Telecommunications Taxes, Surcharges, and Fees.

It's complicated.

Like others in the industry, Phone.com must bill customers under the laws and regulations set in place by tax authorities and regulatory agencies, including federal, state, and local regulators. These jurisdictions and agencies assess taxes, fees, and surcharges for telecommunications-related services and programs that solution providers, including Phone.com, are obligated to collect from customers and remit to these agencies. There are also some surcharges that telephone-related services providers are permitted, but not required to pass through to customers.

The following information provides a representative sample of the most typical federal, state, and local taxes, fees, and surcharges imposed upon Phone.com by government agencies and regulators in the United States. This article is not intended to cover every tax situation, but to provide a broad overview of the types of additional taxes and fees you can expect to see on your Phone.com bill.

Taxes and fees that impact the telecommunications industry are frequently adjusted and subject to change without notice. If new or different taxes, surcharges, or fees are imposed on Phone.com, we will include those adjustments in applicable billings.

Detailed information is available on the Federal Communications Commission (FCC) website.

 

Federal Taxes and Surcharges

Federal Universal Service Fund (USF) Fee

The Federal Universal Service Fund (USF) fee is a surcharge that resulted from the Telecommunications Act of 1996. In 2006 it was amended to apply to VoIP service providers. The contribution requirements are imposed on service providers, but the FCC does not prohibit a customer surcharge that is used to recover Phone.com’s costs of contributing to the FCC program. Phone.com is not permitted to recover more than its expenses through this surcharge and can only assess surcharges up to its breakeven point.

More information is available on the FCC Universal Service website.

Federal Cost Recovery Charge

The Federal Cost Recovery Charge is assessed to recover amounts remitted by Phone.com to support the Telecommunications Relay Service (TRS). The TRS is used to help pay for relay services that transmit and translate calls for people with hearing or speech disabilities.

Regulatory Recovery Fee

The Regulatory Recovery Fee is a monthly per-phone number charge. A portion of the Regulatory Recovery Fee offsets certain costs Phone.com incurs in complying with its regulatory obligations including without limitation upkeep of our E911 systems,  legal, regulatory, administrative, and other requirements including federal, state, and local reporting and filing requirements, and costs that Phone.com incurs by reporting and managing payments to third party telecommunications services providers. The Regulatory Recovery Fee is not a government-mandated fee or tax.

 

State and Local Taxes, Fees, and Surcharges

Phone.com collects and remits a variety of state and local taxes, fees, and surcharges levied on telephone and VoIP providers for the sale of information technology goods and services. These taxes and fees vary by location and include, but are not necessarily limited to the taxes, fees, and surcharges listed below.

E911 (Electronic 911) Taxes and Fees 

Also known as the Emergency Telephone Users Surcharge. This tax can be imposed at the State, County, or local levels to fund E911 Emergency Services.

Lifeline 

Also known as State Universal Service or State Universal Lifeline Surcharges. As with the Federal Universal Service Fund, this charge is assessed by several states. The revenue from this charge helps support services to low-income customers, customers with communication disabilities, and customers who reside in an area that is underserved by small or rural telecom providers because the costs of providing service are too high. The rate varies from state to state.

Public Utility Commission (PUC) Tax/Reimbursement Fee

The PUC tax/fee is a charge imposed on users of regulated services, such as telecommunications, which finances the state regulatory body’s operational costs.

Telecommunications Relay Service (TRS) Surcharge

Also known by other names, including “Relay Services & Comm. Devices Fund,” this surcharge is imposed on telecommunications providers and can be passed on to customers to provide telecommunications relay services.

High-Cost Fund Surcharge 

This surcharge is imposed on telecommunications providers and may be passed on to customers to provide telecommunications services in high-cost areas.

Utility Users Tax 

This is a tax imposed on the consumer for using a utility (telecommunications) service. The tax is generally assessed as a percentage of the amount billed to each customer for the service.

Municipal Franchise Fee 

The municipal franchise fee, sometimes called a “Right-of- Way” fee, is a monthly charge levied by local jurisdictions and paid by the customer to help recover the costs associated with providing telephone service, including installation of outside telephone wires, underground conduit, and telephone poles. This fee varies by location and is frequently based upon an agreement between the local jurisdiction and Phone.com or upon local or state law.

Business and Occupation Taxes 

This tax is levied on a company for the privilege of doing business in the jurisdiction. Business and Occupation taxes are typically imposed on the telecommunications provider. Some states allow telecommunications providers to pass these taxes on to the customer and identify them as a tax or a surcharge.

Statutory Gross Receipts Tax

This is a tax on the privilege of doing business in the state measured by gross receipts received from business conducted in the state. This tax is typically imposed on telecommunications providers; however, some states allow providers to pass the tax on to the customer as in the cases of NY and PA. It’s common to have localities impose a local Gross Receipts Tax, such as in the case of New York City and many cities throughout Utah.

License Tax

This is a tax levied on the service provider to solicit and conduct business in a jurisdiction. Generally, a license tax is a flat annual fee, but in some cases, it is based on gross receipts.

Service Tax 

This is a tax imposed on the privilege of making sales of services.

Sales Taxes and District Tax

These are taxes imposed on the privilege of making sales within a state or a special district (e.g., a rapid transit authority, school district, development zone, etc.).

Deaf Tax Surcharge 

This is a surcharge imposed on telecommunications providers that may be passed on to customers to provide telecommunications service to hearing and speech-impaired individuals.

Poison Control Surcharge

This is a surcharge imposed on telecommunications providers that may be passed on to customers to provide funding for Poison Control Centers.

State and Local Excise Tax 

Excise tax is levied on payments received for the privilege of sending or receiving telecommunications messages.

Communications Tax 

This is a tax imposed on telecommunication services in many states, including FL and VA.

More information about the taxes, fees, and surcharges relevant to your location can be found on your state, or municipality website.

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