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NY TAXES CYBERSPACE, CRAM REACTS
Attention c'punks! A massive artillery fire on our Cyberspatial Reality
Advancement Movement (CRAM) has been volleyed on the NY front!
Retrenchments and counterattack requested ASAP! Reports that this is
the first major enemy offensive on free Cyberspatial territory, to be
followed by supporting attacks in nearby theatres soon! The enemy must
be subjugated at this early critical period before basic footholds are
established to supply a larger offensive! Critical aspects of our evolving plan:
1) match offensives with more powerful counterattacks
2) infiltrate the enemy with spies and saboteurs, leverage strategic insights
3) propaganda and disinformation campaign on the public and enemy
We've been caught completely off guard by this attack! Let's banish our
passivity and complacency and surge into action! Onward, troops!
Date: 31 Aug 93 06:01:03 EDT
From: Marty Winter <[email protected]>
Subject: Sales tax on information services to increase
OK, so what does all this gobbledegook mean? It means simply that New York
State has decided to trash the information superhighway that has been touted
as the solution to unemployment and the means by which New York could have
rebuilt itself. New York, former home of leading edge high-technology is
working overtime to relegate its citizenry to the welfare rolls.
It means that BBS's which are already liable for collection of sales tax
must now go back and collect an additional 5% for a total of 13%. This tax
is RETROACTIVE ... Any BBS which has already collected a membership fee or
other charges up front for a year of service must go back and collect more
money from their subscribers unless their fiscal year begins on September 1.
It means that a connection to the Internet, a subscription to GEnie,
Prodigy, or CompuServe just got A LOT more expensive. It means that
directory assistance calls to look up a phone number will cost more. Calls
for technical support or 800 or 900 services just got a lot more expensive.
Relatives of mine who are still employed by IBM downstate got told by their
superiors that as a potential result of this change IBM and numerous other
information service providers have decided or will decide to leave New York
as quickly as possible.
Newspapers and other entities that would have poured millions of dollars
into New York's economy have found the cost to potential users and
subscribers of new information services has now moved beyond practicality.
The bottom line is that New York has literally killed its own future. New
York's politicians from the Governor to the majority in both aisles of the
legislature have shown a degree of stupidity unparalleled since Nero was
emperor in Rome in killing the golden goose that could have made New York a
mecca for high tech communications. Modern communications in New York by
political fiat will have to consist of semaphor flags and smoke signals
while the remainder of the world outside our third-world state go digital.
This particular episode proves that New York's political system is so
corrupt and so incredibly inept that citizens of New York really have to
give serious consideration to drastic measures against our state government
including voting out every single politician in statewide office. I am
particularly dismayed that this tax law was kept SO secret while being
nursed through the legislative process that no one knew about it at all,
including the Senate. Not a single one of my contacts was able to find out
about any of this in advance. Even the notification from Tax and Finance a
mere three days before its enactment was incredible and unprecedented.
This latest folly will have no effect on free bulletin boards such as
Friends & Lovers, but it will be murder on those services run by those who
thought New York might have permitted them to eek out a living with a
computer and a modem. Thirteen percent sales tax? Think about that number a
little bit. The morons we elected have gone and done it. Do we really think
they're done yet? Are you REALLY going to vote for the same guy again in the
Assembly, the Senate, or the State house? Or are you going to make use of
your digital communications while there is still a dialtone? Is Bill Clinton
watching New York's government and is Bill Clinton REALLY going to sit idly
by and let our bozos in Albany get away with it?
Information superhighway ... ptooey!
[...] The biggest threats to the use of cyberspace
are NOT going to come out those committees and state organizations that
deal directly with coputes, the Internet or other on-line services, but
from places like the Finance committeess, etc, who see the use of the
Internet and other services as a way of helping to fill the state's
coffers. If we are going to educate anybody within the government, it MUST
be those who seem to have the least sake in cyberspace. As Kevin so
rightely pointed out, the boays in Finance and over at T&F have
effectively put the Internet, CompuServe, GEnie and other commercial
on-line services out of the reach of those who might benefit MOST from the
use of such services. In some areas of the state the extra 5% that they
just tacked onto the bill could bring the total coast closer to 20% rather
than the 13% it does in ALbany. Worst part is, that the legislation that
authorizes such things is often buried in the middle of bills that take
weeks to read owing to their sheer size. Our information highway is going
to become a dead end dirt road if things like this continue in NY.
STATE OF NEW YORK SLAPS 13 PERCENT SALES TAX ON INFORMATION SUPERHIGHWAY
The following is a complete electronic transcript of a bulletin issued by
the New York State Department of Taxation and Finance and was received by
Friends & Lovers BBS on Saturday, August 28, 1993.
(begin T&F document)
New York State Department of Taxation and Finance N-93-20
Increase in Tax Rate Applicable to
Entertainment and information Services
Provided by Means of Telephony or Telegraphy
Effective September 1, 1993, there will be an additional state sales tax at
the rate of 5% added to the existing 4% state sales tax imposed on receipts
from the services of furnishing or providing an entertainment or information
service which is furnished, provided or delivered by means of telephony or
telegraphy or telephone or telegraph service of whatever nature (see section
1105(c)(9) of the Tax Law). The treatment of these services for sales tax
purposes remains identical to the existing treatment except as to rate.
Thus, the only change is that the state sales tax rate on such services has
been increased from 4% to 9%. The Municipal Assistance Corporation sales
taxes (section 1107 of the Tax Law), the Metropolitan Commuter
Transportation District sales taxes (section 1109 of the Tax Law) and local
sales taxes imposed pursuant to the authority of Article 29 of the Tax Law
are to be added to the aforementioned 9% state sales tax rate.
Example: A person residing in New York State subscribes to an entertainment
service that is provided by telephony. The entertainment service recipient
receives the service on a monthly basis and is charged for the service
directly on the bill for telephone service. Prior to September 1, 1993, both
the telephone service and the entertainment service were subject to an 8%
sales tax (4% state, 4% local). However, any entertainment service provided
after September 1, 1993 will be subject to a 13% sales tax (9% state, 4%
local). There is no change in the rate of tax imposed on the telephone
service which remains at 8%.
The affected services contracted for or paid for prior to September 1, 1993
will be subject to the additional state sales tax if they are rendered after
September 1, 1993.
A new line and reporting code has been added to the sales and use tax
return in order to report the additional state sales tax imposed on such
Entertainment and information services provided or delivered by means of
telephony or telegraphy or telephone or telegraph service include ALL such
services delivered by such means. These services are taxable, and subject to
tax at the higher rate and the applicable local tax rate, whether provided
through 500, 700, 800 or 900 telephone numbers, as well as those delivered
by local exchange, private telephone line, cable, or channel. It should be
kept in mind that the services subject to tax at the increased rate are
distinct from telephone or telegraph services subject to tax under section
1105(b) of the Tax Law.
Collecting, compiling or analyzing information of any kind and reporting
such information to other persons by means of telephony or telegraphy or
telephone or telegraph service constitutes the rendering of an information
service subject to tax at the increased state tax rate as well as the
applicable local sales tax, unless otherwise exempt.
Information services that are currently subject to tax when furnished in
written form by printed, mimeographed or multigraphed matter or duplicating
written or printed matter, such as tapes, disc, electronic readouts or
displays, continue to be subject to tax at the 4% state tax rate and the
applicable local tax (see section 1105(c)(1) of the Tax Law). The higher
sales tax rate applies to all charges for the service by the vendor to the
customer which are subject to tax pursuant to section 1105(c)(9) of the Tax
A fee for subscribing to a taxable entertainment or information service
(taxable under section 1105(c)(9) of the Tax Law) that is billed on a
monthly, annual or other basis is taxable at the new rate. Membership or
other fees entitling the subscriber to receive by means of telephony,
telegraphy, a certain number of free reports or services, or reduced charges
on reports or services, are also taxable at the new state tax rate. No tax
is due if the vendor makes no charge for the services.
Tax is to be separately stated on the recipient's telephone bill, credit
card charge receipt or any other bill issued for such services.
The increased state tax rate does not apply to any receipts from the sale
of information services that are not subject to tax under section 1105(c)(1)
of the Tax Law. These include an information service which is personal or
individual in nature and is not or may not be substantially incorporated
into reports furnished to other persons by the person who collected,
compiled or analyzed the information. Examples of such services include a
personalized management report delivered orally over the telephone, or an
insurance damage appraisal conveyed over the telephone. Also, purchases of
information services by newspapers or radio and television broadcasters that
are used in the collection and dissemination of news are exempt from sales
In addition, the increased state sales tax rate does not apply to charges
made to organizations and entities (such as government agencies, exempt
organizations, etc.) that are exempt from the general sales and use tax in
accordance with section 1116(a) of the Tax Law. Documentation which
substantiates exemption from the state and local sales tax for such
organizations will likewise serve to exempt such organizations from the
additional 5% state sales tax.
When exempt entertainment services or exempt information services are being
billed by a person other than the actual exempt provider of the services,
the actual provider must give an exempt certification document, form ST-930,
Certification of Nontaxable Services Provided Via Telephony or Telegraphy or
Telephone or Telegraph Services, to the person who will be doing the billing
in order that sales tax (including the increased state sales tax) will not
be charged on the exempt services.
This sales tax exempt certification document may not be issued unless the
person issuing the document is registered to collect sales tax or is
specifically exempt under section 1116(a) of the New York State Tax Law
(and, if required issued a Form ST-119, Exempt Organization Certificate).
When any person, affiliate or agent other than the actual provider of
entertainment or information services bills the recipient of the services on
behalf of the provider, that person will be deemed a vendor of the service
for sales tax purposes and will be liable for all the obligations of a
vendor. Such obligations include collecting, reporting, and remitting the
sales tax (including the additional 5% state tax) due on entertainment and
information services which are furnished, provided or delivered by means of
telephony or telegraphy or telephone or telegraph services.
A person deemed a vendor of these services is entitled to and possesses all
the rights afforded a vendor, including the right to an exclusion or a
credit or refund of tax as provided in section 1132(c) of the New York State
Tax Law with respect to such services.
The person providing the billing service, whetyher doing the actual billing
or or having the billing done by an affiliate or agent, will be deemed to be
a vendor of entertainment or information services when the charges for the
services are wither listed as part of, or as a schedule to the statement of
such person to its customers, or are billed separately.
The term affiliate means an entity which:
- directly, indirectly or constructively controls a person deemed a vendor
of entertainment or information services.
- is controlled by a person deemed a vendor of entertainment or information
- is controlled by a common parent who also controls a person deemed a
vendor of entertainment or information services.
The designation of a person as a vendor, by virtue of such person
performing the billing of charges on behalf of the actual provider of
entertainment or information services, in no way limits the obligations or
removes the liabilities of the actual provider of such services or any other
person with respect to the sales tax imposed on these services.
(end of T&F bulletin N-93-20 [8/93])