Mediaboss Marketing

By Jason Garcia, Orlando Sentinel

2:36 p.m. EST, February 23, 2012

Tax changes sought by big telecommunications companies suddenly stalled in the Senate on Thursday amid questions about the long-term effect on state and local governments' finances.

The Senate's Finance and Tax committee completely rewrote the legislation (SB 1060), which companies such as Verizon, Comcast and AT&T have been pushing to ensure that communications-services taxes can't be collected on certain products, such as downloaded games or home-alarm monitoring services.

The legislation included a controversial provision that would have given the companies freedom to bundle both taxable and non-taxable items into one package with a single price — and yet calculate their taxes based only on the hidden prices of the taxable parts. Critics said that could allow companies to deflate their tax bills by minimizing the internal price of anything that is taxable and maximizing the price of anything that isn't.

State economists have warned that state and local governments would lose, at a minimum, $35 million a year as companies took advantage of the bundling provision. And one of their analyses showed the tax savings for the companies and, potentially, their customers — and the hit to governments — had the potential to reach more than $400 million a year.

With so much uncertainty, the tax committee decided to take all of the tax changes out of the bill and replace them with an 11-member working group that would study the communications-services tax and recommend ways to modernize it. The working group's report would be due before the start of the 2013 legislative session.

"The problem is we just simply don't know how this is going to impact the tax structure," said bill sponsor Ellyn Bogdanoff, R-Fort Lauderdale, who offered the amendment. "There's no question that the telecommunications companies actually dispute those numbers. But because of the time frame, what I've explained to them is I just need more time to address it."

Separately on Thursday, the Florida House of Representatives passed its own version of the bill (HB 809), which includes both the tax changes sought by the telecom companies and the proposed working group.

jrgarcia@tribune.com or 407-420-5414

Excerpt from:
Telecom-tax changes stall in Senate