| Taxes and tax-like charges can add as much as | | | | items. Sales, use and special taxes generally apply |
| 25%, and more, to local telephone charges in | | | | to local service charges, additional calls or |
| some jurisdictions. This is an area to which no | | | | message unit charges, installation charges, and |
| rules are universally applicable, so all generalities | | | | intrastate toll charges. (Most states also tax |
| have exceptions. That being said, there are three | | | | interstate toll charges.) And again, these taxes are |
| "rules-of-thumb" which can be useful in | | | | most often a percent of the items to which they |
| understanding the taxes placed on your bills.1. | | | | apply. That base may include franchise taxes, |
| Generally, the four types of taxes include service | | | | surcharges or other service fees. In other words, |
| fees and charges; franchise tax or surcharges; | | | | you are taxed on taxes!Federal Excise Tax |
| sales use or special taxes; and federal excise | | | | This tax is imposed by Congress on non-exempt |
| tax.2.Taxes are not uniformly imposed on all | | | | items. It generally applies to regulated services, |
| services.3.Some categories of users are exempt | | | | except private lines, mileage, centrex-related |
| from some taxes.Let's take a closer look at | | | | enhancements, service and installation charges, |
| specific taxes you'll encounter on your bills.Specific | | | | and some other services. The base on which the |
| Service Fees and Charges | | | | tax is calculated may include franchise taxes, |
| These charges may be imposed to support 911 | | | | surcharges, and gross receipts taxes. Originally a |
| services, operation of the Public Utility Commission | | | | Spanish-American War "luxury" tax, the rate has |
| (California), provision of special equipment for | | | | varied between 1% and 10% over the years, but |
| handicapped persons (California), Universal Service | | | | has been held constant at 3% since |
| Funds, poison control centers (Texas), etc. The | | | | 1983.Remember, taxes are not uniformly imposed |
| Presubscribed Interexchange Carrier Charge | | | | on all services. For example, white-page directory |
| (PICC) would also fall into this category. Such | | | | advertising is not taxed in most states, unless this |
| charges may be calculated on a per-line or | | | | statement item includes other items. (Arkansas |
| percentage basis. These fees apply universally and | | | | and Oklahoma are exceptions, however.)Who is |
| there are no exceptions.Franchise Taxes or | | | | Exempt?Charities, churches, schoools, nonprofit |
| Surcharges | | | | educational and hospital operations, certain other |
| Usually local items, these charges can and may | | | | entities that receive government funding, foreign |
| be imposed by the county or state governments. | | | | counselor operations, and others, may be exempt |
| Most often these are calculated as a percent of | | | | from state and/or federal taxes. For example, |
| the items that apply, (various local service | | | | common carriers, newspapers and broadcast |
| charges, additional calls or message unit charges, | | | | companies may be exempt from federal tax on |
| and installation charges), but they may be | | | | some services.To understand the specific services |
| calculated on some other basis. This tax is called a | | | | that are exempt from federal tax, refer to the |
| variety of names, including franchise fee, city tax, | | | | Internal Revenue Service publication 510 entitled |
| municipal charge, surcharge, additional charge (AC), | | | | Communications Tax. This publication is very |
| gross receipts tax, etc. As usual, this varies from | | | | specific as to what taxes are federally imposed |
| state to state.Sales, Use or Special Taxes | | | | and which are exempt.As you can see, taxes can |
| These taxes may be imposed by a municipality, | | | | be a complicated subject as it applies to your |
| county, school district, transportation district, state | | | | telecom bills. But understanding them can be a |
| or other taxing body. The "state and local taxes" | | | | major step in reducing your costs when doing a |
| section of your bill may be a combination of such | | | | cost-reduction study. |