Specialized Taxes and Fees Analysis

Practice Areas

In addition to mostly standard federal and state communications taxes, specialized telecom taxes encompass a range of federal, state, and local taxes and fees that companies are responsible for collecting and submitting. 

Though they may be perceived as a sort of sales tax or excise tax on telecom services, they are much more regulated and extensive than standard sales tax.

State Equivalents to the Universal Service Fund

Similar to the FUSF, many states have established state-specific universal service funds to offset the cost of service in rural, high-cost areas and to low-income consumers.

In many cases, state legislatures created specific surcharges to fund these programs, which are generally assessed on intrastate and local end-user revenues. They alternatively may be assessed as a flat monthly charge per line or connection.

States with universal service funds have fees ranging from 0.25%–9%, all well below the FUSC rate, currently 33.4%.

The revenue allocation between interstate and international, and local and intrastate revenues, should be consistent with the methodology used in preparing the FCC Form 499A.

Telecommunications service providers need to be aware of both the billing and remittance requirements associated with these state universal service funds. 

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