New Hampshire Clarifies That Internet Access Is Not Taxable

Tuesday, June 26th, 2012

 
 
Share
Link
New Hampshire
General

New Hampshire has enacted House Bill 1418 (HB 1418) clarifying that charges for Internet access are not subject to the state's Communications Service Tax (CST). 2012 N.H. Laws ch. 279, secs. 4-8.

Prior to HB 1418 becoming law, it was not clear whether, and to what extent, Internet access fees were subject to tax in New Hampshire. Even though New Hampshire does not impose a sales tax, the state does impose a CST on several communications-related services. Because the CST was originally enacted in 1990, long before the Internet was widely used, it did not directly address whether Internet access fees were subject to the CST. New Hampshire had imposed CST on some of the fees Internet service providers charged their customers when those fees were for services that fit within the definition of "communications services."

Congress stepped in and generally prohibited states from imposing tax on Internet access services when it enacted the federal Internet Tax Freedom Act and its subsequent amendments. But, those federal laws allow states that taxed Internet access before October 1998 to continue to do so (which is often referred to as a "grandfather" provision). Having been enacted in 1990, New Hampshire's CST was, "grandfathered," so New Hampshire was allowed to continue to impose the CST on Internet access.

In a 2006 declaratory ruling, New Hampshire's Department of Revenue Administration (DRA) stated that DSL services provided to end-user customers were subject to CST "to the extent that those services meet the definition of ‘communications services.'" In re: AB, Inc, Declaratory Rul. No. 8761 (N.H. Dept. of Revenue Admin. Nov. 17, 2006). After the federal Internet Tax Freedom Act was amended in 2008, the DRA clarified that it would continue to impose CST on Internet service providers' charges for telecommunications. N.H. Technical Info. Release No. 2008-006 (Dept. of Revenue Admin. Sept. 15, 2008). Ultimately, it was unclear how and when Internet access fit within the CST's pre-Internet era definitions of "communications" and "telecommunications," so, in spite of the DRA's guidance, it remained unclear whether Internet access fees were subject to CST. In particular, charges for accessing the Internet through broadband and wireless connections were especially problematic.

HB 1418 has seemingly resolved this ambiguity.

In order to clarify that providing Internet access is not subject to the CST, HB 1418 made a series of changes to New Hampshire's CST statutes. The law specifically excludes "Internet access" from the definition of taxable "communications services." Also, to add clarity, HB 1418 adds new statutory definitions for "Internet" and "Internet access." Furthermore, it specifically excludes charges for Internet access from the definition of "gross charge," which is the tax base on which New Hampshire imposes the CST.


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Colorado Waives Penalties for Notice and Reporting...

Monday, February 19th, 2018 -The Colorado Department of Revenue (DOR) released a publication stating that it has agreed to waive penalties ...

Maryland Sales Tax Holiday for Energy Efficient...

Friday, February 16th, 2018 -The Maryland sales tax holiday for energy efficient appliances runs from Saturday, February 17, 2018, at 12:01...

Dental Prostheses Exempt in Michigan

Wednesday, February 14th, 2018 -The Michigan Department of Treasury recently released a publication describing the retroactive exemption for d...

Taxability of Amusement Devices and Video Games in...

Monday, February 12th, 2018 -The Wisconsin Department of Revenue has released guidance addressing the taxability of video games and amuseme...

Video Streaming Subscriptions Taxable in Texas

Friday, February 9th, 2018 -The Texas Comptroller of Public Accounts recently ruled that video streaming and add-on services are taxable a...

Moratorium on Medical Devise Excise Tax Extended Two More...

Wednesday, February 7th, 2018 -The United States Congress extended the moratorium on the Medical Device Excise Tax (MDET) for another two yea...