New Jersey imposes a per unit basis gross receipts tax on the intrastate receipts of LECs. Pennsylvania imposes a 5 percent tax on the receipts of all providers of intrastate services. As for other major states, California, Illinois, Michigan and Texas do not impose gross receipts taxes. Florida imposes a 2.5 percent gross receipts tax on intrastate, interstate and international services. Ohio's 4.75 percent tax applies only to the receipts of LECs.
Most states impose sales or excise taxes on sales of telecommunications services.
In New York, a maximum combined state and local sales tax rate of 8.5 percent applies, but only on intrastate receipts. All of New York's neighboring states impose these taxes on intrastate, interstate and international services, except for Vermont which exempts all telecommunications services. California exempts all telecommunications services from its sales tax. Michigan imposes a 6 percent tax on intrastate and interstate, but not international, services. As few states impose gross receipts taxes on interstate and international services, it is instructive to review the tax treatment of these services under similar taxes, many of which apply to interstate and international services.