FCC Regulated Charges on Telephone Service ?

Edwards Finance > Phones

Q. Are FCC regulated surcharges, which may be separately stated as a recurring monthly charge on a retail customer's telephone bill, subject to the Massachusetts sales and use tax on telecommunications services?

A. Local telephone companies recover some of the costs of the actual lines connecting homes and businesses through a monthly charge appearing on the customer's telephone bill. This charge is usually called the "subscriber line charge," but also may be referred to as the "federal subscriber line charge" because it is regulated and capped by the FCC. Currently, the charge is capped at $3.50 a month for a primary residential line. The charge for additional residential lines at the same service address and business lines is permitted to be higher. Presubscribed Interexchange Carrier Charges ("PICC") - A charge that long distance companies pay to local telephone companies to help them recover the costs of providing the telephone wires, underground conduit, telephone poles, and other facilities that link each telephone customer to the telephone network. A long distance company pays this charge for each residential and business telephone line presubscribed to that long distance company. There is no tax due on PICC charges paid from one telecommunications vendor to another. However, if a retail consumer or business has not selected a long distance company, the local telephone company may bill the consumer or business for the Presubscribed Interexchange Carrier Charge. If the PICC charge is billed to the retail customer, it is subject to sales tax. More detailed information on federal regulation of the pricing of telecommunications services is available from the Federal Communications Commission, 445 12th St., SW, Washington, D.C. 20554 (toll free number: 888-225-5322) and the FCC website at : http://www.fcc.gov/Bureaus/Common_Carrier/factsheets. Additional information regarding the pricing of telephone services is also available from the Consumer Division of the Massachusetts Department of Telecommunications and Energy (toll free number 800-392-6066), One South Station, Boston, MA 02110 and the DTE website at www.magnet.state.ma.us.

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