Guide to VoIP Taxation and Regulatory Compliance



Overview of Operational Systems  and Professional Services Requirements Necessary  to Ensure Compliance with Communications  & VoIP Taxation and Regulatory Fees

In 2014 there were estimated to be over 300 types of Telecom taxes, fees, charges, and surcharges imposed on potentially 685 different tax bases requiring potentially 48,000 different filings per legal entity across the U.S. in tens of thousands of jurisdictions at the federal, state, and local levels. The vast majority of these impositions currently apply to Interconnected VoIP services and state & local governments continue to extend impositions to I-VoIP services.  As such, there is a level of complexity in calculating Telecom taxes that a vendor of traditional sales and use tax products and services would not normally be exposed to.

Some Telecom Taxes are legally imposed on the I-VoIP services customer or user, with the I-VoIP Service Provider acting as the collection agent, and some will instead be imposed on the Service Provider as the seller or the provider of the Telecom services. The difference in the legal incidence of the tax, fee, charge, or surcharge significantly affects a Service Provider’s legal and regulatory obligations in regards to passing taxes on to a customer. Either tariff or contractual authority is required to pass on many of the Telecom Taxes. In some cases, Telecom Taxes may not be passed on as their own segregated cost to the customer. It is common in the Telecom industry to pass “prohibited” Telecom Taxes through to customers as part of a regulatory recovery fee (also referred to as a “Cost Recovery Fee”).

An I-VoIP Service Provider’s accounting, billing, accruals, collections, remittance, and reporting processes must be able to account for these unique recovery fees.


Attorneys in The CommLaw Group’s Communications Taxes & Fees Practice Group can help you unpack and understand the myriad issues and how they may impact your business.  Moreover, our Attorneys can assist in the development of practical and pragmatic strategies that will enable, and not inhibit, your company’s ability to take full advantage of the explosive growth in VoIP, UCaaS and other Cloud Communications solutions.

Allison D. Rule, Partner

Co-Chair, Communications Taxes & Fees Practice

Tel:  703-714-1312



Jonathan S. Marashlian, Managing Partner

Co-Chair, Communications Taxes & Fees Practice

Tel:  703-714-1313



About The CommLaw Group

The CommLaw Group is unique among its peers, offering clients a scope of capabilities rarely found in boutique law firms.  With a headcount rivaling the Telecom Practice Groups of most major law firms, we boast a team of attorneys, paraprofessionals and consultants possessing the skills, focus, and resources necessary to serve the communications law needs of Fortune 100 companies, all without sacrificing the range of services and affordability which makes us the “go-to” firm for new entrants and service providers of all sizes. 

In association with The Commpliance Group, which specializes in fixed-fee licensing and compliance services tailored to the communications industry, The CommLaw Group offers businesses the “Full Spectrum” of legal, regulatory, administrative, and consultative services.

The CommLaw Group was recently profiled in The Wall Street Journal as one of the Capital Region’s Premier Law Firms.

DISCLAIMERS:  This Briefing Advisory has been prepared for informational purposes only.  It is not for the purpose of providing legal advice and does not create an attorney-client relationship between Marashlian & Donahue, PLLC and you.  You should not act upon the information set forth herein without seeking experienced counsel.   This Advisory may be considered Attorney Advertising in certain jurisdictions.  The determination of the need for legal services and the choice of lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise.

ATTORNEY ADVERTISING DISCLAIMER: This information may be considered advertising in some jurisdictions under the applicable law and ethical rules. The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers

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