                                 CODE OF VIRGINIA

IMPOSITION OF SALES TAX; EXEMPTIONS (§ 58.1-648)

A. Beginning January 1, 2007, there is levied and imposed, in addition to all
other taxes and fees of every kind imposed by law, a sales or use tax on the
customers of communications services in the amount of 5% of the sales price of
each communications service that is sourced to the Commonwealth in accordance
with &#xA7; 58.1-649.

B. The sales price on which the tax is levied shall not include charges for any
of the following: (i) an excise, sales, or similar tax levied by the United
States or any state or local government on the purchase, sale, use, or
consumption of any communications service that is permitted or required to be
added to the sales price of such service, if the tax is stated separately; (ii)
a fee or assessment levied by the United States or any state or local
government, including but not limited to, regulatory fees and emergency
telephone surcharges, that is required to be added to the price of service if
the fee or assessment is separately stated; (iii) coin-operated communications
services; (iv) sale or recharge of a prepaid calling service; (v) provision of
air-to-ground radiotelephone services, as that term is defined in 47 C.F.R.
&#xA7; 22.99; (vi) a communications services provider&#8217;s internal use of
communications services in connection with its business of providing
communications services; (vii) charges for property or other services that are
not part of the sale of communications services, if the charges are stated
separately from the charges for communications services; (viii) sales for
resale; (ix) charges for communications services to the Commonwealth, any
political subdivision of the Commonwealth, and the federal government and any
agency or instrumentality of the federal government; and (x) charges for
communications services to any customers on any federal military bases or
installations when a franchise fee or similar fee for access is payable to the
federal government, or any agency or instrumentality thereof, with respect to
the same communications services.

C. Communications services on which the tax is hereby levied shall not include
the following: (i) information services; (ii) installation or maintenance of
wiring or equipment on a customer&#8217;s premises; (iii) the sale or rental of
tangible personal property; (iv) the sale of advertising, including but not
limited to, directory advertising; (v) bad check charges; (vi) billing and
collection services; (vii) Internet access service, electronic mail service,
electronic bulletin board service, or similar services that are incidental to
Internet access, such as voice-capable e-mail or instant messaging; (viii)
digital products delivered electronically, such as software, downloaded music,
ring tones, and reading materials; and (ix) over-the-air radio and television
service broadcast without charge by an entity licensed for such purposes by the
Federal Communications Commission. Also, those entities exempt from the tax
imposed in accordance with the provisions of Article 4 (&#xA7; 58.1-3812 et
seq.) of Chapter 38 of Title 58.1, in effect on January 1, 2006, shall continue
to be exempt from the tax imposed in accordance with the provisions of this
chapter.

HISTORY: 2006, c. 780; 2007, c. 811.