Taxes and Surcharges Auditing

TELECOMMUNICATION AUDITING SERVICES:
Taxes and Surcharges Auditing

Taxes and Surcharges Auditing

We help you identify errors and secure refunds

Taxes and surcharges represent upwards of thirty-five percent of the total charges on telecommunications and network service invoices. 

Service providers are responsible for interpreting federal, state and local statutes for how taxes and surcharges should be applied to an invoice. This is an arduous process, often resulting in errors. Service providers are aware that errors of this magnitude affect a broad spectrum of their clientele. 

When invoiced errors of this nature are detected, the service provider will correct the error going forward, but may provide refunds or credit adjustments only to those customers that identified the issues.

Taxes

Telecommunications services are classified as international, interstate, intrastate and local service, and Federal, State and Local tax regulations follow suit. Some states apply sales tax to interstate, intrastate, and local service, but not all local tax regulations apply to each of these services. For example, Texas State sales tax applies to interstate, intrastate, and local service, while local sales tax applies only to intrastate and local services. 

What Happens When There is an Oversight?
If an oversight is made by the service provider, local taxes can be charged on all of these services in error. The service provider acts as the agent for the federal, state and local governments to bill and collect taxes, which are then submitted to the appropriate tax authority.

Who is Responsible for Identifying the Correct Taxes? 
It is the customer who is ultimately responsible for paying the correct taxes; if the service provider is audited and it is found that taxes were under collected, then the service provider can bill in arrears for such amounts. In some states, such as Oklahoma, interstate private communication networks are exempt from state and local taxes. This could result in a ten percent monthly savings. Service providers are prone to collecting taxes in error for municipalities that have not enacted taxes. For example, the California Utility User Tax is prone to be erroneously billed for municipalities that have not enacted the tax.

Surcharges

In the case of surcharges, they are categorized as either "mandated" or "non-mandated". 

Mandated Surcharges 
The statutes for mandated surcharges require that they are to be paid by the user. The service provider is simply the collector of the surcharge for the appropriate government agency, in which case sales tax should not apply. Two examples of mandated surcharges are E-911 and Poison Control.

Non-Mandated Surcharges 
Non-mandated surcharges are required to be paid only by the service provider. The service provider may elect – and the majority do – to pass on the surcharges to their users. For non-mandated surcharges, sales tax applies because it is treated as revenue by the service provider. Examples of non-mandated surcharges are: The End User Line Charge, Federal Universal Service Fund, Cost Recovery/ Administrative surcharge and Municipal Franchise surcharge.   

How We Can Help 
Telstar’s taxes and surcharges review process ensures: 
  1. taxes and surcharges have been charged correctly, 
  2. refund/credit adjustments for tax/surcharge overcharges are recovered, and 
  3. billing remains correct going forward.
Telstar's Taxes and Surcharges Audit Process

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The 
Telstar
Advantage
  • We look at the whole picture: our Telecommunication Network Cost Management approach is a necessary discipline to address both financial and technology management challenges.
  • Our expertise gives you greater insight into the origins, accuracy and relevance of your telecommunication network costs. 
  • By actively managing your full network activities, we enable your enterprise to control and reduce expenditures. 
  • Our proactive management of your network services and costs also assists your enterprise with government policy compliance.
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