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Safe Harbor Overrides

Overview

Safe Harbor Overrides, or TAM Overrides, allow you to override the federally-defined default safe harbor values by specifying a new TAM.  The TAM (transaction amount multiplier) specifies the percentage of the transaction amount that is to be taxed.  For example, a TAM of 0.5 indicates that 50% of the transaction amount should be taxed.  

There are three types of Safe Harbor Overrides:

Safe Harbor Type Default Federal TAM Percentage (decimal value)
Cellular 37.1% (0.371)
VoIP 64.9% (0.649)
Paging 12% (0.12)

The basic approach to setting the TAM for a Safe Harbor override is the same across all AvaTax for Communications (AFC) products.  Pass the Safe Harbor Type, the original default TAM as a decimal, and the new Federal TAM as a decimal.  The State TAM is calculated automatically (State TAM = 1.0 - Federal TAM).

Why use a Safe Harbor override?

The Federal Universal Service Fund (FUSF) applies to cellular, VoIP, and Paging services. Many states specify that their Universal Service funds also apply to cellular service. However, the FUSF applies to the interstate portion of the service and the state USF generally applies to the intrastate portion of the service.  The FCC allows carriers to assume that x% of their traffic is interstate in nature.  However, you may find it more beneficial to perform a quarterly traffic study on the network and document the traffic study with the FCC/USAC.  The federal percentage determined as part of the traffic study becomes the new TAM value used during AFC tax calculations.

Implement a Safe Harbor Override

Implement the Safe Harbor Override per transaction or at the account level.

  • Transaction-level implementation allows you to pass the new TAM per transaction at the time of the tax call.
  • Account-level overrides apply to all applicable transactions with no additional information needed in the tax call.

Find instructions for implementing a Safe Harbor Override by product in the table below.

AFC Product Transaction-level Implementation Account-level Implementation
AFC SaaS Pro REST v2 Set a transaction-level Safe Harbor Override in REST v2

Submit a support case to request a TAM override for your account.  Provide this information:

  • Company Name
  • Profile ID (for REST v2 and REST v1)
  • Environment (Production, Sandbox, or both)
  • Safe Harbor Type to override and the new TAM to use
AFC SaaS Pro REST v1 Set a transaction-level Safe Harbor Override in REST v1
AFC Viewer Add a Safe Harbor Override to AFC Viewer
AFC SaaS Pro Soap Specify a Safe Harbor Override for a Traffic Study
AFC SaaS Standard Specify a Safe Harbor Override for a Traffic Study
AFC Manager Add a Safe Harbor Override to AFC Manager
AFC License

Use AFC function calls:

 

Set TAM overrides in the EZtax configuration file:

  1. Locate EZtax.cfg - the path is available in Filelocs.
  2. Edit EZTax.cfg in a text editor.
  3. Update or add a line for each type of safe harbor override needed.  For example, safeHarborVoipTamOverride orginalTAM=0.649, overrideTAM=0.239
    For information about the Safe Harbor override options, see TM_00548_AFC_Configuration_Guide.
    1. Set originalTAM to the default federal percentage in the form of decimal (64.9% is 0.649).  
    2. Set overrideTAM to the decimal value determined in the traffic study (23.9% is 0.239).
    3. Verify that there is a final carriage return at the end of the file.
  4. Save EZtax.cfg and close the file.
 
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