Communications Tax Compliance: An Overview

Over the years, we’ve spoken with thousands of companies of all sizes that are looking to sell communications services. The common thread to these conversations is that everyone agrees that communications services are heavily taxed and tax compliance is complex.

Indeed, communications services are the most heavily taxed item on the planet – but why? Because everyone uses communications services – there are now more mobile phones on the planet than there are people – and the taxes are easy to collect. Communications taxes have been used to fund wars, provide rescue service, install rail lines, move overhead lines underground and seemingly everything in between.

Communications tax began in 1898 to fund the Spanish-American War. In the nearly 120 years that have followed, communications taxes are found across more than 12,000 jurisdictions in North America and cover every conceivable type of communication. If a tax authority wants to raise revenue, a communications tax is an effective fund raiser.

Success and pervasiveness has led to complexity. There are thousands of taxing authorities at the federal, state, and local level with varying different tax rates, impositions, methodologies, registration and filing requirements, and all within certain jurisdictional boundaries. That is a lot information to track. Then, consider any element can change – even the jurisdictional boundaries – and the complexity is staggering.

With the complexity and amounts involved, communications tax compliance is not a matter to take lightly. Missteps can result in penalties, interest and tax expenses that can drain your profits, undo years of revenue collection and undermine the value of your business.

Although the process of communications tax compliance may be complex, the concept of tax compliance itself is simple – taxing authorities require that you collect and remit taxes and fees in exchange for the privilege of providing goods and services to their citizens. Even though the process of compliance may be complex, remember that between you and the taxing authorities are solution providers that make the complexity manageable. For example, Wolters Kluwer has a partner ecosystem that can help with any of the components of the process so that you can operate in compliance.

In this blog series, we’ll reduce the mystery of communications tax compliance into four steps:

  • Registration with taxing authorities
  • Calculation of taxes due
  • Invoicing customers for taxes due
  • Reporting and remitting funds for the taxes owed

We will walk you through each of the steps, so that you can start in compliance and remain in compliance, leaving you to focus your time, energy and resources away from tax compliance and onto your business.

Wolters Kluwer can help guide you through the complex maze of communications tax compliance. Their flagship communications tax solution, CCH® SureTax® Communications, makes tax calculation easy and with their network of partners, they make the other steps of communications tax compliance simple as well.

To learn more about communications tax compliance, download our free white paper, 4 Steps to Communications Tax Compliance.


Sales & Use Tax Experts

All stories by: Sales & Use Tax Experts

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