DOR Informational Letter Regarding DSL Fees

The Missouri Department of Revenue has released an informational letter regarding the application of sales tax to DSL fees.

In the information letter, the Department states Missouri will have no ability to apply sales or use taxes to DSL services, effective June 30, 2008. For a copy of the informational letter, please click here.

This action was a result of federal legislation. The Internet Tax Freedom Act of 2007 prohibited the application of sales tax after June 30, 2008, by states that taxed the telecommunications service provided with the Internet service.

The Missouri Department of Revenue has claimed Internet access fees were subject to sales and use taxes in Missouri based on an exception to the original Internet Tax Freedom Act that allowed states that already applied sales taxes to Internet access fees to continue that practice. The original Act prohibited states that were not already collecting such taxes from imposing any sales tax on Internet access fees. According to informal surveys conducted as the Internet Tax Freedom Act was originally considered by Congress, Missouri's telecommunications companies were NOT collecting sales tax on DSL fees at the time the original Act was passed; therefore, the ability of Missouri to apply sales tax to DSL services has always been questionable. At least now the federal government has erased all doubt and effective June 30, 2008, the Missouri DOR will no longer ask our telecommunications companies to collect sales and use taxes on DSL services.

The letter states questions should be directed to Roger Freudenberg, Missouri Department of Revenue, Office of General Counsel, P.O. Box 475, Jefferson City, MO 65105-0475, or you may contact by phone at (573) 751-2633.