RSS108 Year-Old Telcom Tax Repealed
By Ed Oswald | Published August 1, 2006, 3:21 PM
A 108 year-old tax that originally was used to fund the Spanish-American War ceased to exist Tuesday, and telecommunications industry executives vowed to continue to press for further tax relief for their customers.
A three percent tax was charged to subscribers of long-distance services, as well as wireless, VoIP, prepaid telephone cards and other bundled services.
In May of this year, the IRS announced that it would no longer seek to collect the federal excise tax (FET), ending a long-standing legal dispute with telecommunications providers. The law had been successfully challenged in five appeals courts, which the proceeds since the conclusion of the Spanish-American War had gone into the general fund.
In addition, customers who had been charged the tax would be able to claim a refund as part of their 2006 tax returns. Taxes charged between Feb. 28, 2003 and before Aug. 1, 2006 would be refundable. The IRS said it would provide guidance on how to apply for these refunds from the agency's Web site.
"We have been working for years on behalf of our customers to eliminate this outdated and regressive tax," Verizon Retail Markets Group president Bob Ingalls said in a statement. "This is a good first step in alleviating consumers' telephone tax burden."
One part of the tax remains, which deals with local telephone service. Verizon said it was working with other telecommunications companies to have the tax completely repealed by the end of the year.
Wireless interest groups also lauded the repeal of the tax, saying the average wireless customer's tax burden is 17 percent. However, they said more work was left to lower taxes even further, as they remain at 14 percent even after the FET's repeal.
"If policymakers want to ensure that high tech services like wireless are affordable for all consumers, then the issue of discriminatory taxation must be addressed," CTIA president Steve Largent said. Largent added that the passage of telecommunications legislation now in the Senate was important to give consumers further tax relief.
The bill would prohibit states from placing additional taxes on wireless service for a period of three years. The CTIA is currently involved in a legal battle with Pennsylvania over a five percent gross receipts tax for wireless service in the state.
"While the Senate bill is being debated, we fully intend to remain highly active in states and cities that seek to increase wireless taxes," Largent said.
That's great but is bad for VoIP subscribers. VoIP taxes went up due to the inclusion of VoIP providers having to charge the Universal Service Fund fee, which is higher than FET.
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|We're still funding WWII with a federal rubber tax on tires, it's a shame they don't use rubber anymore.
db.
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|Wait wait *thinks about that for a sec*. Just how active was the telecom industry 108 years ago that a petty 3% would mean anything? o_O
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|Hmm maybe the next law they take out will be the law in my state that says "A person may not cross state lines with a duck atop his head."
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|Ummmmm Yeah.
And as a verizon customer, I have already been notified that increases for EVERY service will go into affect in October.
Gee. Thanks for lightening my bill by 3% and then raising it (potentially) by 10% with the new charges.
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|Old laws are a pain to get rid of. I live in PA, and we have a set of laws called the "Blue Laws". Basically, on Sundays, you can't buy a car or motorcycle, and you can't buy booze of any kind. This dates back to some kind of religious objection to performing those tasks on a Sunday, but no one is willing to be the one to say it's ok to buy a car instead of going to church, so the laws remain.
These taxes are like that. Everyone knows that if the remove this tax, then they'll have to tax something else to make up for the lost revenues, so it is easier to just leave it in place.
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|We had the stupid Blue Laws in VA until a few years ago. I think it they were dropped due to constitutional concerns. Regardless, it's amazing how we Americans talk out of both sides of our mouths. On one side we beat our chests at how progressive and open-minded we are, but then we have crap like this hanging around.
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|Yea, in good ol Indiana we can't buy liquor on Sunday's either. I'm not sure what other silly laws we have, but there is some state where it is illegal for monkey's to smoke cigars on the street. The man is always trying to keep us down haha.
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|Come on people, why do you think the telcos were fighting so vehemently for this tax to be repealed? I don't think it's out of the kindness of their hearts. Instead of 3% going to the government, phone bills are now 3% lighter: the telcos can now increase their rates to fill that gap. Consumers won't be seeing savings for long; and personally, I'd rather see the money going to fund government programs than lining the telcos' pockets.
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|The government will just waste it and have nothing to show for it. At least with the telcos, some exec will get a new boat or something.
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|Well.... It's about time!
ROFLOL
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|I looked it up and it saved me about 3 bucks. Way to go government for cancelling a freakin tax over a century old. Also saw this little note on my Verizon bill:
"On July 1, the Federal Universal Charge (FUSC) will decrease to 2.31 percent of
assessable wireless charges. The FUSC is a Verizon Wireless charge that recovers
government mandated costs and is subject to change each calendar quarter based on an
FCC assessment rate. For more details about FUSC, please call 1-888-684-1888."
Don't know what the original rate was, but hey, I'll take lowering of taxes.
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|Great story. I cannot believe this tax remained for so long on the books and collected. This should be in Ripley's believe it or not. I am curious as to how many other 'dinosaur' taxes remain on the books.
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|I live in Oregon, don't know if anyone else has the so called "Subscriber Line Charge" for $6. The local news said this goes into the telco's pocket. This should be gone too! My taxes on my Qwest line were over $17, and I dumped them for SunRocket for $200 per year! Less than the taxes!
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|It has nothing to do with the price the company is charged.
So expect to be saving 3% :)
With everything as expensive as it is nowadays...every cent counts.
This is good news, but should have been done a long time ago.
Latz, SB
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|Someone should take their asses to court and make them pay it back. Greedy bas****s!! :-)
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|...on all calls placed after the war. (payouts to those who have since died being made to their direct decsendants, of course)
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|Originally used to fund the Spanish-American War? That's the U.S. legal system in action, folks.
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|Yes, a wonderfully efficient government we have... (sarcasm for all the slow folks)
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|More Congress itself than the has-a-life-of-its-own legal system.
Tax laws in this country really need an overhaul.
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|No taxation without representation (That actually knows what the hell they're doing?)
Considering it takes a PHD in tax code, I think it should be a new requirement for all rep, senate, and congressional contenders.
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|No argument from me. What's "great" is that there are segments of the tax code that contradict other segments.
I say dump it all and institute the FairTax.
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|Let's see if they lower our prices now, eh? *laughing*
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