News article on VON Coalition filing saying pretty much the same thing: http://news.com.com/Net+firms+Dont+tax+Internet+calling/2100-7352_3-5389880.html --- Before the U.S. Department of the Treasury Internal Revenue Service Washington, D.C. In the Matter of Advanced Notice of Proposed Rulemaking concerning 26 CFR Part 49 Excise Taxes; Communications Services Comments filed by: The Computing Technology Industry Association (CompTIA) 4350 N. Fairfax Drive, Arlington, VA 22203 HYPERLINK "http://www.CompTIA.org" www.CompTIA.org September 30, 2004 Public Comments: Submitted by the Computing Technology Industry Association (CompTIA) in response to the Department of the Treasury, Internal Revenue Service’s Advanced Notice of Proposed Rule Making (ANPRM) concerning 26 CFR Part 49 Excise Taxes; Communications Services. CompTIA is a twenty-two year old, global trade association representing the business interests of the information technology and communications industries. (More information is available at HYPERLINK "http://www.comptia.org" www.comptia.org.) For inquires regarding these comments, please contact: Thomas E. Santaniello, Public Policy Manager, CompTIA Global Public Policy Headquarters, 4350 N. Fairfax Drive Suite 440, Arlington, VA 22203, Telephone 703.812.1333, ext. 204, Fax 703.813.1337, or email: HYPERLINK "mailto:Tsantaniello@private" Tsantaniello@private Internet Protocol (IP) Applications and Telecommunications Services: Driven by the adoption of innovative IP protocols, ubiquitous local and wide-area networks, and computer processing capability, PCs are as much a tool for “communicating” as a tool for computing. Whether it is email, web-casting, online collaboration or chat rooms, we have grown accustom to computer-communications. CompTIA defines this technology evolution as “convergence technology” (CT). CT is when IT and telecommunications services intertwine as one technology, providing the end user with functionality characteristic of both sectors. More specifically, CT is the merging of voice, video, and data on a single network, integrating telecommunications and computer technology in a way that opens powerful new avenues of communication. It represents the intersection of telephone, computer, wireless, cable, and Internet networks. Spawned out of a highly competitive industry, CT has enriched the telecommunications industry with its wealth of applications designed to serve the consumer. CompTIA believes that a significant distortion in the “Voice Over Internet Protocol” (VOIP) policy debate is the misunderstanding of the underlying technology – which is Internet Protocol communications. VOIP, or any other IP-based application, should be considered an Internet application. For example, the Federal Communications Commission’s notice of proposed rulemaking concerning VOIP services was issued as an “IP-Enabled Services” notice. This illustrates the important distinction of the underlying technology upon which VOIP is based. Further, it illustrates the far reaching impact any VOIP policy will have on all Internet based services and the Internet overall. VOIP is one category of an IP-enabled application. Email is another IP-based application which is a text-based application. Video-conferencing and web-casting are additional IP-based applications which offer combined voice, video, and data. Given the past regulatory and taxing approach to telecommunications services by the federal government, CompTIA is concerned about the potential that any IP-enabled application could be subject to federal excise taxes. Simply because an IP application is capable of two way voice, should not mean it is subject to taxation. Would the IRS refrain from taxing that same application if the end-user turned off the voice function? An uncertain tax regime is not only harmful to a nascent and evolving service such as VOIP, but harmful to technological innovation and adoption of all IP-based services. Voice service should not be inherently taxed. The historic underpinnings of taxing and regulating voice are due to the industrial age corporate structure of voice service providers and the quo-pro-quo relationship between government and industry. Policymakers should recognize that 100 year-old industrial age policies are antiquated and obsolete in today’s global Internet economy. Growth of the Internet through Regulatory Restraint: Regulatory restraint over the Internet has served America well. Creativity and innovation in the marketplace has been dynamic and bursting at the seams with entrepreneurial spirit. Consumers are enjoying more choices, better value, and more personalized products. There is little compelling evidence that regulation of these vibrant and nascent CT services is warranted. Federal policymakers have been very reluctant to regulate the Internet, dating back to wide commercial adoption of this technology. Keeping the “camel’s nose out of the tent” was a clear policy objective from the very beginning. U.S. Treasury Secretary, John Snow and Secretary of Commerce, Donald Evans made the following joint statement in July 2003 concerning multiple and discriminatory Internet taxation: "The Internet is an innovative force that opens vast potential economic and social benefits of e-commerce and enables such applications as distance learning, telemedicine, e-business, e-government and precision farming. Government must not slow the rollout of Internet services by creating administrative barriers…” (HYPERLINK "http://www.useu.be/Categories/Tax%20and%20Finances/July1603InternetTaxMoratorium.html"http://www.useu.be/). The result of this regulation-free environment can be seen in recent Department of Commerce data, which shows record online sales. The Census Bureau of the Department of Commerce announced February 2004, that the estimate of U.S. retail e-commerce sales for the fourth quarter of 2003, was $17.2 billion, an increase of 25.1 percent from the fourth quarter of 2002. Total e-commerce sales for 2003 were estimated at $54.9 billion, an increase of 26.3 percent from 2002. CompTIA supports minimal regulation and taxation of the Internet and its services and strongly encourages policymakers to continue to maintain this policy objective because it has proven to be successful. CompTIA believes a policy of limited regulations provided the proper business environment which allowed for the tremendous global adoption of the Internet. Internet is a Global Communications Network: CompTIA is challenged understanding how federal, state, or local tax jurisdictions could impose such policies on a global communications network. CompTIA continues to represent our membership internationally including Europe, Asia, South America, Canada, and the U.S. on policy matters. Given the numerous international boundaries involved with IP-based applications and services, we remain suspect of any policy which ignores the inherent challenges present in such a global communications device. Further, we are concerned that U.S. based VOIP providers will be globally disadvantaged to overseas providers not subject to regulation or taxation and beyond the scope of U.S. policy. Negative Impact on Small Business: CompTIA is also concerned about the likely negative impacts of taxes on IP applications. Such taxes create market uncertainly; add higher costs, and a burden of collection for those companies offering such services. In addition to the many larger companies which are well known in the IT industry, there are thousands of small and medium sized IT companies offering VOIP services. Unlike traditional telecommunications companies from the past, new IP-based services allow for all sized companies to enter the market and offer services. Many of these companies are small businesses. Current IT markets have not traditionally been regulated as telecommunications services, and such a dramatic policy shift would have a tremendously negative impact on the small business segment of the economy. Given the evolving condition and diversity of industry segments with a stake in the success of VOIP service markets, CompTIA believes the IRS should allow these services to develop without the burden of taxation. Conclusion: CompTIA believes the IRS should recognize the significant industry convergence which is occurring between IT and telecommunications sectors and develop a relevant policy framework. The federal policy of regulatory restraint for the Internet has been successful. We urge the IRS to refrain from imposing telecommunication taxes on Internet applications. We urge the IRS to consider the international impact of taxing Internet applications. Also, we urge the IRS to consider the small business impact of such taxes. Regulating a single IP-enabled application will have a profoundly negative impact on all IP-enabled applications. We look forward to achieving social policy objectives without unnecessary regulations and taxation. CompTIA believes it is in the interest of the both consumer and the economy to allow this revolutionary technology called the Internet to continue to grow and yield benefits to our society. PAGE PAGE 5 _______________________________________________ Politech mailing list Archived at http://www.politechbot.com/ Moderated by Declan McCullagh (http://www.mccullagh.org/)
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