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VoIP Mapping Guidelines

Voice over Internet Protocol (VoIP) Taxation

Taxation of VoIP services requires special handling and as such, special VoIP mappings are provided as a part of the AvaTax for Communications (AFC) mapping guidelines. This document will inform AFC software clients how to map VoIP transactions. This document will also explain the data necessary to populate each Transaction/Service Pair.

Safe Harbor

There are three accepted methods for collecting/reporting interstate and intrastate VoIP revenue for regulatory purposes. The first two are compatible (but not exclusive) to bundled selling; the third is not compatible with bundled selling:

  1. Safe Harbor ratio: the FCC’s preset ratio (64.9/35.1) gets applied to all voice-related charges. This could be applied to either a bundle of voice charges or separate usage fees. Non- voice related charges in a bundle (enhanced features, Internet, software, etc) should be unbundled for the purposes of applying FUSF. This is the default method found in the AFC Tax Engine;
  2. Traffic Study: similar to 1) except the ratio is defined by quarterly traffic studies performed on the network and documented with the FCC/USAC. All other items are the same as 1). This can be accomplished in the AFC Tax Engine via an override file or API;
  3. Actual CDR billing: When billing customers for call detail activity, a carrier must be able to attest that the caller’s originating location can be confirmed, you can report on the basis of actual interstate and international call charges. Your itemized interstate/International LD charges get full FUSF applied. The rest of the bill does not. Since this method is based on actual call detail usage, it is not compatible with typical bundles. This method would involve the use of an override file within the AFC Tax Engine. See section 3 for more detail.

Mapping Information: Transaction Types

AvaTax for Communications supports taxation for three different types of VoIP service, all with unique transaction types: Non-Nomadic or Fixed Location VoIP; Nomadic VoIP; and Non-Interconnected VoIP. As a starting point, users will need to determine which transaction type(s) is appropriate for the category of VoIP services they are offering.

Non-Nomadic or Fixed Location VoIP service is typically tied to a particular physical and/or IP location and may only make a VoIP connection from the location recognized by the subscriber’s Internet Service Provider (ISP) as the subscriber’s service location. These services should use Transaction Type 19 or 20 (VoIP or VoIPA). VoIP and VoIPA (VoIP Alternative) were set up to accommodate the differences in VoIP taxation theories as various jurisdictions formulate their VoIP policies. Where a jurisdiction clearly declares its intent to tax VoIP services, AFC applies tax to the corresponding service types in both VoIP and VoIPA. If a jurisdiction clearly does not tax a particular VoIP service, AFC will not return tax in either VoIP or VoIPA transactions. If it is unclear that a jurisdiction intends to tax a VoIP service, AFC applies tax to the VoIP services, and does not apply tax to the VoIPA service.

Nomadic VoIP service typically utilizes a phone adapter or software application that may be moved from location to location to connect the calling phone to the internet from any location in the world where a broadband internet connection is available. In reverse, this would also allow any caller to automatically locate and reach a nomadic VoIP subscriber anywhere in the world by calling the VoIP user’s phone number, as long as the user’s VoIP adapter or software-enabled device is connected to a broadband internet connection. This service should use Transaction Type 59 (VoIP- Nomadic).

Non-Interconnected VoIP is sometimes referred to as “peer-to-peer” VoIP and often limits users to calls with other users of the same service/protocol and does not offer the ability to make and receive calls from the Public Switched Telephone Network (PSTN). This service should use Transaction Type 65 (Non-Interconnected VoIP).

Mapping Information: Service Types

The following table represents service types that are used for VoIP (19), VoIPA (20) and VoIP-Nomadic (59) transaction types. Those that are valid with Non-Interconnected (65) as well are marked with an asterisk (*).

Service Type

Description

(6) Access Charge*

Basic monthly flat rate for VoIP service.

(8) Install

Charge for installation of VoIP services.

(11) Activation*

One-time charges for activating a VoIP account. (Mutually exclusive of the other VoIP charges.)

(13) Equipment Repair

Charge for repair of equipment necessary to make VoIP calls.

(14) Late Charge*

Late charge on VoIP services.

(30) Local Feature Charge*

Charges and fees for additional feature charges of VoIP services.  (Includes services such as call waiting, caller ID, call blocking, call forwarding, etc.)

(37) Equipment Rental

Charge for renting equipment necessary to make VoIP phone calls.

(48) Wireless Access Charge

This will tax similar to Cellular/Access Charge. Federal and State USF are applied, but at the wireless safe harbor rate (valid only with Transaction types 19 and 20).

(49) Interstate Usage*

Portion of MRC, or per-minute charges, attributable to calls that cross state lines but do not leave the United States. (Reserved for use when sending actual interstate and intrastate usage using the Actual CDR billing method).

(50) Intrastate Usage*

Portion of MRC, or per-minute charges, attributable to calls that do not cross state lines. (Reserved for use when sending actual interstate and intrastate usage using the Actual CDR billing method).

(51) International Usage*

Portion of MRC, or per-minute charges, attributable to calls that originate inside the United States and terminate outside the United States.

(53) LNP

Fixed, monthly charge associated with transferring an existing phone number to a VoIP service provider.

(577) Enhanced Feature Charge*

Charges and fees for additional feature charges of VoIP services which are separate from basic transmission services. (Includes services such as voicemail, interactive voice response, audio text information services, and protocol processing.)

(596) Access-Local Only Service

Basic monthly flat rate charge for Local Only Service VoIP.

(635) Toll-Free Number

Monthly recurring charge for access to a VoIP toll free number.

E911 and other Per-Line Taxes

Many jurisdictions have different rates or reporting requirements for landline, wireless and VoIP services. For this reason, there will be jurisdictions where the VoIP tax type applies and other jurisdictions where an unspecified E911 applies. Non-Interconnected VoIP services are not typically subject to 911 compliance as these types of services do not ordinarily provide 911 functionality. Thus Non-Interconnected VoIP services are not submitted with line count transactions. For fixed location and nomadic services, in order to ensure that appropriate per line taxes are returned, users must submit at least one line count transaction with line quantity data. For single channel lines, Lines (service type 21) is appropriate. Additionally, using Wireless Lines (service type 52) will produce the wireless rate when it differs from the standard rate.

For customers using trunks (PBX or PBX High Capacity), three transactions must be passed to provide the proper per line taxes. This is because some jurisdictions assess per line taxes, such as E911, on the number of Trunks used, while others assess on the number of Outbound Channels and still others assess based on the number of Extensions. In some cases, tax could be assessed on more than one transaction. For example, the jurisdiction may assess TRS on the trunk and E911 on the Outbound Channels.

For PBX Trunks, the transactions are as shown below:

  • 578-PBX – Designates the number of PBX Trunks a customer is using. The Lines field of this transaction should be populated with the number of Trunks to be taxed.
  • 566-PBX Outbound Channel – Designates the number of outbound channels a customer is using on a PBX Trunk. The Lines field of this transaction should be populated with the number of Outbound Channels to be taxed.
  • 41-PBX Extension – Designates the number of Extensions a customer is using on a PBX Trunk. The Lines field of this transaction should be populated with the number of Extensions to be taxed.

For High Capacity Trunks, the transactions are as shown below:

  • 579-PBX High Capacity – Designates the number of High Capacity Trunks a customer is using. High Capacity Trunks are usually defined as T1 or greater. The Lines field of this transaction should be populated with the number of Trunks to be taxed.
  • 582-High Capacity Outbound Channel - Designates the number of outbound channels a customer is using on a High Capacity Trunk. The Lines field of this transaction should be populated with the number of Outbound Channels to be taxed.
  • 580-High Capacity Extension – Designates the number of High Capacity Extensions a customer is using on a High Capacity Trunk. The Lines field of this transaction should be populated with the number of Extensions to be taxed.

The following table represents service types that are used for VoIP (19), VoIPA (20) and VoIP-Nomadic (59) transaction types.

Service Type

Description

(21) Lines

Designates the quantity of numbers a VoIP customer is using.

(Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of lines designated in the lines field.) This service type will return E911 at the landline rate regardless of whether it is paired with the VoIP or VoIPA transaction type.

(578) PBX

Designates the number of PBX trunks a VoIP customer is using. (Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of trunks designated in the lines field. Used in conjunction with 19/41 and 19/566.)

(566) PBX Outbound Channel

Designates the number of voice grade communications channels leaving a subscriber's premises through a VoIP PBX connecting the subscriber's premises to the public switched network. (Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of extensions designated in the lines field. Used in conjunction with 19/41.)

(41) PBX Extension

Designates the number of VoIP PBX extensions a VoIP service customer is using. (Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of extensions designated in the lines field. Used in conjunction with 19/566 and 19/578.)

(579) PBX High Capacity

Designates the number of High Capacity Trunks a customer is using. (Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of High Capacity Trunks designated in the lines field.)

(582) High Capacity Outbound Channel

Designates the number of voice grade communications channels leaving a subscriber's premises through a VoIP High Capacity Trunk connecting the subscriber's premises to the public switched network.

(580) High Capacity Extension

Designates the number of VoIP extensions a VoIP service customer is using on a High Capacity Trunk. (Taxable amount is irrelevant for this transaction/service type. Tax is calculated based on the number of extensions designated in the lines field.)

(52) Wireless Lines

Designates the quantity of numbers a VoIP customer is using. (Taxable amount and number of lines are irrelevant for this service type. Tax is calculated based on the number of transactions passed. For two lines you would pass two transactions.) (valid only with Transaction types 19 and 20).

Per-Invoice Taxes

In order to ensure that appropriate per invoice taxes are returned, users must submit one invoice transaction using service type 43-Invoice. Tax is based per invoice per account per billing cycle. Pass one transaction for each invoice issued. The charge and lines fields are irrelevant and must be set to zero.

The following table represents service types that are used for VoIP (19), VoIPA (20), VoIP-Nomadic (59), and Non-Interconnected (65) transaction types.

Service Type

Description

(43) Invoice*

Mapping category for transactions on a per invoice basis. (Tax is based per invoice per account per billing cycle. Taxable amount or numbers of lines are irrelevant for this transaction/service type.)

Additional Services

While the above transactions can support most of the VoIP service offerings and features, there are some additional services that will be handled outside of the VoIP transaction.

Directory Assistance

Clients who offer directory assistance should use the following Directory Assistance transactions.

Transaction Type

Service Type

Name

Description

1

54

Interstate/Directory Assistance

Charges for Directory Assistance calls that cross state boundaries.

2

54

Intrastate/Directory Assistance

Charges for Directory Assistance calls that are contained wholly in one state.

Mapping for Actual Interstate and Intrastate Usage

AFC users choosing to send actual interstate and intrastate usage data rather than using the AFC default Safe Harbor method for VoIP Transaction/Service pairs can use the following Tax Types for override functionality. The existing Tax Type would need to be set to zero and the VoIP Alternate Tax Type would need to be assigned the current tax rate.

When billing customers for call detail activity, a carrier must be able to attest that the caller’s originating and terminating locations can be confirmed. Itemized interstate, international, and local number portability (LNP) charges will receive full FUSF application. The rest of the bill will receive full state USF charges where applicable. Since this method is based on actual call detail usage, it is not compatible with typical bundles. This method involves the use of an override file within the AFC Tax Engine.

Note: This is only applicable for use with VoIP Transaction Types 19 (VoIP), 20 (VoIPA), and 59 VoIP- Nomadic).

State

Existing Tax Type

Existing Tax Type Name

Alternate Tax Type

Alternate Tax Type Name

Federal

226

FCC Regulatory Fee (VoIP)

274

FCC Regulatory fee (VoIP Alternate)

Federal

162

FUSF (VoIP)

163

FUSF

Alaska

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Arizona

13

State Universal Service Fund

282

State USF (VoIP Alternate)

Arkansas

13

State Universal Service Fund

282

State USF (VoIP Alternate)

California

161

E911 (VoIP)

239

E-911 (VoIP) Alternate

California

217

TRS (VoIP)

291

Telecommunications Relay Svc Charge (VoIP Actual)

California

450

CA High Cost Fund A (VoIP)

288

CA High Cost Fund A (VoIP Actual)

California

452

CA Teleconnect Fund (VoIP)

292

CA Teleconnect Fund (VoIP Actual)

California

453

CASF (VoIP)

293

CASF (VoIP Actual)

California

454

Universal Lifeline Telephone Service Charge (VoIP)

290

Universal Lifeline Telephone Svc Chg (VoIP Actual)

Colorado

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Kansas

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Maine

215

ConnectME Fund (VoIP)

520

ConnectME Fund (VoIP Alternate)

Missouri

522

P.U.C. Fee NF

521

P.U.C. Fee (VoIP Alternate)

Missouri

141

Missouri Universal Service Fund

282

State USF (VoIP Alternate) *

Nebraska

299

NE Universal Service

282

State USF (VoIP Alternate)

Nevada

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Oklahoma

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Puerto Rico

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Washington D.C.

165

Universal Service Fund (VoIP)

282

State USF (VoIP Alternate)

Wisconsin

271

WI USF

282

State USF (VoIP Alternate)

Wyoming

522

P.U.C. Fee NF

521

P.U.C. Fee (VoIP Alternate)

Wyoming

426

WY USF

282

State USF (VoIP Alternate)

*Note: Missouri requires the naming for the State USF to conform to the following “Missouri Universal Service Fund”. Modifications to the Tax Type name may be required in your billing system if using tax type 282 in Missouri.

Populating Data

The data required for accurate taxation varies from service type to service type, but each service type is the same regardless of whether you choose VoIP or VoIPA. Common variables that need to be set for each transaction are: Business/Residential, Sale/Resale, Regulated/Unregulated, and Incorporated/Un- Incorporated.

The following chart lists which data to populate for each service type.

Service Type

Data

Access Charge

Taxable Amount

Access Charge-Local Only Service

Taxable Amount

Activation

Taxable Amount

Enhanced Features

Taxable Amount

Equipment Rental

Taxable Amount

Equipment Repair

Taxable Amount

Install

Taxable Amount

International Usage

Taxable Amount, Minutes

Interstate Usage

Taxable Amount, Minutes

Intrastate Usage

Taxable Amount, Minutes

Invoice

None (Taxable Amount, Lines, and Minutes should be populated with zeros. Taxes returned based upon how many transactions are passed into the system. You should pass one transaction for each invoice issued.)

Late Charge

Taxable Amount

Lines

Lines

LNP

Taxable Amount

Local Feature Charge

Taxable Amount

PBX, PBX Extension, and PBX Outbound Channel

Lines

PBX High Capacity, High Capacity Extension, and High Capacity Outbound Channel

Lines

Toll-Free Number

Taxable Amount

Wireless Access Charge

Taxable Amount

Wireless Lines

Lines

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