This issue contains the second part of a two-part article on regulated and non-regulated charges and taxes placed on them. Unfortunately the subject of taxes as it applies to your telecom bills is broad enough to warrant a lengthy discussion.
In Part I, we covered the regulated and non-regulated Income tax calculator charges that will appear on your bills. This issue will describe the different kinds of taxes that you will find, what they are paid for and who is exempt from them.
Taxes and tax-like charges can add as much as 25%, and more, to local telephone charges in some jurisdictions. This is an area to which no rules are universally applicable, so all generalities have exceptions. That being said, there are three “rules-of-thumb” which can be useful in understanding the taxes placed on your bills.
1. Generally, the four types of taxes include service fees and charges; franchise tax or surcharges; sales use or special taxes; and federal excise tax.
2. Taxes are not uniformly imposed on all services.
3. Some categories of users are exempt from some taxes.
Let’s take a closer look at specific taxes you’ll encounter on your bills.
Specific Service Fees and Charges
These charges may be imposed to support 911 services, operation of the Public Utility Commission (California), provision of special equipment for handicapped persons (California), Universal Service Funds, poison control centers (Texas), etc. The Presubscribed Interexchange Carrier Charge (PICC) would also fall into this category. Such charges may be calculated on a per-line or percentage basis. These fees apply universally and there are no exceptions.
Franchise Taxes or Surcharges
Usually local items, these charges can and may be imposed by the county or state governments. Most often these are calculated as a percent of the items that apply, (various local service charges, additional calls or message unit charges, and installation charges), but they may be calculated on some other basis. This tax is called a variety of names, including franchise fee, city tax, municipal charge, surcharge, additional charge (AC), gross receipts tax, etc. As usual, this varies from state to state.