Often A “Strangely, Hectic, Irritating & Tricky”… Show
Complicated billing, tax on tax, federal charges, services, and products — understanding telecom taxes right is tricky. Usually, our blogs are written for the enjoyment of a general audience on a range of topics that relate to telecom. However, in this blog, I wish to touch on telecom taxes, mainly geared toward helping our Channel Partners. Still, it can also help end customers who want to understand better the long list of taxes on their providers’ invoices… as the list is getting longer and more and more complex. For the sake of this blog, I am going to focus on the USA and related telecom taxes.
Telecom Tax Explained
The telecom industry rates the number one spot for taxes in the United States. The different filing requirements create a maze of Federal, State, and Local taxes that suppliers need to navigate.
Telecommunications taxes are highly regulated and much more extensive than typical sales tax. Telecom companies are responsible for collecting and submitting various federal, state, and district taxes.
Which Companies are Required to Pay Telecom Tax?
So who has to pay telecommunications tax? It seems like an easy question to answer… Phone companies, right? Not so fast. Telecom is so much more than just a phone now. The complexities and dynamics change so fast that laws are outpacing legislation. Let’s look at some of the most recognizable:
Telecom Providers: These include companies that provide voice, VoIP, cloud and hosted/managed services, and messaging services.
New and Emerging Telecommunications: Businesses that operate in the business and still need to pay taxes include Wireless Communication Providers (including pre-paid) Video Call, and some entertainment providers fall into this category.
Product and services providers in telecom are often the same company. Yet both have different taxes applied and must be accounted for separately. If you are on the fringe of telecom and not sure which taxes you are responsible for, specialized experts in telecommunications tax can be contacted to ensure you are compliant.
ClearlyIP has recently partnered with SmartBilling, so our Partners can offload the complexity of telecommunications billing, taxes, compliance, and filings to a team of experts. It is so important to have a team of experts to help Providers understand and ensure they comply with what telecom taxes companies must collect.
Taxes That Companies Must Collect
There are potentially thousands of telecom tax filing requirements, and the regulating authorities are many. The tax rate is high, and rates in the high teens are not uncommon.
Some of the Companies/Entities that control taxes in Telecommunications:
- Internal Revenue Service (IRS) – Federal excise tax
- Federal Communications Commission FCC – Universal Service Fund (USF)
- States – Sales & Occupation taxes
- State Public Utility/Service Commissioners – 911 fee and special needs services
- State Public Utility/Service Commissioners – (access & utility fees)
- Municipalities – Sales & Occupation taxes
The logistics of managing, billing, collecting, and then remitting all of those taxes can be a significant accounting challenge
ClearlyIP Introduces SmartBilling and CSI for Channel Partners
Smart Billing Provides Detailed Telecom Billing Services
ClearlyIP understands the importance of automation tools for our partners for fast, efficient, and accurate customer billing and tax filing. Telecoms with good billing systems save time and have more satisfied customers. In collaboration with Smart Billing and CSI, we can ensure our Channel Partners, and therefore our mutual customers, are being billed the proper taxes and are filed as required. While Partners’ focus on minimizing potential tax liabilities reduces audit-related risks, an overly conservative approach can result in customers paying more than they probably should. Channel Partners will be able to offer invoices with in-depth data and consumption details in very little time that, in turn, enlightens customers on their usage and dependability of the communications platform.
Compliance Solutions Inc. (CSI) Offers Telecom Tax Expertise
CSI can offer expertise in generating expansive tax content with a cloud solution to help solve complex compliance challenges.
Support for an Expanding Tax Ecosystem
- VoIP and UCaaS
- Managed Services
- Hosting and Connectivity
- SMS and text messaging
With these services, you gain peace of mind that you are collecting the proper taxes and the correct amounts. Hopefully, that allows you to focus on new business opportunities that can grow your business.