New Sales tax discussion

Posts: 56 · Full Forum Member Joined: Mar 15, 2006 Posts: 56

rdstoll wrote:

Here is a list of all the taxes/charges I paid on my last SBC bill. This is not a joke (and only from a partial bill as I cancelled early in the month)!!

Federal Access Charge 4.50
IL Telecom Relay Svc and Eqp .08
Infrastructure Maintenance Cr .79
Emergency 9-1-1 Serv 1.25
Federal Universal Service Fee .45
Federal Access Charge #2 4.50
9-1-1 Emergency System
Billed for Chicago 1.25
State Infrastructure Maintenance Fee .14
State Additional Charges .04
Federal Universal Service Fee .45
IL Universal Service Fee .12
IL Telecom Relay Svc and Eqp .08
Federal at 3% 1.11
Illinois at 7% 2.02
Municipal Telecommunications Tax 2.02

Wow. I dont think my sprint bill was that intense on taxes...

Posts: 2257 · Posted: Mon May 01, 2006 6:52 pm Post subject:

dconnor wrote:

My $.02

It is my understanding of sales tax that a company only needs to collect and pay sales taxes in States in which that company has a physical presence, such as an office.

So, I would venture to guess that Vonage has either an office or more likely switching equipment located in each of the 21 States mentioned.

That is true, to an extent.

At one point, several states decided that, for the purposes of an Internet sale, your WEB BROWSER, since it was located in the state or purchase, constituted a "presence" for the company for the duration of the sale, in which case it constituted an intrastate sale and was, therefore, taxable. I know the company I worked for at the time (a mail order company located in a state without sales tax) fought that one tooth and claw, and eventually the definition was shot down.

But that hasn't stopped the various states from coming up with various schemes. In Maine, for example, we have a concept called "use tax", (Kentucky, where I used to live, also has this). Basically, if I buy something out of state, I am expected to keep track of each and every purchase and pay Maine "use tax" on it, which coincidentally is the EXACT same rate as sales tax, within 60 days of the purchase of the item.

There is also an alternative use tax we can pay, which is something like 4/10% of our income, which covers all "incidental" purchases (under $1000) so we can avoid having to keep track of every stick of gum we buy out of state. This is especially useful because Maine has fairly complex sales tax rules, governing what types of food are taxable, for example, as opposed to a simple "all foods are nontaxable" exemption. So going across the border to buy groceries is tricky, because you have to study the law carefully to know what you are supposed to pay taxes on.

Of course, compliance with this onerous law is somewhere near 100%, as you can imagine. Wink

States will impose the taxes they wish, and Vonage can fight it based on interstate commerce law, but telecommunications companies are a different beastie, and Vonage is now a serious potential source of income. Pork doesn't grow on trees, you know. It grows on voters.

Posts: 282 · Posted: Mon May 01, 2006 9:43 pm Post subject:

From my pending billing cycle that comes due May 4th:

Pending Charges Summary:

Total Charged Calls: $7.08
State Telecommunications Sales Tax $0.50
Federal Excise Tax $0.21
Approved Call Credits: $0.00
Total Amount $7.79
Charges not covered in your monthly plan fee are listed above. We will bill you for these charges on your next billing date.

This was for international calls, but you can see the 'State Telecommunications Sales Tax' line item is there at a healthy 7%.

Posts: 56 · Full Forum Member Joined: Mar 15, 2006 Posts: 56

ChrisFix wrote:

From my pending billing cycle that comes due May 4th:

Pending Charges Summary:

Total Charged Calls: $7.08
State Telecommunications Sales Tax $0.50
Federal Excise Tax $0.21
Approved Call Credits: $0.00
Total Amount $7.79
Charges not covered in your monthly plan fee are listed above. We will bill you for these charges on your next billing date.

This was for international calls, but you can see the 'State Telecommunications Sales Tax' line item is there at a healthy 7%.

what listed there wasnt there last month?

Posts: 282 · Posted: Mon May 01, 2006 10:08 pm Post subject:

abela2006 wrote:

ChrisFix wrote:

From my pending billing cycle that comes due May 4th:

Pending Charges Summary:

Total Charged Calls: $7.08
State Telecommunications Sales Tax $0.50
Federal Excise Tax $0.21
Approved Call Credits: $0.00
Total Amount $7.79
Charges not covered in your monthly plan fee are listed above. We will bill you for these charges on your next billing date.

This was for international calls, but you can see the 'State Telecommunications Sales Tax' line item is there at a healthy 7%.

what listed there wasnt there last month?

No, it's new this month. That's why I posted it here....

Last month, probably just like yours:

Charges Detail:

Residential Premium Unlimited Plan
(05/Apr-04/May) $24.99
Emergency 911 Cost Recovery $0.99
Regulatory Recovery Fee $0.99
FET Tax $0.75
Total Amount $27.72

Posts: 1715 · Posted: Mon May 01, 2006 11:43 pm Post subject:

For comparison, here's the taxes & such from my Verizon Bill:

Code:

Verizon local package $28.95 <-- doesn't sound bad does it? Just wait...
---------------------------------------------
Taxes and Surcharges:
Federal Subscriber Line Charge $6.50 (Verizon profit)
Federal Excise Tax $1.08
Local comm tax $2.10
Stage gross tax $0.86
Telecom Relay Fee $0.15
County 911 $0.50
Federal Universal Service Fee $0.67 (Verizon profit)
=========================================
T O T A L $11.86

$11.86 / 28.95 = or 41%of the cost of the "service", or ~30% of the total bill (not including DSL and its related charges/etc)

Damn... that's the first time I've run that analysis on my landline bill (have done it on the cell (20% of bill) & cable bills (13% of bill) in years past) That's a huge amount of taxes/fees on my Verizon bill for what I get. They called me twice last week trying to sell me their unlimited voice package, but for $50+ just for the plan, not including taxes/fees/etc... and I'm sure there'd be more than what I've listed above, as I have no long distance carrier on that land line.

I don't have my Sprint local bill handy, but I'll have to take a peek at it next time... At least my Verizon land line has been reliable thus far. Can't say that for Sprint.

Posts: 1424 · Posted: Tue May 02, 2006 8:24 am Post subject:

Out of curiosity, why do you consider USF Verizon profit?

Posts: 18 · Vonage Forum Associate Joined: Mar 08, 2005 Posts: 18

So, those of you in taxed states will soon be changing your mailing addresses to points outside the taxed areas ?

I have never received paper correspondence from Vonage and pay my bill electronically. IMO, there's no real reason other then 911 (no - don't start on that) they need my actual point of presence

Posts: 171 · Posted: Tue May 02, 2006 8:37 am Post subject:

jayrm wrote:

I have never received paper correspondence from Vonage and pay my bill electronically. IMO, there's no real reason other then 911 (no - don't start on that) they need my actual point of presence

Not entirely true. Your billing address has to match the billing address of your credit card. Nice plan, but I don't think that will fly. Too bad... Cry

Posts: 1424 · Posted: Tue May 02, 2006 8:54 am Post subject:

I would surmise that they would use your shipping address or the E911 address rather than your billing address to compute tax. Yes, Vonage allows three different addresses.

In all actuality the E911 address makes the most sense because it would automatically exclude nomadic users from being taxed. It most faithfully reflects the concept of service address.

It will be interesting to see what actually gets taxed. For example, if you have a regular line and a soft-phone line, in many cases only the regular line should be subject to tax. I expect that we will see taxes applied on the total bill.