Delaware General Assembly

AN ACT TO AMEND TITLE 30, CHAPTER 55 OF THE DELAWARE CODE RELATING TO PUBLIC UTILITIES TAXES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

Section 1. Amend § 5501(6) (b) of Title 30 of the Delaware Code by striking the phrase “as defined in § 1104(5) of the Internet Tax Freedom Act, Pub. L. 105-227, 47 U. S. C. § 151 note (1998), as in effect on March 29, 2002”.

Section 2. Amend § 5501 of Title 30 of the Delaware Code by inserting a new subsection (7) to read as follows and renumbering existing subsection (7) as subsection (8):

“(7) ‘Internet access’ means the provision of a computer and communication service through which a customer using a computer and a modem or other communications device may access content, information, electronic mail or other services offered over the Internet and may also include access to proprietary content, information, and other services as part of a package of services offered to users; the term ‘Internet access’ does not include any services defined in subsection (1)(a)(iii) and (iv) of this Section, except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access.”.

Section 3. Amend subsection (a) of § 5502 of Title 30 of the Delaware Code by inserting the phrase “excluding any charges for Internet access as defined in § 5501(7) of this Chapter” at the end of the sentence.

Section 4. Amend subsection (b) (4) of § 5502 of Title 30 of the Delaware Code by inserting the phrase “excluding any charges for Internet access as defined in § 5501(7) of this Chapter” at the end of the sentence.

“(d) The tax imposed by subsections (a) and (b) (4) of this Section applies to a ‘bundled transaction’ as follows:

(1) The term ‘bundled transaction’ means a transaction consisting of distinct and identifiable commodities or services which are sold for a single non-itemized sales price but which are treated differently for tax purposes.

(2) If the sales price is attributable to commodities or services that are taxable and commodities or services that are nontaxable, the portion of the sales price attributable to the nontaxable commodities or services shall be subject to tax unless the provider reasonably identifies and allocates such portion from its books and records kept in the regular course of business.

(3) If the sales price is attributable to commodities or services that are taxable at different rates, the total sales price shall be treated as attributable to the commodities or services taxable at the highest rate unless the selling provider reasonably identifies and allocates the portion of the sales price attributable to the commodities or services taxable at a lower rate from its books and records kept in the regular course of business.

(e) Nothing herein shall be construed to affect the imposition of tax on a charge for voice or similar service utilizing Internet Protocol or any successor protocol. This Section shall not apply to any services that are incidental to Internet access, such as voice-capable e-mail or instant messaging.”.

Approved February 7, 2005