Telephones and Taxes


Pull out your cell phone billor even the one for your land lineand look at the long list of federal, state, county and local taxes. The Washington, D.C.-based Council on State Taxation ( www.statetax.org ) says state and local taxes imposed on telecommunications services are more than double the average levy on general business.

A council study showed the average effective state and local tax rate on telecom services to be 14.17% compared with only 6.12% on general business. The companies themselves bear part of the compliance burdenin 2004 the average provider filed 47,921 tax returns (over 170 returns per day) compared with only 7,501 returns for an average general business. This reflects the fact that telecom companies have more than 6,683 taxing jurisdictions to contend with.

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