Would Nebraska have begun taxing internet-access charges if the federal Internet Tax Freedom Act moratorium expired in 2014?

Plain-English summary

Nebraska would not have begun taxing internet-access charges solely because the federal moratorium expired. State law taxed specifically enumerated services, and internet access as then defined in federal law was not included.

The Department therefore told purchasers and providers that no Nebraska collection or remittance change would be required on that basis.

Scope of the guidance

The request sought short-term guidance in advance of the moratorium's expected 2014 expiration. The GIL answered only under Nebraska law and the federal definition of internet access in Internet Tax Freedom Act § 1105(5).

It did not address other products or services sold with internet access, and its conclusion depended on the statutes and federal definition in effect at the time.

Common questions

Q: Did the GIL rely only on the federal moratorium?

A: No. The Department concluded that Nebraska's own enumerated-service statutes did not tax internet access as then defined.

Q: Would providers have had to change collection when the moratorium expired?

A: The GIL said no change was required for Nebraska tax on internet-access charges.

Q: Did the GIL cover every internet-related charge?

A: No. It addressed internet access as defined in the cited federal provision.

Citations and references

• Internet Tax Freedom Act § 1105(5) — internet-access definition used in the request
• Neb. Rev. Stat. §§ 77-2701.16 and 77-2703 — specifically enumerated taxable services
• Nebraska GIL 1-14-2 — state treatment if the federal moratorium expired

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/general-information-letters-gils
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/gil/GIL01-14-02_Internet_Tax_Freedom.pdf

Source-quality note: The official PDF required OCR and the extracted text below contains minor recognition errors. The question, cited law, and Nebraska non-taxability conclusion are legible and are the basis for this summary.

Original ruling text

GIL 1-14-2 Sales and Use Tax: Internet Tax Freedom Act Expiration

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue
(Department) until amended. A guidance document does not include internal procedural documents that
only affect the internal operations of the Department and does not impose additional requirements or
penalties on regulated parties or include confidential information or rules and regulations made in
accordance with the Administrative Procedure Act. If you believe that this guidance document imposes
additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. The Department
recommends you do not print this document. Instead, sign up for the subscription service at
revenue.nebraska.gov to get updates on your topics of interest.

August 22, 2014
Dear XXXX:

This correspondence is in response to your August 8, 2014 letter regarding the Internet Tax Freedom Act.
Based upon the nature of your request, we are providing this General Information Letter (GIL). This GIL
will be published on the Nebraska Department of Revenue’s (Department) website with all identifying
taxpayer information redacted.

GILs address general questions, provide analysis of issues, and direct taxpayers to the Nebraska statutes,
Department regulations, revenue rulings, or other sources of information to help answer a question. A
GIL is a statement of current Department policy, and taxpayers may rely on the Department to follow the
principles or procedures described in a GIL until it is rescinded or superseded. You may also find current
regulations, revenue rulings, information guides, taxpayer rulings, and other GILs at
revenue.nebraska.gov that may be helpful to you.

Your letter requests the issuance of an expedited, short-term administrative guide that will inform
taxpayers purchasing or providing Internet access (IA), as defined in § 1105(5) of the Internet Tax
Freedom Act, that should the current moratorium on state taxation of charges for IA expire, no changes
will be required in the taxes collected or remitted with respect to the taxation of IA. You request that this
guidance be issued no later than September 14, 2014, and that it remains in effect until the moratorium is
reinstated or for at least 60 days after any subsequent, pre-reinstatement public notice of the withdrawal
of this guidance.

Nebraska law imposes sales and use tax on specific enumerated services which are defined in Neb. Rev.
Stat. 8§ 77-2701.16 and 77-2703. Nebraska does not impose sales and use tax on charges for Internet
access as currently defined in federal law. I have enclosed a copy of Nebraska’s responses to a recent
survey conducted by the Streamlined Sales Tax Governing Board.

FOR THE TAX COMMISSIONER
Sincerely,
Ellen Thompson

Tax Specialist
Policy Section

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