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