There are few days where I don’t speak with a new VoIP service provider who is concerned about VoIP taxes. I get calls from current telecom service providers, internet service providers, cable operators, and even technology/systems integrators.
As a result of the many companies that focus on delivering VoIP solutions to these new entrants the barriers to entry are remarkably low. A new entrant can gain access to a complete white label solution with minimal, if any, upfront costs. These VoIP solution providers deliver the soft switch, bandwidth, billing, and even tax/fee calculation support.
With market entry being rather simple, I encourage these businesses to not forget about their VoIP tax and regulatory obligations. Some of the taxes and fees to consider include Federal USF contributions and the filing of a 499A form each year. Additionally, almost every state, and some local jurisdictions, require VoIP service providers to collect and remit 911 fees. Where the landscape becomes a bit more confused is at the state level regarding state USF fees and VoIP taxes including sales tax and telecommunications tax. Only a handful of states currently regulate VoIP services as a telecommunications service. States also differ in their application of a sales tax and telecommunications taxes to VoIP services.
With such a confusing tax and regulatory scheme – which is frequently changing – VoIP service providers are wise to develop a strategy for how they will comply. Here’s a link to a guidebook on VoIP taxes and regulatory issues.