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Top 10 Guide for Telecom Tax Compliance

By Brian Greer on Tue, Mar 18, 2014 @ 02:43 PM

I speak with several companies each week that are in the process of launching a new VoIP telecommunications service.  Misinformation abounds including……”Since it’s delivered over the Internet I thought it was tax free.”  I hear the following comment also…..”My carrier is collecting and paying all the taxes and fees for me.”

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Let me dispel these rumors.  First, VoIP is both taxed and regulated.  It is not tax free.  Furthermore, carriers are generally only collecting those taxes and fees that apply to the wholesale transaction when they sell the service to you.  As a telecom reseller, you are exposed for the applicable taxes and fees on the mark-up at least and potentially for the taxes and fees that you have already paid to your carrier.

As a result of the various myths and multitude of confusion, I developed a quick reference guide for those who are entering the telecom service market.  This guide is not meant to be all encompassing but is meant to provide baseline information and the framework for establishing a process to ensure tax and regulatory compliance for your telecommunications and certain types of VoIP services.  The Top 10 list includes:

  1. Identify the Federal regulatory requirements
  2. Identify the State and Local regulatory requirements
  3. Determine the State and Local transactions tax applicability
  4. Determine how you will invoice your customers
  5. Apply for the applicable federal licenses
  6. Apply for the applicable State and Local regulatory license(s)
  7. Register with the applicable State and Local tax authorities
  8. Implement a compliance reporting solution
  9. Submit the appropriate exemption documentation to upstream carrier(s)
  10. Calculate, bill, collect, and remit your taxes and fees

Click here to download the complete guide, “Top Ten Guide for Managing Taxes and Regulatory Fees”.

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Brian Greer

Written by Brian Greer