Software // Enterprise Applications
News
12/21/2006
03:42 PM
Connect Directly
RSS
E-Mail
50%
50%

Vonage To Fight Baltimore's Effort To Tax Its Internet Phone Service

Vonage won a court battle more than three years ago in which a federal judge ruled that Vonage's service was an information service, not a telecommunications service.

When it was revealed this week that the city of Baltimore is suing Vonage to collect a $3.50 monthly tax for subscribers using its Internet phone service, the city opened up an issue that has defied resolution for years.

Baltimore instituted the tax on all phone lines in 2004, but apparently didn't file the lawsuit until recently.

"The service that Vonage is providing clearly fits the definition of a telecommunications line," said Joshua N. Auerbach, an assistant city solicitor, according to media reports.

Not so, says Vonage, which claims it is an information service and therefore exempt from taxes. Vonage won a hard-fought battle in a federal court in Minnesota more than three years ago in which the judge in the case ruled that Vonage's service was an information service.

However, the tax issue keeps raising its head, particularly as long distance charges drop and VoIP services like Skype continue to eat into traditional telephone company services and revenue. The drop in telecom taxes has hit hard the Universal Service Fund, which is used to subsidize telecommunications in rural areas.

FCC chairman Kevin Martin has suggested that telephone numbers could be taxed instead of phone lines. That approach would concern Vonage, which issues phone numbers, but not peer-to-peer VoIP providers like Skype, whose users normally don't use numbers.

Comment  | 
Print  | 
More Insights
Building A Mobile Business Mindset
Building A Mobile Business Mindset
Among 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps – and it's past time for those with no plans to get cracking.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest September 18, 2014
Enterprise social network success starts and ends with integration. Here's how to finally make collaboration click.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.