Taxes in the telecommunications industry are notoriously problematic and sometimes feature “a tax on a tax,” in which one tax nests within another tax. For example, the Federal Universal Service Fund can include some of a state’s Universal Service Fund taxes, as well as some local regulatory fees and surcharges.
“You won’t necessarily see all these taxes and fees on a customer’s bill, but the calculation behind the scenes has to be correct or you’ll be out of compliance,” says Erwin Wilson, who is responsible for indirect tax at Globalstar. “To make matters even more complex, the rules and rates are always changing at the jurisdictional level. For example, 911 is usually regulated at the state level, and sometimes at the city and county levels. To be in compliance we have to comply with these moving targets, at every level, on a monthly basis.”
Globalstar files in all 50 states, so there are more than 3,000 counties and nearly 20,000 cities to keep track of. “We would have to staff up the department, meaning a significant increase in headcount, to keep up with the compliance and filing requirements,” says Erwin. “We’re talking about multiple full-time jobs, and even then, I think it would be impossible.”
