Companion bills recently introduced in New York State (A. 11180 and S. 9112) would impose a temporary tax on businesses that provide broadband internet access service. Revenues generated from the tax would be earmarked to fund the provision of broadband internet access services to students in the state during the COVID-19 pandemic.
The tax proposal would assess an “annual charge” on a provider’s “gross intrastate telecommunication revenue”— which remarkably is undefined. Also astonishing is the lack of a tax rate — the New York State Department of Taxation and Finance is directed to determine the applicable rate “in consultation with the state education department” in order to fund the bills’ mandate to provide “high-quality internet access” to eligible students in the state.
Another unfortunate — and likely unconstitutional — component of the tax proposal is a prohibition that bars an internet access service provider from passing through the tax to customers “as a fee, charge, increased service cost, or by any other means.” Finally, and somewhat more positively, the proposal contains a self-terminating provision that automatically repeals the tax on the last day of the school year in which Governor Cuomo’s declaration of an emergency related to the COVID-19 pandemic terminates.
The Eversheds Sutherland SALT Legislative Insider policy team will continue to track this and other New York tax legislative proposals in what is certain to be a very busy 2021 legislative session. The Eversheds Sutherland SALT Legislative Insider platform tracks state and local legislative developments and provides policy insights from the Eversheds Sutherland SALT Team to help you navigate evolving legislative developments with real-time policy insights. The platform offers customizable services to ensure you are aware of tax proposals that are of the highest impact to your company.
For more information about SALT legislative proposals or to learn about tracking bills with our SALT Legislative Insider platform, please contact the Eversheds Sutherland SALT Team.