Our partner FAStek outlines the different telecommunications companies that have to pay communications services tax and details the relevant compliance factors these businesses need to consider in a featured guest blog post, part of Rev.io’s Strategic Partner Program blog series.
Companies that offer communications services are generally required to collect and remit communications services tax unless a regulatory authority specifically exempts them. As there are many regulating authorities and relatively few exemptions, this is a tax obligation that many companies in the telecommunications industry must attend to.
Most businesses that sell communications services must collect and remit communication services tax, which can be thought of as an extremely complex set of sales taxes on these services. Businesses that provide the following services are generally subject to this tax:
This isn’t a comprehensive list, and there are other providers, services, and emerging businesses that may also be subject to communications tax. The three-fold approach of voice services, video services, and tech is simply a helpful matrix through which to consider companies’ different services in light of these tax laws.
If your business is subject to communications tax, there are actually many different individual communications taxes that you may have to pay. The federal government, federal regulators, state governments, state regulators, and local governments may all assess different taxes.
For just one example, consider the Florida Department of Revenue’s communications tax laws. The state normally collects taxes on telephone services, VoIP services, satellite services, video services, private line services, pager and beeper services, facsimiles (fax) services, and telegram services. The state has numerous exceptions, though, including faxes that are used for advertising or professional services, services sold to religious, educational, nonprofit or government organizations, and other exceptions.
Sorting through just one taxing authority’s requirements and exceptions is complex, and that complexity is only compounded when all of the relevant agencies’ regulations are considered. As new federal, state and local tax laws replace outdated ones, navigating communications tax only becomes even more complex.
If your business is or might be subject to communications tax, work with a communications tax expert who can review your situation in light of the numerous relevant tax regulations. A knowledgeable consultant will be able to help you accurately determine which communications taxes your business is obligated to collect and pay.
To speak with someone who specializes in communications tax, contact the team of consultants at FAStek.