U.S. rejects Net phone call tax

The Treasury Department said it doesn’t plan to tax telephone calls made over the Internet after a lawmaker asked for a clarification of a notice the government issued last week.
The Treasury Department and Internal Revenue Service said Friday the government will seek comment from telecommunications companies on whether telephone tax regulations first developed in 1965 need updating to keep pace with technological advances.

“Nothing in the notice said anything about taxing” the technology known as voice over Internet protocol, or VOIP, Treasury Department spokeswoman Tara Bradshaw said.

California Representative Christopher Cox, a Republican who leads the House Energy and Commerce Committee, yesterday sent a letter to President George W. Bush urging him to “direct the IRS immediately to affirm” that a tax on telephone calls does not apply to those placed over the Internet.

Jeff Pulver, chief executive of pulver.com, which operates Free World Dialup, a voice-over-the-Internet service, said he was pleased by the government’s clarification and said it ratifies an earlier ruling by the Federal Communications Commission that traditional telephone rules don’t apply to his industry.

“The IRS needs to get a grip about how VOIP technology is evolving,” he said.

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