In Part 1 of this subject, we'll take a close look at regulated and non-regulated charges to your bills. In Part II, I'll cover a few "rules of thumb" of just how taxes are applied to these charges, and a few tips on how to recover money due to incorrect taxation to certain business entities or non-profit groups.

The charges for local telecommunications services include both regulated and non-regulated types. Taxes are assessed on both. You can find most of these specific charges contained in "summary" section of your bill.

Regulated Charges

Tariffs are developed and filed by Local Exchange Carrier with state and public utility commission. After approval, these public documents define rules under which regulated services will be provided, and charges that will be applied.

Once approved, tariffs have weight of law, and deviations require special approvals by utility commissions. For detailed information on tariffs, visit CCMI. (Center for Communications Management Information) The following are services regulated by tariffs in most states:

In Part I, we covered regulated and non-regulated charges that will appear on your bills. This issue will describe different kinds of taxes that you will find, what they are paid for and who is exempt from them.

Taxes and tax-like charges can add as much as 25%, and more, to local telephone charges in some jurisdictions. This is an area to which no rules are universally applicable, so all generalities have exceptions. That being said, there are three "rules-of-thumb" which can be useful in understanding taxes placed on your bills.

1. Generally, four types of taxes include service fees and charges; franchise tax or surcharges; sales use or special taxes; and federal excise tax.

2. Taxes are not uniformly imposed on all services.

3. Some categories of users are exempt from some taxes. Let's take a closer look at specific taxes you'll encounter on your bills.

Specific Service Fees and Charges These charges may be imposed to support 911 services, operation of Public Utility Commission (California), provision of special equipment for handicapped persons (California), Universal Service Funds, poison control centers (Texas), etc. The Presubscribed Interexchange Carrier Charge (PICC) would also fall into this category. Such charges may be calculated on a per-line or percentage basis. These fees apply universally and there are no exceptions.

Franchise Taxes or Surcharges

Usually local items, these charges can and may be imposed by county or state governments. Most often these are calculated as a percent of items that apply, (various local service charges, additional calls or message unit charges, and installation charges), but they may be calculated on some other basis. This tax is called a variety of names, including franchise fee, city tax, municipal charge, surcharge, additional charge (AC), gross receipts tax, etc. As usual, this varies from state to state.