Court Says VoIP Is Not A Telco Service; States Can't Tax It As One

from the just-say-no-to-usf dept

In recent years, various state regulators, desperate to dredge up extra tax income, have targeted VoIP providers, using the infamous "like a duck" test, to say that since they look like a traditional telephone service, they need to pay taxes like one -- despite the fact that they don't make use of the same infrastructure (which is part of the reason why telco services were taxed in the first place). A couple years ago, an appeals court rejected this theory in Minnesota, and now an appeals court has come to the same conclusion in Nebraska, stating that VoIP services, such as Vonage, are not telecom service providers, and thus are not responsible for taxes such as the Universal Service Fund. Of course, this also contradicts some other rulings... so perhaps we'll eventually see this in the Supreme Court as well.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    bob, May 5th, 2009 @ 2:47am

    A Mess I Tell You

    Telecommunications in the USA are a mess, look how long it took to get rid of the Spanish American war tax!
    Look at the Universal Service Fund where does that money go? How much is it? How is it administered?

     

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  2.  
    identicon
    Anonymous Coward, May 5th, 2009 @ 3:10am

    Trust me on this one, you really don't want to know where that money goes or how its divided up. All it would really do is raise your blood pressure and piss off a ton of people. Because in the end, short of what would damn near be civil war, we really have no way to correct a screwed up situation.

     

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  3.  
    identicon
    inc, May 5th, 2009 @ 3:34am

    Re:

    ...or maybe we should get pissed off and elect representatives that do their job right. If none are available you should run for election :)

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Chargone, May 5th, 2009 @ 3:39am

    problem with that is that people tend to vote on the lizard principle.

    candidates not part of the 'lizard' parties thus don't have a hope in most long running democratic systems.

     

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  5.  
    identicon
    Blatant Coward, May 5th, 2009 @ 3:53am

    I vote the Straight Clevage ticket!

    More cleavage I get from, or on, a candidate, the more I vote for them.
    Except for Monica's ol' man's wife.

    Eccccch.

     

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  6.  
    identicon
    Batman, May 5th, 2009 @ 5:19am

    Careful Now

    The ruling is that Vonage is not a telecom service at the state level. The FCC has yet to decide what Vonage. And while pretending that it does not know what Vonage and other VoIP providers are, it has imposed 911, CALEA, Disability Access, number portability and other obligations on Vonage. In other words, the FCC is regulating VoIP exactly the same as regular telephone service without the bother of actually declaring that it is a phone service. This next FCC meeting, on the agenda is wither VoIP providers can discontinue service without compliance with the FCC rules for providing notice to customers of discontinuance of service.

     

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  7.  
    identicon
    CleverName, May 5th, 2009 @ 5:32am

    More like a tax

    from their site:
    "The fund is maintained through contributions made by telecommunications providers across the country and is disbursed based on four primary support programs."

    contributions ?
    So is it a tax or a charitable contribution ?

     

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  8.  
    identicon
    Rob R., May 5th, 2009 @ 5:40am

    Re: More like a tax

    Neither. It's a fee. They levy a fee against your on your bill, then they "contribute" to this fund from that. What is not said is that if I pay $15.00 on the fee, do they then "contribute" $15.00 to the Fund, or a lesser amount and just keep the rest?

    This is just another of many many things that need to be fixed. Either that or wait for socialism to fully engulf us and then we won't have to worry about it any more.

     

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  9.  
    identicon
    mike, May 5th, 2009 @ 6:31am

    voip tax

    Agreed that voip shouldn't be taxed but what about your isp's? the only reason they aren't taxed is because they are exempt for right now. So eventually we could see internet taxes instead of voip taxes. They will get ya one way or another!

     

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  10.  
    identicon
    Carol R., May 5th, 2009 @ 7:01am

    Re: Re: More like a tax

    The surcharge is two fold: first, the actual payment into the federal fund (which needs to be reviewed; I mean who are they funding these days? Everybody is wired) and the second, a much smaller piece, is an admin fee from the Telco for the expense of accumulating and paying this money to the government. This is a much smaller piece. Many states have their own funds, so this charge can layer up.

     

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  11.  
    icon
    chris (profile), May 5th, 2009 @ 7:58am

    Re: Re:

    ...or maybe we should get pissed off and elect representatives that do their job right. If none are available you should run for election :)

    you remind me of myself, when i was young and stupid and thought i could make a difference.

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Anonymous Coward, May 5th, 2009 @ 8:04am

    They don't make use of the same infrastructure as the telco's, which is why the telco's were taxed in the first place?

    What infrastructure are you referring to? The infrastructure that the Telco's put in? The right of way?

    What happens if you get Vonage over DSL? Then that is the same infrastructure as the telco's.

     

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  13.  
    identicon
    Rezendes, May 5th, 2009 @ 8:24am

    Re: Re: More like a tax

    At least with Socialism you know where the money went and you're entitled to some of the benefits! I still prefer my liberty and Democracy but full disclosure is not a virtue of that system!

     

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  14.  
    identicon
    Sean, May 5th, 2009 @ 8:53am

    Re: Careful Now

    Since most of the Telcos now use a VoIP back end for sending communications. Would an additional fee or tax that is specifically for VoIP then be added to "traditional" telcos?

     

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  15.  
    identicon
    Anonymous Coward, May 5th, 2009 @ 11:35am

    Re: Re: Careful Now

    Since most of the Telcos now use a VoIP back end for sending communications.

    Err, no. They use digital ATM backbones, but it's not Internet Protocol, thus not VoIP.

     

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  16.  
    identicon
    Anonymous Coward, May 5th, 2009 @ 11:54am

    Re:

    What happens if you get Vonage over DSL? Then that is the same infrastructure as the telco's.

    Vonage is a service runs over a variety of Internet paths. It doesn't matter if it's DSL or not. Now if they want to tax DSL over telephone lines as if it's a telco service then that's a different question.

     

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  17.  
    identicon
    Anonymous Coward, May 5th, 2009 @ 2:13pm

    "despite the fact that they don't make use of the same infrastructure (which is part of the reason why telco services were taxed in the first place)"

    Which is why I didn't understand this passage. I don't understand what the infrastructure has to do with the equation, since the infrastructure is owned by the telco and wouldn't be the reason for the taxation.

     

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  18.  
    identicon
    Clueby4, May 5th, 2009 @ 5:12pm

    USF is a joke

    USF is a joke, they plunder 6.85 billion from consumers in 2007. Does anyone really think that money is even given the appearance of being used appropriately let alone any tax-payer real world benifits?

    And I haven't even mentioned the additional billions telcoms got out of the bailout bill.

     

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  19.  
    identicon
    sys admin, Jun 2nd, 2009 @ 7:26am

    Universal Slush Fund

    The Universal Service Fund was supposed to subsidize rural telephones so that everyone would have a phone. Good idea.

    Then politicians started playing Santa with it. About 11 years ago I worked for a Canadian company that booked millions in easy sales from US school boards when the universal service fund was used for "educational connectivity," which means free computer stuff for school boards. They were placing these gigantic orders because they knew it was a windfall that would not last.

    I lost all respect for the universal slush fund right there.

     

    reply to this | link to this | view in thread ]


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