PhoneTips.net

There’s no getting around it. If you have a phone, you will pay some taxes. That’s life. Here is a breakdown of the taxes you may see on your local or long distance phone bill:

• State & Local Municipal Tax - imposed by state, local, and municipal governments. Could appear as a “gross receipts” tax in some states. These are not federally mandated taxes. The percents vary depending on your location and are set by your state, local, and municipal governments, respectively.
• Federal Excise Tax - a 3% tax imposed on all telecommunications services (including local, long distance, and wireless). This tax is mandated by the federal government (not the FCC) and is based on usage.

These are the only taxes you should see on your bills. You cannot do anything about the Federal Excise Tax. If you feel your State, Local, or Municipal taxes are too high, the next time you receive a “public hearing” notice concerning these rates, you should plan to attend if possible.

If you move your service from your local provider to a local bundled service, you will pay the same taxes that were charged by your local provider. Switching your long distance service from your local provider’s default carrier to one of your own choice will not eliminate the Federal Excise tax either. Your local provider and long distance provider will each apply the tax to your usage.

Some bundled providers will lump some of these taxes into their plan charge if they charge a flat fee for a basic plan that includes a specific number of minutes. The problem with that is that unless they tailor their plans geographically, they tend to average the taxes (meaning customers in low tax areas will pay more than they should and customers in high taxes will pay less).

This entry was posted on Saturday, December 10th, 2005 at and is filed under The Basics. You can follow responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your site.