Independent Internet service providers struggling against the twin behemoths of major telecommunications companies and state regulatory structures have won a key battle in New York, where the Tax Appeals Tribunal has held that telephony and telegraphy services are inherently interstate and, therefore, exempt from sales tax.
In a trio of recent decisions, the tribunal ordered refunds for small companies that purchase line access from large companies. It rejected the state’s argument that such purchases are subject to a state tax on intrastate telephonic communications. The ruling could spell the end of a tax policy that had frustrated and burdened independent Internet service providers.
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