As millions of Americans put the finishing touches on federal tax returns that were due on Tuesday, executives of wireless association CTIA and six major wireless carriers wrote to leaders of the Senate Finance Committee to urge passage of separate bills that would impose a five-year moratorium on new state or local taxation of wireless services and establish a national framework for taxes applied to digital goods and services. Signed by Steve Largent, the CEO of wireless association CTIA, and by the CEOs of AT&T, Verizon Wireless, Sprint Nextel, T-Mobile USA, United States Cellular and Cellcom, the letter spotlights the Wireless Tax Fairness Act (S.543) and the Digital Goods and Services Tax Fairness Act (S.971). Both measures are currently under review by the Senate Finance Committee under the leadership of chairman Max Baucus (D-MT) and ranking member Orrin Hatch (R-UT). Addressing S. 543, the executives advised Baucus and Hatch that enactment of the proposed moratorium on state and local wireless taxes “will provide the states a chance to reform today’s discriminatory tax system, which now applies an average levy of more than 16.3 percent to wireless services [as] compared to an average rate of 7.4 percent applied to other goods and services.” In calling for quick passage of S. 543, the executives also noted that “the disparity between the taxes on wireless services and other goods and services imposes an unfair and regressive burden on low income Americans who disproportionately rely on wireless service for both telephony and Internet access.” With respect to S. 971, the wireless executives outlined the need for “a national framework for the application of state and local taxes on digital goods and services downloaded to smart phones and wireless tablets” as “several different jurisdictions may claim they have the right to tax the same transaction at different tax rates depending on where the consumer lives, where the consumer was when the digital good was purchased, or where the entity that sold the digital good is domiciled.” The solution to such jurisdictional issues, added the executives, lies in the passage of S. 971, which “would impose a clear framework to govern these transactions similar to the way that Congress dealt with mobile service more than a decade ago when it enacted the Mobile Telecommunications Sourcing Act.”
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Industry urges Congress to act on wireless tax bills
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