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« Your Digital Freedoms Are At Stake | Main | EconomyWatch: Solid GDP Growth » January 29, 2004Cable Companies May Try to Keep Your Tax RefundCable television companies who have been forced by the state of Tennessee to collect an illegal tax from their customers for the past nine years may try to avoid refunding the money to customers, even though the state is making revenue from the last three years available for refunding to taxpayers. At least that's the indication from this story from Knoxville. The cable companies might also try to increase rates to keep the tax cut you should be getting in the future, by tacking on some new fee. Memo to cable companies: Nobody really likes you. Don't make it worse by helping the state keep our money. And don't cheat us out of our tax cut. There are alternatives, as you know. UPDATE: Why did cable industry sue to stop the illegal tax if they don't want to return the money to customers and cut their rate? Oh. Never mind. Why don't people like cable companies such as Comcast? Because they pull stunts like this. [Hat tip: Instapundit] CORRECTION Jan. 30, 2004: Editor's note: This is too important to be left only as a response to a commenter below. Bloggers should correct their errors within the body of the errant post and so I shall: I completely misread the Knoxville newspaper's story and, in my head, morphed the ISPs in the story into cable companies. That's what I get for writing and posting late at night w/out benefit of coffee. The story does NOT indicate the big cable companies are going to try to stiff customers by keeping the refunded tax money (though I wouldn't be surprised if at least one of them did). The story talks about the difficulties the state's refund process is creating for small Independent Service Providers. My only question now is why does the ISP operator in the story claim he'll have to raise prices to reflect some other tax now that he no longer has to collect the illegal tax? I've seen nothing from the state that indicates they're levying a new tax to replace the illegal tax. What I am missing? But Jason, the commenter below, is right - it is wrong of the state to have created a difficult process for refunding the illegally collected tax money to consumers. The state knows which ISPs and cable companies paid the tax, and how much - down to the last penny - that they paid. It could, tomorrow, cut checks to refund the money to the companies, which could then refund customers on their next bill - or mail checks to former customers. It is the state that is trying to hang on to millions of dollars of revenue from an illegal tax, by shifting the burden of the refund process to the ISPs. That's wrong. Comments
Bill- I'm trying to find where the knoxnews.com article references a specific cable company... or any cable company for that matter. I see lots of mention of internet service providers, and mention of specific internet service providers who are not a cable company. While some cable companies certainly provide internet service, lots of internet service providers do not provide cable television. I think your stroke needs to broaden a little and your complaints levied against all ISPs. It really sucks that the state, which levied the illegal tax, is making customers ask the ISPs for their refunds. This makes it sound like the ISP kept the tax revenue. This can't be true, can it? This puts the ISP in a bad spot. It forces the ISP to comply with govt regs and pay other taxes levied to cover the previous revenue stream supplied by ISP customers. Econ 101: When a business incurs higher costs; the costs will be passed onto the customer and hence your new fees. In your previous post on this subject - 'Tennessee Ends Illegal ISP Tax' - you make mention that "the state doesn't really want to give the money back, so they're making it difficult for you to get it. You have to ask your Internet service provider for the money, and then they have to ask the state." Seems that you should be more upset with the state than the ISPs. I wonder if the ISPs wanted the tax to be levied in the first place? I guess what I'm trying to ask is: Why are you so upset with *only* cable companies when the issue is about internet service providers and how the state levied the illegal tax on them and thier customers and is now asking ISPs to do the state's time consuming and expensive leg work to return the money? Am I missing something here? Posted by: Jason at January 30, 2004 3:01 AMOops. I completely misread the Knoxville newspaper's story and, in my head, morphed the ISPs in the story into cable companies. Jason is right. I'm going to add a rather contrite update/editors note to the post. That's what I get for writing and posting late at night w/out benefit of coffee. My only question at this point is, why does the ISP operator in the story claim he'll have to raise prices to reflect some other tax now that he no longer has to collect the illegal tax? I've seen nothing from the state that indicates they're levying a new tax to replace the illegal tax. But Jason is right - it is wrong of the state to have created a difficult process for refunding the illegally collected tax money to consumers. The state knows which ISPs and cable companies paid the tax, and how much - down to the last penny - that they paid. It could, tomorrow, cut checks to refund the money to the companies, which could then refund customers on their next bill - or mail checks to former customers. Posted by: Bill at January 30, 2004 5:51 AMCoincidentally, I heard on a local radio station that Comcast (who charges different fees in TN based on location) is going to standardize fees across the state. The effect: an average 5% increase to all cable subscribers. Posted by: SayUncle at January 30, 2004 8:50 AMIn the knoxnews.com article it says: "they(the ISPs) will now be required, for the first time, to pay sales tax on the telecommunications services they buy to provide Internet connections to customers." and "Previously, Internet providers could buy telecommunications services sales-tax-free if they passed them onto customers who paid sales tax. With customers not paying sales taxes, providers will be required to pay sales tax on the telecommunications services themselves. "We'll have to increase cost to match the amount that they would have paid," said Steve Siopsis, systems engineer for the Knoxville-based Internet service provider Virtual Interactive Center. But, he added, "It's not going to look like an increase because it's the same amount (as the bill with tax)." Bryson said he may also raise prices because he'll now be adding $20,000 in telecommunications tax to his expenses rather than simply collecting sales tax from customers." It looks like a messy situation. The state is definitely trying to make up for the lost tax revenue by charging the ISPs sales tax on telecom services. I'm not sure of TN tax laws, but I wonder how this sales tax on the business is more legal than the sales tax on the customer??? The refund process seems entirely unfair. Asking private business ISPs to refund hundreds of thousands of dollars using their own money up front and then begging the state to pay back-taxes to the ISP to cover these costs could bankrupt any business. This would not seem to contribute to a business friendly climate. I wish you luck in trying to recoup the back-taxes. You're going to need it. Look at the bright side though; at least you're not knee deep in a state income tax form... unlike most of us. Keep up the excellent posting; I look forward to reading your blog daily. Regards. Posted by: Jason at January 30, 2004 1:43 PMSo somebody (Hobbs?) could do us all a service by publishing how much that tax would have been each month for the common home subscriber to Comcast. Then we could add up our months without finding our bills. I'll bet when all is said and done less than 30% of this money is reclaimed from the state. Surely we all used the same service and paid the same amounts? Posted by: Keith Murgatroyd at May 30, 2004 2:16 PMPost a comment
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