Telephone Taxes, Fees and Surcharges
Federal Taxes, Fees & Surcharges
At times, the local and long distance phone bill will contain surcharges or fees that are required by federal law, but are not a tax, which means the funds are not collected by the Federal government. On the other hand, the federal taxes applied to local and long distance telephone service are established by the U.S. Congress and are collected by the Internal Revenue Service as part of the general tax revenue for the U.S. Department of Treasury. Telephone companies do not keep the federal tax money that they collect, but forward the money to the Department of Treasury.
Number Portability Service Charge
Local Number Portability is required by federal law and, allows phone customers to keep their same phone number if they switch from one local telephone company to another. This charge covers the consolidation of the printed telephone directory, rather than having a directory for each local phone carrier, and directory information. Carriers recover the costs of providing this service through a fixed, monthly charge. Local telephone companies may continue to place this charge on their customers' phone bills for five years from the date the companies first began itemizing this charge on their bills. This is not a tax or a charge by the government. For many providers, this fee costs 34¢ per month.
Charges for Network Access for Interstate Calling
Though this fee is regulated and capped by the Federal Communications Commission (FCC), it is not a tax or a fee charged by the government. It maintains the network for connecting customers to local switching via wires, poles and conduits. This money goes to the phone company, not to the government, and covers costs that are not already recovered by the local phone service monthly charge. The FCC caps the maximum price that a company may bill you for this. To ensure that all Americans can afford at least a minimal level of basic telephone service, the FCC will not allow phone companies to charge more than $6.50 for a single line.
Other names for this charge: "FCC Charge of Network Access," "FCC-Approved Customer Line Charge," "Interstate Access Charge," "Federal Access Charge," "Federal Line Cost Charge," "Customer Line Charge," "Interstate/Single Line Charge" or "Subscriber Line Charge."
Universal Service Fee
Our nation has had a policy to promote telephone service to all Americans at affordable and reasonably comparable rates since 1930. The Universal Service Fee helps to make basic telephone services available to all Americans, including those with low incomes or bad credit or those living in rural areas where service is very costly to provide. Universal Service support also helps provide discounted telecommunications, Internet access, and internal connections to schools and libraries and makes telecommunications rates for rural health care providers comparable to those in urban areas. All telecommunications companies providing service between states must contribute to the Universal Service Fund. Some of these telephone companies decide to pass their costs of contribution on to you in the form of a line item on your bill. Typical names for this charge: "Universal Connectivity Fee" or "Federal Universal Service Fee." This fee is found on the long distance bill and is based on a percentage of total long distance charges, which can vary from carrier to carrier.
Federal Excise Tax
Taxed under the Internal Revenue Code and applied as a percentage of local and toll telephone service and teletypewriter exchange services. This is a 3% tax mandated by Congress. It is imposed on all telecommunications services and appears on local and long distance bills.
State and Local Taxes
To obtain information about the state and local taxes listed on your telephone bill, you should contact your local and state tax offices. These offices may be listed in the government section of your telephone directory. Additionally, your local or state consumer offices should be able to provide the address and telephone numbers of these offices.
California High Cost Fund (CHCF) Surcharges A and B
Levied by the CPUC under Public Utilities Code Section 739.3, these surcharges subsidize the basic rates for local telephone companies servicing rural areas and compensates carriers for providing basic residential service in areas where the cost exceeds the CPUC determined statewide average.
CHCF-A and CHCF-B are levied on local phone charges. The CHCF-B surcharge is also applied on the long distance bill. They are charged as percentages of your total bill. These percentages are set by the CPUC, and they are set every 3 months - which means they can change frequently. Click here for the latest figures set by the CPUC.
California Teleconnect Fund Surcharge (CTF)
Established by the CPUC, this surcharge provides discounts on telecommunications services to qualifying schools, libraries, community-based organizations, and county-owned hospital and health clinics. This surcharge is calculated as a percentage of local phone charges. This percentage is set by the CPUC, and can change. The latest figure set by the CPUC for Fiscal year 2014-2014 is below.
Universal Lifeline Telephone Service (ULTS) Surcharge
CPUC levied under the Public Utilities Code Section 872, this surcharge reimburses intrastate service providers for lost revenues and operating expenses associated with providing ULTS, the low-income local phone program described in Tab 1. The ULTS fee on the phone bill subsidizes these users for their reduced monthly phone rates and is charges at 1.450% of the local phone and long distance charges of all end-users.
Customers receive a surcredit on their bill when Pacific Bell's revenue exceeds CPUC-imposed price caps. This amount can vary from month to month.
State Regulatory Fee
This nominal fee is charged to all local phone customer to fund the CPUC in regulating utility companies such as local phone carriers.
California Relay Service (CRS) and Communications Devices Fund
In compliance with Public Utilities Code 2881 and Section 270, the Commission implemented three telecommunications programs for California residents who are deaf, hearing impaired and/or disabled. These three programs are collectively known as the Deaf and Disabled Telecommunications Program (DDTP), doing business as the California Telephone Access Program (CTAP). This fee is remitted to the Deaf & Disabled Program Trust Fund to reimburse intrastate service providers for lost revenues and operating expenses associated with providing relay services and communications devices (see Tab 1). This fee is charged as a percentage of local phone charges. This percentage is set by the CPUC, and can change. Click here for the latest figure set by the CPUC.
State 911 Tax
Provides funds to public agencies operating emergency 911 services. This charge helps pay for emergency services such as fire and rescue.
City-imposed utility users tax on telecommunications services. There is no such tax currently imposed by the City of San Diego (as of August 2013).
Emergency 911 Charge (E911)
Enhanced 911 - Wireless Services
This charge helps pay for emergency services such as fire and rescue. Local governments may impose this charge on the long distance bill.
The wireless Enhanced 911 (E911) rules seek to improve the effectiveness and reliability of wireless 911 service by providing 911 dispatchers with additional information on wireless 911 calls.
The wireless E911 program is divided into two parts - Phase I and Phase II. Phase I requires carriers, upon valid request by a local Public Safety Answering Point (PSAP), to report the telephone number of a wireless 911 caller and the location of the antenna that received the call. Phase II requires wireless carriers to provide far more precise location information, within 50 to 300 meters in most cases.
The deployment of E911 requires the development of new technologies and upgrades to local 911 PSAPs, as well as coordination among public safety agencies, wireless carriers, technology vendors, equipment manufacturers, and local wireline carriers.