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