Telecom Tax Blog

    Today's Telecom Tax Could be Tomorrow's Internet Tax

    Posted on Mon, Aug 27, 2012 @ 01:42 PM

    As followers of all things telecom tax and internet tax, we remain interested in how changes in the American telecom infrastructure become changes in our taxes, which in turn becomes changes in the types of tax that SureTax® calculates.  So, it seems logical that today's USF becomes tomorrows Universal Internet Fund.  After all, taxing communications is as American as apple pie.  But, an Internet USF Tax is not a sure thing.

    USF goes back to communications being a fundamental enabler of democracy and commerce.  From the beginning, the founders of this country envisioned a nation that was connected with communications infrastructure. The postal service connected Americans with each other (and their bill collectors!). It was subsidized using a flat fee system, so the inexpensive letters carried across town helped pay for the letters sent across the country.  The Communications Act of 1934 continued in that spirit, envisioning a system for "a rapid, efficient, nationwide, and worldwide wire and radio communication...for ALL of the people of the United States."  That notion led to the Universal Services Fund (USF).

    As telecom continues to go digital, the FCC wants to implement a new fee similar to USF, to enable broadband access to all across the country.  It makes sense that a community without broadband today would be as disadvantaged as a community without dial tone before the days of the internet.

    So, here comes the Internet USF Tax.  Seems like a done deal.  Some customers pay a little every month so that the people with difficult economics can also benefit from service.  Simple.

    No, not simple!

    In 1998, Congress passed the Internet Fairness Act, prohibiting taxation of internet access!  So, no tax.  But, wait.... is USF a tax?  The FCC says it isn't.  They say it's a fee collected by carriers.  So, if USF is simply a fee, then an Internet USF would be legal.

    Who knows what will happen?  I do know that whenever they sort this out, we'll be ready to make the calculations that keep everyone in compliance.

    You can read more here....

    http://thehill.com/blogs/hillicon-valley/technology/245479-fcc-eyes-tax-on-internet-service.

     

    suretax whitepaper cta

     

     

     

     

    http://thehill.com/blogs/hillicon-valley/technology/245479-fcc-eyes-tax-on-internet-service

    Tags: telecom tax, voip tax, i-voip tax, i-voip taxes, telecom taxes, telecommunications tax, voip taxes

    PSTN ends on 2018, at least that's the plan

    Posted on Tue, Aug 7, 2012 @ 11:01 AM

    As VoIP tax and telecom tax service providers, we find telecom to be fascinating.  It seems not that long ago when 96%+ of all Americans had a landline telephone.  In fact, if you DIDN'T have a landline phone, it was a sign that something was wrong.  It was tough to get a loan without a landline phone.

    Here are amazing stats presented by the Technology Advisory Council to the FCC.

    - By 2014, the United States will have fewer than 42M access lines

    - Access line losses were nearly 6.6 million between 2Q09 and 2Q10, a drop of 7.3%.

    - By 2014 US consumers will have 31.6 million VoIP lines accounting for 42.5% of all U.S. access lines

    - Fixed lines continue to decline; mobile is the preferred choice for voice communication

    - More than 25% of U.S. consumers aged 18 or older have already given up their voice landline for voice wireless‐only service.

    The biggest stat of all is that by 2018, only 6% of Americans are expected to have traditional landline service.  So, 2018 is expected to be the last year of the PSTN (and its tax revenue).

    Perhaps the supreme irony is that in the early days of the internet, families would get a second phone line for their modems.  Phone companies (even the term "phone company" seems archaic) saw PSTN line growth exploded.  That same desire for digital and mobile communication is leading the PSTN's demise.

    There's a moral in there somewhere....

     

    Tags: voip tax, i-voip tax, i-voip taxes, telecommunications taxes, telecommunications tax, voip taxes

    15 Amazing Worldwide Mobile Facts

    Posted on Fri, Aug 3, 2012 @ 05:33 PM

    As professionals committed to VoIP tax and telecom tax solutions, we are often amazed at how large the market for telecom truly is.  It is the one product that everyone, and I mean EVERYONE, seems to need.

     We recently received an industry report with 15 facts that quantify exactly how large this market is.  Here are three that are just amazing…

    • The global population is currently estimated at 7 billion.
    • There will be 6.5 billion mobile subscribers worldwide by end-2012
    • The worldwide mobile subscriber base will now grow at a CAGR of 7.3 percent between 2011 and 2016, to near 8.5 billion by end-2016

    It’s no wonder that worldwide; telecom is the service that jurisdictions love to tax.  With 6.5 billion units in service, just one dollar per subscriber per month would yield almost $80B in revenue worldwide.

    The other 12 facts are almost as amazing.  Plus, you can use them to impress your friends at work.

    Click here to download the 15 Worldwide Mobile Facts.

     

    Tags: voip tax, i-voip tax, i-voip taxes, telecom taxes, voip taxes

    3 Taxation Mistakes that VoIP Providers Make - Part 1

    Posted on Thu, Jun 28, 2012 @ 12:53 PM

    So, you’re a VoIP operator trying to figure out your VoIP taxes.  Confusing, isn’t it?

    It’s so confusing that many new operators decide that calculating telecom tax is just too complex (our VoIP whitepaper can help).  Some implement the “Ostrich Strategy” and stick their head in the sand - figuring that they will pay their tax once they get “big enough”.  Other operators rely on best guesses or tax advice from their general accountants and attorneys.  Either choice can be disastrous, leading to audits from any number of federal and state agencies that can put their VoIP start-up on the road to destruction before it even gains traction.

    Let me help you sort through the VoIP tax confusion.  Let’s start with the beginning.

    VoIP tax was born in 2004.  As the FCC attempted to shore up the Universal Service Fund,  it created the “IP-in–the-Middle” Order.  In that order, the Commission ruled that VoIP is a telecommunications service and thus subject to USF obligations if it is “an interexchange service that: (1) uses ordinary customer premises equipment with no enhanced functionality; (2) originates and terminates on the public switched telephone network (PSTN); and (3) undergoes no net protocol conversion and provides no enhanced functionality to end users due to the provider’s use of IP technology”. 

    Next, regulated VoIP was defined in 2005.  The FCC created a new category of regulated communications service called I-VoIP (Interconnected Voice over Internet Protocol.  I-VoIP is the standard that the legal community uses to decide which VoIP services are regulated).  The FCC defines I-VoIP with four major characteristics, and a provider must possess all four of these characteristics or it is not I-VOIP, but perhaps a VoIP Toll.  (For a detailed understanding of these characteristics, please download our VoIP whitepaper).

    Suppose you checked your VoIP offering versus the FCC’s  four characteristics and you’ve determined that you are regulated.  Now you need to figure out what "flavor" of VoIP you are offering.  

    While the FCC has defined two categories of VoIP (I-VoIP and VoIP Toll), there are still different flavors of VoIP within these categories - such as Fixed and Nomadic VoIP (details are included in the VoIP whitepaper) - and each flavor carries with it even more nuances. 

    These flavors are important.  Each VoIP nuance carries significance not only at the federal level, but also at the state level because taxation and regulation vary so much from state to state.  Some states limit their regulatory powers to E-911 and Public Safety, while others regulate through their Department of Revenue and other state taxing authorities.  The taxes that they may assess include:

    • State and Local Sales and Use Tax
    • Excise Tax
    • Gross receipts tax
    • Utility Users Tax
    • E-911 (both State and Local)
    • Local Telecommunications taxes

    If you are an I-VoIP; you must also file a Form 499-A (at a minimum), which reports your revenue data for the calculation of obligations to:

    • Federal USF
    • Federal TRS (Relay) Fund
    • North American Numbering Plan Administration
    • Shared costs of local number portability
    • FCC Regulatory Fees

    Still confused?  It’s understandable.  It’s a complex subject.

    What next?  The first step is to download our VoIP whitepaper.  Then, watch for our next two installments of this blog.  The whitepaper and blog articles will help you sort this out.   Until then, figure out what flavor of VoIP you offer. Here are some questions you should answer:

    1. Is the service fixed or nomadic?
    2. Is the service associated with static IP address or is it “over the top”?
    3. How do I source the fees, by jurisdiction of the calls or billing address?
    4. How do I represent these taxes properly to comply with Truth-in Billing?  (Hint: see blog post #3 in this series).

    If you need more immediate help, contact me.  I’m glad to talk you through issues and share my expert contacts with you.  

    Until then...stay tuned for Part Two – Tax-on-Tax..

    Click me

     

    Tags: telecom tax, voip tax, i-voip tax, i-voip taxes, telecom taxes, telecommunications taxes, telecommunications tax, voip taxes

    Schedule a Demo

    Featured Whitepaper

    SureTax Webinar

    SureTax Telecom Tax VoIP Tax Questions

    SureTax Telecom Tax