The Kansas BOTA ruled that an Internet service provider was correctly assessed sales and use tax on its equipment purchases. The equipment was used to provide service. It consisted of routers, switches, fixed wireless subscriber modules, fixed wireless access points, wireless radio transmitters, and backhaulers. The provider had argued before the BOTA that it did not owe sales and use tax on the equipment because the federal Internet Tax Freedom Act (ITFA) pre-empts state and local taxation of Internet access.
The BOTA noted that the ITFA does pre-empt state and local taxation of “Internet access,” defined as including Internet access provider purchases of “telecommunications.” The BOTA also noted, however, that the ITFA defines “telecommunications” as “the transmission, between or among points specified by the user, of information of the user’s choosing….” The BOTA found that the ITFA’s plain meaning and legislative history supported not interpreting “telecommunications” as including equipment.
In the Matter of the Appeal of Pixious Communications, L.L.C., Kansas Board of Tax Appeals, Docket No. 2017-6703-DT, February 14, 2019, ¶202-027