Form Ct-2 - Guidelines And Rules For The Virginia Communications Taxes (Page 2 of 16) in pdf

New Communications Tax Structure

Transition to New Taxes

Effective January 1, 2007, the repealed taxes and fees

For purposes of the transition to the new communications

will be replaced with a new state communications

tax structure, bills issued by providers prior to January

sales and use tax (“communications sales tax”) and a

1, 2007 must reflect the taxes and fees in effect on

new state E-911 tax (“landline E-911 tax”) on landline

December 31, 2006, even if the bills include charges for

telephone service. Additionally, a public rights-of-way

communications services to be provided after December

use fee (“cable rights-of-way use fee”) will be imposed

31, 2006. Bills issued by providers on and after January

on cable television providers, effective January 1,

1, 2007 must reflect the new communications taxes,

2007. Revenues from the communications sales tax,

even if the communications services were provided

the landline E-911 tax and the cable rights-of-way

prior to January 1, 2007.

use fee (“communications taxes”) will be collected

Standard Language and Terminology

and remitted monthly by communications services

TAX has worked with providers to develop standard

providers (“providers”) to TAX and deposited into the

terminology for the new taxes. When referring to each

Communications Sales and Use Tax Trust Fund (“the

of the new taxes, providers shall use the following

Fund”). Moneys in the Fund will be distributed to

terminology or similar variations thereof to avoid

localities on a monthly basis after payment

customer confusion:

(1) to TAX for the direct costs of administering the

•

The communications sales and use tax shall be

communications taxes;

referred to as either the “communications sales and

(2) to the Virginia Department for the Deaf and

use tax” or the “communications sales tax;”

Hard-of-Hearing (VDDHH) for the costs of the

•

The E-911 tax on landline telephone service shall

Virginia Relay Center for the hearing impaired;

be referred to as the “landline E-911 tax” or the

and

“E-911 tax;”

(3) to localities for any cable television franchise fees

•

The public rights-of-way use fee imposed on cable

due.

television providers shall be referred to as the “cable

The state E-911 surcharge on wireless telephone

rights-of-way use fee” or the “rights-of-way use

service, the state and local public right-of-way use fee

fee.”

on landline telephone service and the local BPOL tax

Together, the new taxes shall be referred to as the

on telephone and telegraph companies not exceeding

“communications taxes.” TAX will post general

.5% will remain in effect.

information regarding the new communications tax

Cable franchise agreements entered into or renegotiated

structure on its web site,

after January 1, 2007 will not include a franchise fee.

Customer inquiries regarding the new taxes or the

Cable franchise agreements in effect as of January

transition should be answered by providers.

1, 2007 will remain in effect until their expiration.

New Communications Sales And Use Tax

Cable providers will not bill or otherwise collect from

customers any cable franchise fees accruing on or

Effective January 1, 2007, the communications sales

after January 1, 2007. Instead of paying franchise fees

tax will be a state tax administered by TAX. The

to localities, cable providers will include with their

communications sales tax will be imposed on customers

monthly communications sales tax return a report

of communications services at the rate of 5% of the

listing by locality the franchise fees that accrued that

sales price of the services. The new tax will appear as

month. On a monthly basis, TAX will pay the accrued

a line item on customers’ bills and will be collected and

franchise fees to localities from the communications

remitted to TAX by providers.

sales tax, landline E-911 tax and cable rights-of-way

Definitions

use fee revenues deposited in the Fund (see “Cable

Terms used in the communications sales tax have the

Franchise Fee”).

same meaning as those used in the retail sales and use

tax, unless defined otherwise, as follows:

“Bundled transaction” means a transaction that

includes communications services subject to the

communications sales tax and consists of distinct and

identifiable properties, services, or both, sold for one

nonitemized charge for which the tax treatment of the

distinct properties and services is different.

CT-2 W

REV 11/06

Page 2

Form Ct-2 - Guidelines And Rules For The Virginia Communications Taxes Page 2

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