State & Local Tax Blog

The Extended Moratorium on Taxation of Internet Access Has Some Income Tax Implications

You might not immediately think of the recently signed Internet Access taxation ban as having anything other than an effect on state sales taxes, but there was a potential loophole in it that states like Texas smoked out.

As you probably know, Texas has enacted a sweeping new state income tax. They would like to call it simply a “modification to existing franchise taxes”, but it’s a big new tax — but I digress. Some might call it a new tax. There was some concern evidently that the grandfathering provisions of the ban, would prevent Texas from imposing their modified franchise tax on Internet Service Providers. But, as we say here in Texas — Don’t Mess With Texas. It’s not only Texas that might have been impacted. Michigan might have been affected with its business tax. So might also Ohio, with its commercial activity tax, and Washington’s business and occupation tax might have been affected as well.

They made sure to get some language in the bill to clarify that it does not apply to state general business taxes, such as gross receipts taxes, that are structured in such a way as to be a substitute for or supplement the state corporate income tax.

These guys are on top of things.

By the way, you can get an actual copy of the bill from us. Just ask.

Leave a Reply

Your email address will not be published.

What You Should Do Next

Have a state or local tax issue or question? Need help? Want peace of mind? We can help! Sign up for a free "What's Next" call and let us get to work for you.