Telecom Tax Blog

    Three Common Mistakes Made By VoIP Providers. Part 3 of 3.

    Posted on Mon, Oct 1, 2012 @ 05:01 PM

    Mistake #3: Not representing the proper taxes and fees on the bill.

    The VoIP world got off to a crazy start with offers flying all over the country for unlimited service for a low flat monthly fee. All the service providers were taking the stance that “hey, its internet, it isn’t taxable” so needless to say thousands of new companies were launched with little to no regard for taxation compliance.

    As always, the regulatory agencies were slow to catch up, but as they always do when tax dollars are on the table, they caught up.  Now VoIP providers all over the country are scrambling to understand the tax they should and should not collect based on the type of service they are and how it is billed and delivered.

    However,  while many are catching on that tax is something they should be collecting, the question becomes what taxes?  Along with that question is how do I represent those taxes on the bill?

    As Talk America discovered in 2006, not properly representing the taxes on the bill can be as bad as not collecting them at all.  The FTC is extremely diligent in protecting consumers from what they perceive as being false or misleading statements.

    So what do we do?  Well here is a quick reference list of some things you need to be sure you get right:

    • Understand the difference between provider based taxes, and consumer based taxes. 
    • Understand which of these taxes are pass-through taxes, which are not pass-through taxes and which are optional to be passed through to the consumer.
    • Make sure that you call a fee a fee and not a tax.
    • Make sure you call a surcharge a surcharge and not a tax. 
    • Make sure that you write out the exact nomenclature that the taxing authority expects to see.  Abbreviations or modifications to the bill can cause you problems.

    Nothing prevents a carrier or service provider from charging to recover costs or overhead, but improperly implying that those fees are somehow mandated by the government will get you in more trouble than it is worth.

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    Tags: telecom tax, voip tax, telecom taxes, voip taxes

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