Limit Tax Exemption for Internet Service Providers (language only)

Item 3-5.06 #1s

Language
Page 421, after line 14, insert:
"§ 3-5.06  LIMIT THE SALES AND USE TAX CREDIT FOR INTERNET SERVICE PROVIDERS
Notwithstanding any other provision of law, for purchases made between July 1, 2002, and June 30, 2003, any exemption from the retail sales and use tax applicable to production, distribution, and other equipment used to provide Internet-access services by providers of Internet service, as defined in § 58.1-602 of the Code of Virginia, shall apply to only eighty percent of the cost of purchases otherwise qualifying for exemption.  For purchases made between July 1, 2003, and June 30, 2004, no exemption from the retail sales and use tax applicable to production, distribution, and other equipment used to provide Internet-access services by providers of Internet service, as defined in § 58.1-602 of the Code of Virginia, shall be provided. Rather, a request for a refund of sales taxes paid shall be submitted to the Tax Commissioner and said refund shall apply to only sixty percent of the cost of qualifying purchases.   The Tax Commissioner shall develop procedures for such refunds."

Explanation
(This amendment limits the amount of the sales tax exemption for Internet service providers to 80 percent of the price of purchases otherwise qualifying for exemption in FY 2003 and 60 percent in FY 2004 and turns the exemption into a refund for 2004. The estimate revenue impact is $520,000 in FY 2003 and $2.6 million in FY 2004.)