Benjamin Franklin usually gets credit for saying “nothing can be said to be certain, except death and taxes.” Will Rogers said, “The difference between death and taxes is death doesn’t get worse every time Congress meets.” It’s fair to say that telecom taxes are certain, and they do seem to get worse every time you receive a bill!
Carriers can charge over 75 different taxes and surcharges on an invoice. Taxes and surcharges encompass about 20% of your telecom bills, with 15% to 25% for mobile services and 30% for local and PBX trunks. Carrier Service Guides have provisions that allow them to “pass through” taxes regulatory fees and unspecified surcharges. The surcharges allow carriers to impose fees simply for the costs of collecting and remitting the funds to the required tax agencies.
Listed below are some questions and information that provide unconventional thinking on ways to save money.
Do all carriers charge you the same telecom taxes and surcharges for their services?
Usually, AT&T, Sprint, T-Mobile, and Verizon pass its Universal Service Fund (USF) expense to customers, but Cricket and MetroPCS absorb the costs. A number of enterprises negotiate exemptions with the major providers to avoid these charges.
Do the percentages or tax rates vary on the same services?
Carriers don’t always apply the same surcharges. In some cases, this is a billing error, which can provide a refund or credit. In some rare cases, the provider may have made a mistake in failing to collect a surcharge or tax.
Are the calculations computed from the same line items on the invoice?
Verizon will often impose its property tax surcharge, which can range from 2.5% to 3% of a customer’s total interstate and international charges on top of its Universal Service Fund Charge (USF). Should the USF apply to property taxes imposed by states and local jurisdictions? The USF is levied on telecom services subject to direct regulation by the Federal Communications Commission (FCC). In effect, carriers are interpreting the FCC’s tax and adding it to state and local property taxes for real estate and equipment.
Can the vendor provide documentation and justify the tax?
Some vendor services are also information services that are specifically not telecom services (IP / internet access is a primary one) and therefore it is NOT subject to telecom taxes and surcharge. Ask them to explain their taxes and surcharges and to work from the tax code, not their internal documents.
It pays to question the validity of taxes and how they are calculated, particularly when you are negotiating a new contract. If you don’t have the time or the expertise, get help. Some of the taxes may seem small, but the volume and frequency mean that mistakes can quickly add up. Each billing error will provide a refund or credit. It will also provide future savings through cost avoidance.
Telecom audit and optimization, as part of a telecom expense management program, ensures that your telecom taxes and surcharges are accurate and help you recover from past errors and overcharges.