Telecom Tax Blog

Communications Tax Compliance: An Overview

Posted on Tue, Jun 13, 2017 @ 03:02 PM

Over the years, we’ve spoken with thousands of companies of all sizes that are looking to sell communications services. The common thread to these conversations is that everyone agrees that communications services are heavily taxed and tax compliance is complex.

Indeed, communications services are the most heavily taxed item on the planet – but why? Because everyone uses communications services – there are now more mobile phones on the planet than there are people – and the taxes are easy to collect. Communications taxes have been used to fund wars, provide rescue service, install rail lines, move overhead lines underground and seemingly everything in between.

Communications tax began in 1898 to fund the Spanish-American War. In the nearly 120 years that have followed, communications taxes are found across more than 12,000 jurisdictions in North America and cover every conceivable type of communication. If a tax authority wants to raise revenue, a communications tax is an effective fund raiser.

Success and pervasiveness has led to complexity. There are thousands of taxing authorities at the federal, state, and local level with varying different tax rates, impositions, methodologies, registration and filing requirements, and all within certain jurisdictional boundaries. That is a lot information to track. Then, consider any element can change – even the jurisdictional boundaries – and the complexity is staggering.

With the complexity and amounts involved, communications tax compliance is not a matter to take lightly. Missteps can result in penalties, interest and tax expenses that can drain your profits, undo years of revenue collection and undermine the value of your business.

Although the process of communications tax compliance may be complex, the concept of tax compliance itself is simple – taxing authorities require that you collect and remit taxes and fees in exchange for the privilege of providing goods and services to their citizens. Even though the process of compliance may be complex, remember that between you and the taxing authorities are solution providers that make the complexity manageable. For example, Wolters Kluwer has a partner ecosystem that can help with any of the components of the process so that you can operate in compliance.

In this blog series, we’ll reduce the mystery of communications tax compliance into four steps:

  • Registration with taxing authorities
  • Calculation of taxes due
  • Invoicing customers for taxes due
  • Reporting and remitting funds for the taxes owed

We will walk you through each of the steps, so that you can start in compliance and remain in compliance, leaving you to focus your time, energy and resources away from tax compliance and onto your business.

Wolters Kluwer can help guide you through the complex maze of communications tax compliance. Their flagship communications tax solution, CCH® SureTax® Communications, makes tax calculation easy and with their network of partners, they make the other steps of communications tax compliance simple as well.

To learn more about communications tax compliance, download our free guide, 4 Steps to Communications Tax Compliance.


Tags: communications tax

Communications Tax Compliance: Tax Calculation

Posted on Tue, May 9, 2017 @ 03:27 PM

Communications tax compliance is complex. More specifically, to reuse a line from Warren Buffet, communications tax looks complex, and it is complex, but it’s not as complex as it looks.

Communications tax compliance looks less complex when you break it down into the four major processes. In this post, we’ll look at an incredibly complex component of communications tax compliance – tax calculation.

Not to worry, although the tax calculations may be complex, implementing a tax calculation solution complex is fairly simple.

To begin, communications services will be taxed, to some extent, in almost every state. These taxes may include sales tax, communications services tax, gross receipts tax, business and occupation tax, and utility users tax. Also, each service you provide may have a different tax treatment in each state. To calculate the tax consequences of a transaction, you need to know the applicable tax jurisdictions for the transaction (nexus determination), the taxability of the item sold, the rates and tax rules that apply to the transaction and the quantity and dollar amount of the item sold.

For audit protection, you should maintain an audit trail of the calculation.

Communications tax calculation can be a difficult task. There are over 12,000 different tax authorities, each with potentially different tax rates and rules for any given communications service. In addition, with the potential for periodic tax changes, the task of tax calculation and tracking becomes so difficult that it needs automation to be performed and managed properly.

An automated tax calculation solution consists of four basic components:

  1. Data input/output function for communicating with the billing system
  2. A tax research database that contains all of the current taxability information rates and rules for the communications services you will be selling
  3. A calculation engine that applies the tax research data to determine the tax consequences of your transactions
  4. A reporting system that provides information for reporting tax liabilities to the proper authorities

At the heart of the tax calculation solution is tax data. Tax data originates with tax research which is compiled from the various tax authorities and then categorized. Without current, quality tax data, the system cannot properly determine tax consequences.

CCH® SureTax® Communications makes tax calculation easy. CCH SureTax Communications is the tax calculation solution designed specifically for the unique needs of the communications industry. CCH SureTax Communications combines communications tax research with communications tax rules to generate the tax calculations and reports that you need to maintain tax compliance.

Tax calculations are driven by tax research data from Wolters Kluwer, the source of the most complete, up-to-date research data available in the communications industry, with tax applicability data and rules covering the more than 12,000 jurisdictions in the U.S., its territories and Canada.

At Wolters Kluwer, we can help guide you through the maze of communications tax compliance. CCH SureTax Communications makes tax calculation easy and with our network of partners, we make the other steps of communications tax compliance easy as well.

To learn more about communications tax compliance, download our free guide, 4 Steps to Communications Tax Compliance.


Tags: communications tax

The Five Best and Five Worst States for Starting a Telecom Solutions Provider Business

Posted on Mon, Sep 16, 2013 @ 01:00 PM

Are you thinking of becoming a solutions provider?  If so, what are the Five Best States for starting a technology business?  What are the Five Worst?

CRN published an interesting article that looked at a broad range of criteria.  Here are the lists and brief explanations.  But, no matter where you start your business, SureTax can deliver your telecom tax solution, including VAT calculations for over 200 countries.

Top Five

#1 Utah.  Tech savvy and very pro-business.
#2 Virginia.  Low taxes, limited regulations, sizable pool of educated workers and a virtually recession-proof economy.
#3. Colorado
#4. Washington
#5. Maryland

Bottom Five

#50.  West Virginia.  Limited pool of IT educated workers and very limited business opportunities.
#49.  Hawaii.  High labor costs and business expenses, taxes and regulatory environment, and business opportunity.
#48. Wyoming
#47. Arkansas
#46. Mississippi

Tags: telecom tax, voip tax, telecom taxes, telecommunications taxes, voip taxes, VAT tax, cloud computing

Telecom Tax Webinars - Now Available on our Webinar Channel

Posted on Wed, Apr 24, 2013 @ 11:15 AM

Webinars - what a great forum for discussing telecom tax.

Lately, we've reached out to many of you in the telecom tax community through the webinars we have conducted with our partners.  It's a great two way exchange of information.  We enjoy the opportunity to present our solutions and we also appreciate the thoughtful questions we receive during the webinar. 

To share our webinars with more in the community, we've created a webinar channel where you can watch our webinars on demand.  Our two most recent webinars are available:

We look forward to posting more webinars going forward.


COMPTEL Opposes USTelecom Petition on Switched Access Services

Posted on Tue, Feb 26, 2013 @ 06:00 AM

Yesterday, COMPTEL filed comments opposing USTelecom's petition for a declaratory ruling that incumbent local exchange carriers are non-dominant in the provision of residential and business switched access services.

With the adoption of VoIP and wireless services, incumbent local exchange carriers are asking to be relieved of their dominant carrier duties. This is significant because dominant-carriers have regulatory requirements regarding pricing, tariff filings and market entry and exit that are not applied to their competitors.

In its comments, COMPTEL noted several reasons why this petition should be denied. First, USTelecom readily admits that ILECs continue to have market power and remain dominant in the switched access market.

"As a result, the existence of the ILECs' market power and dominance is neither uncertain nor a matter of controversy. For this reason alone the Commission should deny USTelecom's Petition," COMPTEL stated. COMPTEL also noted that the future of end user switched access regulation is the subject of a Further Notice of Proposed Rulemaking in the Intercarrier Compensation/USF proceeding, and should be addressed there, rather than in a declaratory ruling proceeding. Finally, in an attempt to demonstrate the competitiveness of the market, USTelecom only submitted information about the retail market for voice services. Carrier's carrier switched access service is not a retail service, however, and IXCs do not have competitive alternatives to the switched access service provided by the ILECs that serve their customers, making allegations about the competitiveness of the retail voice market irrelevant to any determination of the ILECs' continued dominance in the switched access market.  
To see COMPTEL's full comments, visit the COMPTEL website.

Telecom Growth: Rethinking The Phone Call

Posted on Thu, Feb 21, 2013 @ 10:57 AM

Everyone was impressed as Siri changed the way we thought about "talking" on the phone. But, what if talking on the phone was taken to its full potential?

Ericsson recently uncovered its new communication technology, the IMS Innovation Platform, a "Web Real Time Communications" or WebRTC interface that is designed to reshape the consumer-enterprise habitat. This new platform is expected to make a high impact on communication services where new communication paradigms can be derived and better mobile service can be expected. WebRTC will enable developers to produce exceptionally creative applications that are not limited by their respective technology platforms.

"Developers will take the concept of the existing phone call, see it as a digital stream and innovate accordingly. Reading, transcribing, contextualizing, translating, on any connected device, using people's existing phone number - all are just the beginnings of possibility," said Geoff Hollingworth, head of Business Innovation, Ericsson North America.

At SureTax, we're excited about the possibilities...and look forward to providing solutions for the tax ramifications.

Unified Communications Revenue Tops $2 Billion

Posted on Mon, Feb 11, 2013 @ 06:33 PM

Unified Communications services is a hot segment of the telecom market.

New data from Synergy Research Group shows that annual service provider revenues from cloud UC services have now topped $2 billion. While today 75% of the cloud UC services market is for individual services – web conferencing, videoconferencing and contact center – the smaller UCaaS business suite market segment is growing more than twice as fast and will soon dominate.

Today the UC standalone SaaS segment is dominated by Cisco, thanks to it having a 54% share of the web conferencing SaaS market – though its market share is edging downwards. The main challengers in UC standalone SaaS include Citrix, Microsoft, Adobe and Intercall, Meanwhile leaders in the higher growth UCaaS business suite segment are mainly up-and-coming new operators – including RingCentral, 8×8, ShoreTel/M5 and West IP Communications. It is notable that traditional telcos have not led the charge in either segment, though companies like AT&T, Verizon and BT are now becoming increasingly active.

If you are thinking about getting into Unified Communications, SureTax® Telecom can handle any communications tax calculation, including Unified Communications.  With our partners, we can help new and existing providers with regulatory, calculation and compliance solutions.

Tags: telecom tax, telecom taxes, telecommunications tax, ucaas

Machine 2 Machine Telecom, Telecom Tax and Bananas

Posted on Fri, Feb 8, 2013 @ 09:57 AM

The SureTax® team just returned from the IT Expo East conference where is it clear that telecom continues to be a growth industry.

Among the takeaways from the conference was the enormous explosion of the M2M (machine to machine) market.   Just when you thought the telecom market could not get any more diverse, enter the banana monitoring devices.  Yes, that is right - banana monitors. 

Apparently bananas are one of the most profitable items in a grocery store, but with the shortest shelf life.  So, one ingenious company has developed a monitor to track the stage of ripening on the tree.  That information is transmitted to logistics where the process between harvesting, packing, shipping and stocking is timed precisely to maximize the amount of shelf life the bananas have in the store. 

This was just one of many examples of telephony enabled devices (in this case wireless network) that are rapidly entering our day to day activities.  Rest assured that as these new telecom markets grow, governments will be right behind them, ready to capture new tax revenues.

CCH SureTax is leading the way in research and knowledge for emerging telecom markets such as M2M.  As the universe of tax changes, we are here to help.

Tags: telecom taxes, telecommunications taxes, telecommunications tax, machine 2 machine, m2m

Telecom Tax Avoidance and "Qui Tam"

Posted on Wed, Jan 9, 2013 @ 11:11 AM

At SureTax®, our services support telecom tax calculation for the purpose of compliance.  The notion being that if a company does not comply with tax laws, they are subject to fines and penalties.

But, what if a company cheats - doesn’t pay taxes - and is caught by a whistleblower?  Then what happens?

There is a provision in common law call called qui tam, which is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitu, meaning ‘he who sues in this matter for the king as for himself’.  It’s a principle that is still alive in US law and it means that whistleblowers can earn some or all of the collections of a case presented on behalf of the government.

Earlier this year, a whistleblower brought a qui tam case in New York under the state’s False Claims ActNew York attorney general Eric Schneiderman intervened in that case against a national wireless provider for deliberately under-collecting and under-paying $100 million dollars in sales taxes on wireless access plans.

But, what about the federal tax?  Why not bring a qui tam case there also?

A loophole in federal law prohibits whistleblowers from bringing qui tam cases.  The IRS has a whistleblower office, where whistleblowers can go to file a complaint.  But, if the IRS decides not to take the case, it’s over and the whistleblower has no qui tam option.

In New York, the defendant must have at least $1 million in sales and must have deprived the state of at least $350,000 in revenue.

Maybe Congress needs to take a look at New York to figure out how to increase collections.  A federal qui tam law could do for tax fraud what nickel return deposits did for aluminum can recycling.


Tags: telecom tax, voip tax, telecom taxes, telecommunications taxes, telecommunications tax, ucaas, tax calculation, voip taxes, VAT tax

Georgia to Require Online Retailers to Collect and Remit Sales Tax

Posted on Wed, Jan 2, 2013 @ 11:21 AM

We offer SureTax® eCommerce, a cloud based, real-time ecommerce tax calculation solution - so we keep an interested eye on the latest state "Amazon Tax" laws.

In an effort to collect tax from online retailers, states continue to pass Amazon Laws.  Georgia, our home state, is now requiring online retailers to collect and report sales tax.  Georgia's new Amazon Law went into effect Jan. 1 and affects online stores that don’t have a store or a warehouse in the state, but use ads on Georgia-based websites as a gateway to their own sites.

This law is targeted towards Amazon and others.  Amazon is expect to pull ads from sites that meet this requirement.

With an increasing number of Amazon Laws in place, and the Main Street/Marketplace Fairness Acts on the horizon, online retailers should have a strategy in place for calculating, collecting and remitting sales tax. 
Contact us if you need help developing your online sales tax compliance solution.

You can read more here: Atlanta-Journal Constitution.

Tags: tax calculation, ecommerce, Sales tax, Amazon Laws

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