Telecom and TV Tax/Fee Explanation
State and Municipal Tax
a. Description: Taxes paid by consumers and directly submitted to appropriate state, county or city authorities.
b. Rate or Range of Rates: Illinois Telecommunications Tax Rate is 7%; City of Taylorville, Hillsboro and Nokomis tax rate is 6%. This is one of the largest taxes you pay at a combined 13%.
c. What it is applied to: All intrastate services.
Federal Excise Tax
a. Description: The Federal Excise Tax was introduced in 1898 by the federal government as a temporary tax to support the nation’s efforts in the Spanish-American War. The tax revenue from the Federal Excise Tax goes directly into the Federal General Fund.
b. Rate or Range of Rates: The tax rate is three percent.
c. What it is applied to: The Federal Excise Tax is applied to all local telecommunications services except installation charges, and is not applied to other taxes.
d. Statutory Authority: Internal Revenue Code §§ 4251-54.
Illinois State 911
a. Description: 911 has been designated as the “Universal Emergency Number” for all citizens throughout the United States to request emergency assistance. The purpose of the fee is to “pay for” the cost of such systems. Consumers do not pay this fee in order to be provided with E911 service. There is no per-call charge for calling 911.
b. Rate or Range of Rates: This is a $2.00 flat fee per telephone line or hosted VoIP connection.
c. What it is applied to: This surcharge is a flat fee paid by the consumer. The surcharge required to be collected by the service provider shall be added to and stated separately in its billings to the customer.
Federal Universal Service Fund
a. Description: The FCC, as directed by Congress developed the Federal Universal Service Fund (USF) which provides funding for low income services, schools and libraries, and high cost rural service. All telecommunications companies are required to pay a specific percentage of their interstate and international revenues into the USF.
b. Rate or Range of Rates: The FCC calculates the quarterly percentage of the interstate and international revenue (contribution factor) based on the ratio of total projected quarterly costs of the universal service support mechanism to contributors’ total projected collected end-user interstate and international revenues, net of projected contributions. The quarterly percentage can be found on the FCC web site at www.fcc.gov.
c. What it is applied to: Federal USF is 16% of all interstate/international telecommunication charges. A percentage of all unlimited long distance plans have federal USF applied to it.
d. Statutory Authority: 47 C.F.R. § 54.709(a)
TV Franchise Tax
a. Description: Municipalities and Counties have elected to charge a 5% franchise tax on all TV services for any provider who have cables in and above the rights of way.
Broadcast and Regional Network Fee
a. Description: This fee is added to any TV service that receives local and regional broadcasts. This fee pays for a portion of the Re-transmission Consent Agreements negotiated between us and the local and regional broadcasters.