Pursuant to Chapter 2 of the Laws of 1995, only companies principally engaged in a local telephone business are subject to the Section 184 tax. Several recent legislative proposals have included Article 9 rate reductions. The preliminary report contains an extensive discussion of the taxes imposed on telecommunications providers in neighboring and other major states. It is important to consider each of these taxes when examining state tax policy toward telecommunications providers. The most common state tax regime for these companies is a combination of a corporate net income tax and a sales tax on intrastate, interstate and international services.
Most states impose corporate income taxes on the net income of telecommunications providers.
All neighboring states impose these taxes on most, if not all, providers. The same holds true for the other major states shown in the table. As previously noted, a dwindling number of states impose gross receipts taxes on telecommunications providers. Few of New York's neighboring states impose these taxes. New Jersey imposes a per unit basis gross receipts tax on the intrastate receipts of LECs.