VoIP Phone communication system providers provide noteworthy cost savings on business communications by offering various options to customers, such as unlimited local and long-distance calling. Also, compatibility with mobile devices and desktops, and mechanization for boosting productivity and smoothening out production difficulties are considered. Apart from that, VoIP taxes incurred are things that have to be understood.
Voice over Internet Protocol (VoIP) may sound clumsy and old-fashioned Still it is currently the trend and is the only way to keep the present generation of mobile workforce active and help connect scattered families.
If VoIP phone call costs have been increasing unreasonably since the last few months, then it is an indication that the communication provider is overcharging, which is also unreasonable and illegal.
VoIP Taxes & VoIP Fees
Since the VoIP industry is vulnerable to government VoIP taxes and is controlled by the Federal Communications Commission, the government authorizes different types of fees to be charged legally to customers.
A few VoIP fees that are charged legally include,
Fees for E911
For identifying a caller who dials the phone number 911, the telephone service providers must meet the FCC’s VoIP regulations wherein the E911 (Enhanced 911) fees charged covers the cost. Companies providing VoIP must make 911 service a binding mandatory feature of every menu.
If the emergency services are not able to process a caller’s location or even a return call number, then the facility should be able to transmit and route a 911 call to a suitable call center that handles emergencies. The customer’s physical location, along with the callback number, should be available with the emergency services.
Customers should be made aware of the limitations of 911 services. As per the service line provided by both the local and state governments, the E911 fees help fund chargeable emergency response systems. The fees of E911 vary from state to state where the customer resides, and its range varies. Users are charged for using 411 information services too.
Universal Service Fund (USF)
As per Federal Communications Commission (FCC) regulations, all VoIP telecommunication providers must pay Universal Service Fund (USF) fees, which are normally between 15% and 33% of a VoIP communication provider’s revenue.
The cost of USF fees VoIP communication providers incurs could be legally passed over to customers on a monthly basis as per the number of VoIP Office lines taken by the business. VoIP providers may charge customers a minimum amount of USF fees. The customers should note that this fee varies almost four times each year.
Portability Fees
The fees for porting a telephone number are not required by the FCC, but the rule allows the VoIP service providers to charge their users, phone porting charges, often called LNP (Local Number Portability) charges.
LNP charges are usually one-time charge that covers the cost of porting (transferring the phone number), be it fax, local, or even toll-free phone numbers, from one phone company to another phone company. These lines are charged based on the number of lines provided, allowing end users to negotiate with VoIP providers for lower or no porting fees.
If customers do not pay for porting their phone numbers, VoIP providers cannot refuse them porting. The providers are allowed to charge the customers only the cost they incur for porting the phone numbers, but these fees vary depending upon the carrier selection and location.
VoIP Taxes as per Federal, State & Local
VoIP service providers are supposed to charge the customers at state, federal, and local levels. The VoIP taxes that get charged for telecommunications services will change as per the specific services provided, and, in few cases, on a case-to-case basis, the provider can decide the charges regarding tax charged for communications from the user.
Taxation for VoIP includes
- Local sales VoIP taxes
- Taxation at the state level
- Federal excise VoIP taxes
- City tax
- Additional state taxes from local governments
- License VoIP taxes
- Franchise tax
- Intrastate toll tax
- Transit tax
- Public utility tax
Gross Revenue Surcharge
The gross revenue surcharge counterbalances federal and state taxes by offsetting the costs of VoIP service providers. The government regulates tax payments, and while it does not mandate gross revenue surcharges which are not illegal.
Compensation of Intercarrier
Intercarrier compensation is the fees paid by one carrier (phone service provider) to another carrier for making, sending, and ending telecommunications over their network. The compensation fees charged by the carriers vary based upon the call type, termination location, and origin of the call, whether the carrier is local, wireless, or even long-distance.
These charges include,
Access Charges
Long distance carriers pay VoIP call fees on a local network for making or terminating VoIP calls.
Reciprocal Charges
These charges apply to making calls within the same local area. Federal laws require interstate access charges, while the local authorities oversee intrastate charges.
Surcharge for Internet
The state or federal governments do not regulate the surcharge for internet infrastructure, but few VoIP providers charge customers within legal means. These charges are to cover the cost of a local network along with its internet infrastructure.
VoIP Fees To Know
A few VoIP providers inappropriately increase their fees to increase their profit margins and pass any extra expenses incurred onto customers. If any hidden charges appear on your bills, it is important to contact your VoIP provider immediately.
Termination Fees
The ETF (Early Termination Fees) is a well-liked way to scoop out the price for VoIP customers. Even if the provider is at fault, customers who cancel their VoIP service contract before the end date still incur termination fees. The customers must understand the early termination fee terms before signing a contract for a year, otherwise they could end up paying for multiple years.
Suppose the customer is planning to cancel the VoIP service. In that case, they should cancel their service at minimum 30 days (around four and a half weeks) before their annual or monthly billing cycle begins, as this always helps in avoiding an automatic billing option. In a few cases the new provider could assist in arranging the previous provider’s termination fees on the customer’s behalf.
Add-on Fees Features
Many SaaS (software as a service) providers offer deals on a monthly rental plan, where they inform customers that the most important features are available only as paid “add-ons.”
On the other hand, add-ons like video conference facilities, toll-free minutes, extra cloud storage space, and even SMS texts look normal. Therefore, it is not advisable to go for the lowest plan.
RCIP Fees
RCIP (Regulatory, Compliance, and intellectual Property) fees are fixed by the VoIP provider and are not demanded by the government. This RCIP fee helps companies pay for fraud prevention, patent/copywriting protection, or even filing the company’s trademark. It is charged on a per-line basis, that adds up the costs quickly.
Recovery & Program Fees
VoIP service providers sometimes do overcharge the regulatory recovery fees and the federal program fees in an attempt to recover the regulatory fees for TRS (Telecommunications Relay Services) and federal Universal Service fees, which are not illegal.
The regulatory recovery fees are the same as federal program fees, which help balance the cost of provider compliance with local, state, and federal telecom laws. This includes even the E911 system maintenance, which covers the cost of categorizing and reporting the relevant requirements along with bookkeeping.
Support & Administrative Charges
Adding administrative charges along with service and support charges helps VoIP system providers to justify one time or even repeated charges on the phone bill.
The term, “Service Fees,” is intentionally vague and the description lack detail.
Ther term Service Fees is arguable, and the description provides no details. The customer should ask the provider for a detailed breakdown of these charges. With these service charges received, the telecom providers pay the government-regulated administrative charges.
Reducing Business Phone Bill
Switching from the traditional landline to VoIP helps reduce business communication costs and lowers phone bills. A few other ways to reduce the business phone bill include,
Reviewing Provider Discounts
VoIP providers usually offer volume discounts for purchasing a higher number of user seats. Industry-specific discounts committed user discounts and annual pricing discounts are also available.
Selecting Tier-Based Pricing
As an alternative to purchasing individual add-on features, tier-based pricing helps companies choose from diversified, adaptable bundled plans with a lower fixed monthly price.
This type of pricing helps small businesses, teams or even startup companies looking for a fundamental cloud phone system. They need not pay for those advanced features that they are not currently in need of.
Limiting Third-Party App
The third-party combinations in VoIP are an important business phone system accomplishment. Most present-day VoIP solutions do include important cloud communication features and some also have open-source APIs (Application programming interface) too.
When planning to take VoIP software, it is better to select software that has built-in CRM. Wherein features like team chat messaging, video conferencing and customer survey tools, helps to avoid purchasing additional apps.
Evaluate Phone Bills
Conducting a detailed review of the existing phone bills and VoIP invoices helps to identify suspicious fees. Customers should look out for other expenses known as phone bill cramming. It is an illegal act wherein the communication providers help to track counterfeit, hidden, unannounced or excessive fees.
Fees like automatic subscription renewals or even upgrades, maintenance costs, accidental transactions are few examples to be aware of. If the phone bill looks complicated, then there is more probability of scam.
Does FCC Regulate VoIP?
VoIP communication services are regulated by FCC (Federal Communications Commission) regarding structuring fees. Law enforcement agencies must comply with regulations, support emergency services, and address unlawful robocalls and other issues.
VoIP providers must follow the CALEA (Communications Assistance for Law Enforcement Act), which is known as “Digital Telephony Act.” This allows federal agents to intercept and wiretap any phone call conversations made over the internet.
Contributions made to Universal Service Fund by all providers of voice communication helps in providing VoIP and landline phones. This gives access to the lower income group too. The provider gives internet access to rural healthcare services, libraries and schools.
VoIP phone system providers must ensure that people with difficulty speaking can access their phone systems. Even those people having hearing impairments should be provided with text-to-voice, relay service, caption phone service and others.
The FCC has made it compulsory for VoIP platforms and other wireless telecom carriers to link a physical address to a business phone number via E911 (Enhanced 911 Services). The emergency services will have an exact location when a user calls 911 from their VoIP phone number.
The FCC will take legal action against VoIP providers, if they assist in illegal robocalling. It also includes legal action against providers who make deceiving outbound Caller IDs, helping pre-recorded telemarketing calls without consent. Even those providers helping businesses to contact those phone numbers that are on Do Not Call Registry and many more.
VoIP Phone System Provider
Before signing any form of contract, the customer should always review the tiered pricing options. They should also ask for a sample invoice. The VoIP taxes and fees are only a small part of the total VoIP bills.
Conclusion
States and local governments usually impose less tax on VoIP services that do not interconnect. They don’t have to contribute to the FUSF (Federal Universal Service Fund) and they usually do not include 911 function, the legal fees for the same do not apply.
Providers are more likely to charge higher VoIP taxes and fees for interconnected VoIP services compared to the non-interconnected ones. Consequently, even if the customer believes that the services are one and the same, they may still incur different charges. If the company does not know the differences, it will face penalties.
Tax compliance requirements are different for communication tax. There will be a requirement of communication tax software and billing platforms. This helps handling of the relevant fields and calculations which helps in minimizing audit exposure
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