Updated Tax Information
What is the Federal Universal Service Fund (USF)?
Federal Universal Service Fund (USF) Charge – Because telephones provide a vital link to emergency services, government services, and surrounding communities, the federal government promotes telephone service to all households. The USF helps to make phone service affordable and available to all Americans, including consumers with low incomes, those living in areas where the cost of providing telephone service is high, schools and libraries, and rural health care providers. Congress has mandated that all telephone companies providing interstate service must contribute to the USF. Although not required to do so by the government, many carriers choose to pass their USF contribution costs on to their customers in the form of a line item, often called the “Federal Universal Service Fee” or “Universal Connectivity Fee.”
The Universal Service Fund (USF) is increasing from 22% to 33%. and will be shown in customers bill. For more information about the USF increase click here.
The current incarnation of the USF was introduced into tax law created by United States Congress, via the FCC in 1998. Title 47, Code of Federal Regulations, Sections 36, 54, and 69.
This surcharge is imposed for the purpose of providing telecommunications services at an affordable price to schools, libraries, rural health care providers, and low-income customers. The Federal Communications Commission (FCC) regulates this surcharge.
What benefits does the USF Fee provide?
- Provides quality telecommunications services at a reasonable cost.
- Improves the accessibility of telecommunications services inexpensive rural areas to libraries, public schools, and healthcare centers.
- Allows low-income consumers to have telecommunications services.
For Tax Exempt Clients:
To comply with the federal, state, and local tax law requirements, it is necessary that SmartChoice has properly executed exemption certificates from all of our customers who claim tax exemptions.
Should SmartChoice not have these certificates on file, we are obligated to collect the tax for the state in which the property is delivered. If you are entitled to any tax exemptions, please send the updated form as soon as possible.
For further information regarding certificates of exemption, please contact SmartChoice’s Regulatory Department at firstname.lastname@example.org.
Taxes, Fees, and Surcharges
Explanation of Taxes, Fees, and Surcharges:
Federal, state, and local governments assess a variety of taxes, fees, and regulatory program surcharges, that are exclusive of SmartChoice, LLC’s service rates and charges.
There are three broad categories of federal, state, and local taxes, fees and surcharges that apply to services provided by SmartChoice, LLC and which SmartChoice, LLC’ collects and remits to each jurisdiction:
- Federal Universal Service Fund Surcharge
- Federal, state, and local taxes, fees, and surcharges
- Jurisdiction-specific surcharges
The information contained below is for provided reference only and is subject to change without notice. This information is not intended to replace or supersede any Federal, State or Local laws and regulations. Additional information regarding Federal, State and Local taxes can be obtained from the respective governmental agencies.
Federal Universal Service Fund Surcharge
The Federal Universal Service Fund (FUSF) surcharge is billed to all telecommunications services providers to supplement the cost of serving rural or high-cost areas, income-eligible consumers, rural health care facilities, schools, and libraries.
The FUSF surcharge is billed as a percentage of Company interstate and international telecommunications and Internet Protocol enabled service revenues, established by the Federal Communications Commission quarterly. As of January 1, 2021, the FUSF contribution rate is 31.8%.
Federal, State, and Local Taxes, Fees, and Surcharges
In addition to the Federal Universal Service Fund, SmartChoice, LLC assesses the following federal, state, and local taxes, fees, and surcharges:
Federal Subscriber Line Fee
The Federal Subscriber Line Fee allows SmartChoice, LLC to recover a portion of its costs of connecting telephone lines and dedicated circuits connected to homes and businesses. This fee is regulated and capped by the Federal Communications Commission.
Federal Local Number Portability Fee (LNP)
Local Number Portability (LNP) is a service that provides customers with the ability to retain their existing local telephone numbers when switching from one local service provider to another. This fee is set and established by the local number portability administrator.
Carrier Cost Recovery Fee
This fee recovers costs SmartChoice, LLC incurs for expenses including, but not limited to, federal and state regulatory and license fees, fees to fund telecommunications services for the speech and hearing-impaired, costs associated with North American Numbering Plan and other regulatory fees and surcharges.
ICC is a fee designed to defray the costs of fraud prevention and complying with federal and state regulatory requirements
Federal Excise Tax
The Federal Excise Tax is a three percent federal tax established by Congress. This tax applies to local service that is billed separately from long distance service and is paid directly to the Internal Revenue Service.
State, County, And Local Taxes
Taxes that are paid by consumers and directly submitted to appropriate state, county, or city taxing jurisdiction. Some taxing jurisdictions include special district sales and school district taxes, which are also collected under sales tax law provisions, where applicable. The tax is determined by each individual taxing jurisdiction and passed through to subscribers.
Suggest combing the yellow highlighted fees into a single fee. Have adapted the Lumen description here. Note that TRS surcharges may include intrastate revenue bases in the future as the FCC has proposed.
Municipal-specific surcharge to recover company’ expenses associated with municipal revenue taxes, which apply to calls originating and terminating within the village or municipality. Municipal Surcharges apply to all local charges.
The emergency 911, E911, surcharge is assessed on each local service access lines to fund state Public Safety Access Points, the local dispatch centers for first responders. The fee applies to telecommunications and VoIP access lines.
Gross Revenue Surcharge/Franchise Tax
Governmental entities may charge telecommunication carriers to use the public rights-of-way to provide service to their customers. This fee recovers costs associated with those charges. This surcharge is generally applied to all services except the E911 surcharge.