f 10

0 lin

es p

er c

ust

omer

.

3. S

urc

har

ge

rem

itted

dir

ectly

to

the

pro

vid

er o

f T

RS

ser

vice

, GC

I Com

mu

nic

atio

ns

Cor

p.

4. E

ffec

tive

10/0

1, w

irel

ess

serv

ice

will

als

o b

ecom

e su

bje

ct t

o th

e 91

1 ta

x. S

ee n

ote

reg

ard

ing

th

is la

w c

han

ge

bel

ow.

5. S

ome

juri

sdic

tion

s re

qu

ire

qu

arte

rly

rem

ittan

ce;

som

e m

onth

ly.

Th

e n

um

ber

giv

en is

an

ave

rag

e b

ased

up

on a

rep

rese

nat

ive

sam

ple

.

6. 9

8 ju

risd

ictio

ns

char

ge

a g

ener

al s

ales

tax

. O

f th

ese,

18

do

not

ap

ply

to

telc

o.

7. A

ccor

din

g t

o Ju

nea

u S

ales

Tax

Ad

min

ista

trat

or, a

ll te

lep

hon

e ca

lls t

hat

are

bill

ed t

o an

ad

dre

ss w

ithin

th

e ci

ty a

nd

bor

oug

h o

f Ju

nea

u w

ould

be

sub

ject

to

the

sale

s ta

x.

PR

OP

ER

TY

TA

XE

S

ST

UV

WX

YZ

AA

Pro

per

ty

Tel

co

Eff

ecti

ve R

ate

Les

s ra

te

red

uct

ion

d

ue

to c

red

itA

dju

sted

E

ffec

tive

Rat

e

Tel

co P

rop

. T

ax L

oca

lly

vs. C

entr

. A

dm

in'd

(en

ter

L o

r C

)

Tel

co F

MV

b

ased

on

C

ost

(C

) C

ap'd

Inc

(I)

or

Mkt

(M

) (e

nte

r C

, I o

r M

)

Gen

eral

B

usi

nes

s E

ffec

tive

R

ate

Gen

. Bu

s.

Lo

cally

vs.

C

entr

. A

dm

in'd

(en

ter

L o

r C

)

Gen

eral

FM

V

bas

ed o

n

Co

st (

C)

Cap

'd In

c (I)

o

r M

kt (

M)

(e

nte

r C

, I o

r M

)R

eal P

rop

erty

1.41

%0.

00%

1.41

%L

M1.

35%

LM

Tan

g. P

ers.

Pro

p.

1.41

%0.

00%

1.41

%L

M1.

35%

LM

Inta

ng

. Per

s. P

rop

.0.

00%

0.00

%0.

00%

EQ

UIP

ME

NT

EX

EM

PT

ION

S

CC

DD

EE

GG

HH

II

Pro

per

ty

Rea

l vs.

P

erso

nal

(e

nte

r R

or

P)

Exe

mp

tio

n

or

Cre

dit

A

vaila

ble

?

(en

ter

Y o

r N

)

Exe

mp

tio

n

limit

ed t

o

reg

ula

ted

or

pu

blic

util

ity

cos?

(en

ter

Y

or

N)

Rea

l v.

Per

son

al

Pro

per

ty?

(R

or

P)

Exe

mp

tio

n

or

Cre

dit

A

vaila

ble

?

(Y o

r N

)

Exe

mp

tio

n

limit

ed t

o

reg

ula

ted

or

pu

blic

util

ity

cos?

(Y

or

N)

To

wer

s(E

1)N

N/A

N (

Jun

eau

)N

/AP

ole

s/w

ires

/co

nd

uit

s(E

1)N

N/A

N (

Jun

eau

)N

/AC

OE

(E1)

NN

/AN

(Ju

nea

u)

N/A

Mfg

eq

uip

men

t(E

1)Y

(Ju

nea

u)

NN

(Ju

nea

u)

N/A

Cel

l sit

e/sw

itch

es(E

1)N

N/A

N (

Jun

eau

)N

/AB

road

ban

d e

qm

t.(E

1)N

N/A

N (

Jun

eau

)N

/A

Ple

ase

list

any

gen

eral

co

mm

ents

bel

ow

th

at s

ho

uld

be

no

ted

reg

ard

ing

th

is s

tate

. In

clu

de

a b

rief

des

crip

tio

n o

f an

y la

w c

han

ges

tak

ing

eff

ect

afte

r Ju

ly 1

, 200

4 th

at w

ou

ld c

han

ge

the

info

rmat

ion

ab

ove

.

(E1)

If a

n it

em c

an b

e ta

ken

ou

t of

a s

tru

ctu

re w

ithou

t to

ols,

not

bu

ilt in

, it

will

nor

mal

ly b

e p

erso

nal

. S

ince

rea

l an

d p

erso

nal

pro

per

ty a

re t

axed

at

the

sam

e ra

te, t

he

dis

tinct

ion

is n

ot im

por

tan

t.

BB

Jun

eau

= 1

.164

%;

An

cho

rag

e =

1.1

61%

(av

erag

e o

f 43

tax

dis

tric

ts)

Co

mm

ents

/fo

otn

ote

s:

If Y

es, P

leas

e D

escr

ibe

An

cho

rag

e h

as n

o g

ener

al s

ales

tax

.

Jun

eau

: N

ew e

qu

ipm

ent e

xem

pt

100%

yea

r 1,

80%

yea

r 2

dec

linin

g

to 2

0% y

ear

5. 1

00%

tax

able

aft

er t

hat

.A

nch

ora

ge

has

no

gen

eral

sal

es t

ax.

An

cho

rag

e h

as n

o g

ener

al s

ales

tax

.A

nch

ora

ge

has

no

gen

eral

sal

es t

ax.

FF

* A

lask

a H

B 1

86 (

sig

ned

into

law

7/0

1) a

men

ds

A.S

. 29.

35.1

31(a

) to

exp

and

th

e 91

1 ta

x to

wir

eles

s te

lep

ho

ne

serv

ice.

Beg

inn

ing

10/

1/01

, mu

nic

ipal

itie

s w

ith p

op

ula

tio

ns

ove

r 10

0,00

0 m

ay im

po

se a

fee

of

$.50

per

eac

h w

irel

ess

ph

on

e, a

nd

m

un

icip

alit

ies

smal

ler

than

100

,000

may

imp

ose

a f

ee o

f u

p t

o $

.75

per

ph

on

e.

An

cho

rag

e h

as n

o g

ener

al s

ales

tax

.

JJ

Pro

per

ty T

axS

ales

Tax

If Y

es, P

leas

e D

escr

ibe

An

cho

rag

e h

as n

o g

ener

al s

ales

tax.

2004 TELECOMMUNICATIONS TAX STUDY — PART I I — Ana lys is o f Ind iv idua l S ta tes : A laska

26


2004 TELECOMMUNICATIONS TAX STUDY — PART I I — Ana lys is o f Ind iv idua l S ta tes : A laska

CO

ST

TE

LE

CO

MM

UN

ICA

TIO

NS

TA

X S

TU

DY

- S

tate

Su

mm

ary

Sh

eet

Sta

te

Tot

al #

of

Loc

al

Tax

es

App

lied

to

Sal

es

Tot

al #

of

Sta

te

Tax

es

App

lied

to

Sal

es

Tot

al

Loc

al T

ax

Rat

e A

ppli

ed t

o S

ales

Tot

al

Sta

te T

ax

Rat

e A

ppli

ed t

o S

ales

# of

Loc

al

Tax

Bas

es

that

Mus

t B

e M

aint

aine

d

# of

Sta

te T

ax

Bas

es t

hat

Mus

t B

e M

aint

aine

d

Tot

al #

of

Ret

urns

R

emit

ted

Per

Yea

r

Tot

al #

of

Tax

ing

Juri

sdic

tion

s

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Rea

l P

rope

rty

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Tan

gibl

e

Pro

pert

y

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Inta

ngib

le

Pro

pert

y

Pro

pert

y T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

(IN

PU

T 1

IF

YE

S, 0

IF N

O)

Sal

es T

ax

Exe

mpt

ions

or

Ince

ntiv

es?

IN

PU

T 1

IF Y

ES

, 0

IF N

O

AL

AS

KA

10

2.50

%0.

00%

10

798

1.41

%1.

41%

0.00

%1

-

Gen

eral

Bus

ines

s

Tot

al #

of

Loc

al

Tax

es

App

lied

to

Sal

es

Tot

al #

of

Sta

te

Tax

es

App

lied

to

Sal

es

Tot

al

Loc

al T

ax

Rat

e A

ppli

ed t

o S

ales

Tot

al

Sta

te T

ax

Rat

e A

ppli

ed t

o S

ales

# of

Loc

alT

ax

Bas

es t

hat

Mus

t B

e M

aint

aine

d

# of

Sta

te

Tax

Bas

es

that

Mus

t B

e M

aint

aine

d

Tot

al #

of

Ret

urns

R

emit

ted

Per

Yea

r

Tot

al #

of

Tax

ing

Juri

sdic

tion

s

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Rea

l P

rope

rty

Pro

pert

y T

ax

Eff

ecti

ve

Rat

e -

Tan

gibl

e

Pro

pert

y

Pro

pert

y T

ax

E

2004 State Study and Report On Telecommunications Taxation · League of Cities, and United States Conference of Mayors, renewed discussions with telecommunications providers and other

Documents