Every year, the Federal Communications Commission updates its fee schedule to ensure regulatory services are being appropriately covered by contributions from communications service providers. While the current fees were adopted several months ago, some CSPs are still not aware of significant changes that directly impact them: RespOrgs that manage toll free numbers and direct broadcast satellite providers.
In this post, we’ll go over the most noteworthy changes for fiscal year 2015 and provide insights on how these two groups are affected.
Toll-Free Number FCC Contributions
Since the 1980s, registration of toll-free numbers in America (those beginning with 1-800, 1-844, 1-855, 1-866, 1-877 and 1-888) have been maintained by Responsible Organizations, known as RespOrgs. These organizations bear the responsibility of building and keeping customer records for toll-free numbers on behalf of subscribers. Some are long distance carriers but many are resellers and independent companies.
With the 2015 fiscal year schedule, the FCC adopted a regulatory fee category for toll-free numbers managed by RespOrgs. The reason behind the move, put simply, was to recoup costs associated with the commission’s work on regulating toll-free numbers:
“There may be many toll free numbers controlled or managed by RespOrgs that in some cases are not carriers, and therefore, have not been paying regulatory fees. Because Commission FTEs (full time employees) work on toll free number regulation, we adopted the regulatory fee category for toll free numbers to recover the associated costs.”
Source: 2015 Report and Order and FNPRM
Because many RespOrgs are not traditional carriers, some companies may not yet be familiar with the change or what it means for them. If your organization manages toll-free numbers and hasn’t contributed to the FCC in the past, it’s important to understand the current schedule and ensure appropriate fees, currently 12 cents per toll-free number per year, are being applied when filing taxes.
Direct Broadcast Satellite (DBS)
Direct broadcast satellite (DBS) providers are also experiencing their first fee rate as a subcategory of cable television and Internet Protocol Television (IPTV). The adoption of this fee was met with some noticeable controversy, namely by cable providers who contend the fee is too low: At 12 cents a year (or one cent per month, per customer), the DBS fee is eight times lower than the one for IPTV.
In keeping this initial fee low, the FCC sided with DBS operators who commented that paying the same rates as cable television providers would lead to rate shock among customers:
“We recognize that FY 2015 would be the first time the Commission would be applying this regulatory fee subcategory for DBS. Thus…we find that…the proposed rate of 12 cents per subscriber per year is a sensible fee.”
Keeping Up With Changes
These are just two recent examples of the countless communications taxation changes that must be continually monitored to maintain tax compliance. Any tax decision or automation software you use should account for these transitions at the federal, state and local levels as they occur.
If this is the first time your company is learning about these regulatory fee changes—or if you are concerned about missing other rules, rates and regulations that stand to impact your business—we highly encourage you to seek the expertise of a compliance expert. To gain a better understanding of your communications products and services from a tax perspective, Avalara’s free communications tax calculator is also a good place to start.