EarthLink yields to Net taxes
The ISP says it will stop picking up the tax bill for subscribers, meaning customers in some states will wind up paying more for dial-up and broadband Internet access.
The taxes will affect dial-up users in states that are not subject to the Internet Tax Freedom Act--namely New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas and Wisconsin. States that have approved the act exempt users from paying taxes for most Internet access and transactions.
Additional fees will vary, depending on local and state tax rates, and range from zero percent in some parts of Ohio to as much as 10 percent in some parts of North Dakota. At the high end, that adds up to taxes of about $2.20 a month for an unlimited dial-up service and about $1.50 per month on average.
The policy changes will carry over to all DSL subscribers in the form of universal service fund recovery charges. As are dial-up services, telecommunications company-served EarthLink DSL services will now be accompanied by additional charges that will vary by state.
Many states, including California, tax home DSL at a rate of 66 cents per month, while the most expensive state, Illinois, charges an additional $5.30 a month. Businesses face different rates for DSL usage, ranging from 2.07 percent in California to 18.37 percent in Florida.
EarthLink offers a range of service packages for business DSL depending on speed, from $129 a month for 144kbps service to $399 a month for 1.5mbps service. At Florida rates, that would result in additional taxes of between $24.50 and $73.50 a month.
Until now, EarthLink has been incurring these fees per customer.
"We see that the industry as a whole has started to change their policies regarding these taxes," said EarthLink spokesman David Blumenthal. "Since we've been absorbing them up to now, we made the decision...that we'd now include them on customer invoices."
EarthLink is not the only Internet service provider to force consumers to foot its taxes. AOL Time Warner's America Online unit has practiced a similar policy for more than a year, according to a company representative.