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

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Software // Enterprise Applications

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.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Slideshows
Reflections on Tech in 2019
James M. Connolly, Editorial Director, InformationWeek and Network Computing,  12/9/2019
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
Slideshows
Flash Poll