Understanding Phone Taxes and Other Service Charges

Understanding Phone Taxes and Other Service Charges

The array of taxes and supplemental charges on your bill can be quite confusing. Here is a brief summary of each, and what it covers.

The Federal Excise Tax was challenged and no longer applies after September 2006. It was a tax levied on both local and long distance services by the federal government.

The FCC Subscriber Line Charge is a fee that reimburses local telephone companies for the right to use their networks to route long distance calls. This tax is called different things by different carriers, but is basically the same thing; a tax created by Congress in 1983 that amounts to typically $6/line.

The Local Number Portability Charge or LNP is a charge assessed through a law passed by Congress in 1996 to cover the costs carriers incur in upgrading their networks so that switching carriers doesn't mean switching phone numbers.

911 Emergency Service Fee and Equalization Surcharge are both fees assessed to cover the costs of emergency phone services.

The Gross Receipts Tax Surcharge is a tax that goes to local governments, and is assessed differently in different areas of the country.

A PICC or Presubscribed Interexchange Carrier Charge is a fee that long distance carriers pay to local carriers for the use of their networks. This, by law, doesn't have to be passed on or shown to consumers, so it can appear in many different ways on your phone bill. This is also another great reason to stick with one provider for both long distance and local services.

The Universal Service Fund Charge is a charge assessed that subsidizes phone service for the poor and in rural areas. It also varies from location to location.

These are the main additional charges on a typical phone bill, but can vary slightly in different areas.