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Telecom taxes and fees: Is it a sin to make a phone call?

Unfortunately, the new year does not hold much hope for reversing the disturbing trend of increasing federal, state and local taxes and surcharges that are applied to telecommunications services. It’s not unusual for enterprise customers to pay an additional 25-30 percent on their bill, depending on the types and locations of services purchased. The worst of these offenders is the Federal Universal Service Fund (FUSF) charge, which is administered through the FCC and applied by telecom carriers to interstate and international service charges, and is now almost 18 percent. The FCC is expected to review the FUSF contribution requirements this year, but may try to expand FUSF contributions to include broadband connections (Internet access), which are currently not subject to the charge. These would lower the percentage rate, but will likely not decrease total payments.

Thousands of state, county and local governments are faced with tightening budgets and decreasing revenue sources. These taxing authorities set their sights on telecommunications transactions to help replenish their coffers. In many jurisdictions, the idea of “updating” telecom taxes generally means revising existing statutes to include new technologies and services, such as Voice over Internet Protocol (VOIP) or prepaid wireless. For years, carriers have tried to get a national, uniform tax policy for telecom, but to no avail.

These taxes may be referred to on your invoice as sales taxes, gross receipts taxes, 911 fees, or communications services taxes. There may also be line items for regulatory administrative fees or property tax fees, which are imposed by some carriers but not required to be collected by any government agency.

Enterprise customers should closely review their telecom invoices to determine if the myriad of taxes and fees are accurately applied and consistent with their telecom contracts.

In the old days, tax policy was used to influence behavior. So if society didn’t want people to drink, smoke or drive their cars, high taxes were imposed on alcohol, cigarettes and gasoline. So, when did it become a sin to make a phone call?

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