Communications Excise Tax: What You Need to Know
The Communications Excise Tax is a type of tax that the government collects on select types of communication services in the United States. Businesses that offer local or toll telephone services, teletypewriter exchange services or any other similar service may be liable to tax under this category which is called communications excise tax. Here, we explain the documentation that is most frequently filed, who has to do that for some categories of business including yours and the constraints associated with e-filing through us.
What is the Communications Excise Tax?
To put it straightforward, the Communications Excise Tax is a type of tax that a government levies on certain communication services such as:
- Local Telephone Services: Charges for local telephone services, which allows access to local telephone network facilities
- Toll Telephone Services: Services for the long-distance telephone, wherein the cost changes relative to distance or duration
- Teletypewriter Exchange Services: Subscribers are enabled to send and receive messages over teletypewriter devices. 24/7 Access: You do not have to wait for office hours to pay your excise tax as the solution is available to you at all times.
The tax rate on these services is charged at 3 percent of the total charge for any communication services such as installation and service fees.
Who is required to pay the Communications Excise Tax?
Should your business offer communication services which incur this excise tax, you must collect it from your customers and send it over to the IRS. This applies to the following types of businesses:
- Staying In Touch with the Least or Long Distance Telephone Company: Any businesses that sell local telephone services or long distance calling services
- Broadband Access–ISPs: There are ISPs who bundle voice and data services and such businesses may be liable to tax.
- Telecom companies both on cable and satellite: There are companies that render telecommunication services via a cable or through a satellite dish. Such companies may be needed to file and pay this tax.
- Telephony Over Internet Protocol: Companies providing telephony services through the internet may be required to submit this tax depending on the services they provide.
Filing Categories of Communications Excise Tax
The Communications Excise Tax also applies to other various types of communication service providers. Some of these include:
- About Local and Long Distance Telephone Companies: If your company provides local or toll telephone services, you must collect and remit the 3% excise tax on service charges.
- Telecommunications companies comprising cable and satellite systems: Supplying cable uses heaps of different communication services such as telephone and the internet. This tax may be collected and reported. It has been almost common practice for telecommunication service providers (TSPs) that bundle broadband Internet access and make VoIP services available to the users to charge for an excise tax.
- Telephone Resellers: Companies that only sell ‘phone services’ (irrespective of whether they are either traditional or VoIP) are also liable to tax.
IRS Form 720: Withholding Tax Return Form for the Local Government.
Employers with a telecommunication service tax registration number and engaged in the distribution/redeeming of telecommunication services are required to complete IRS Form 720. Employers who fall under this category make sure to submit IRS Form 720 4 times in the year.
Filing Deadlines:
All the quarterly 720 tax returns will be filed due date is the last day of the month after the quarter reporting period. For instance, Form 720 would be filed with the IRS by interim users, applying the prescribed forms of the annual or short Form for the quarter ending March, due April 30.
File Form 720, Communication Excise Tax through our platforms.
Filing your Communication Excise Tax returns can easily be done through our e-filing system. Through the use of the eFiling portal, businesses can easily file the tax, IRS and the law against their duress since there is no way extension in the tax period will be allowed unless the employer is notified.
- Fees, payment and filing: The website provided has been designed such that filling and sending Form 720 takes only a couple of minutes.
- Error Proofing: The system has been structured in such a way that any tax return filed in America is checked against all standard parameters.
- Instant Confirmation: We send you a notification immediately after you have successfully submitted your Communications Excise Tax form.
- Secure and Confidential: Your tax information is safe with us because we respect your privacy.
- 24/7 Access: You do not have to wait for office hours to pay your excise tax as the solution is available to you at all times.
Why E-file Communications Excise Tax?
E-filing your Communications Excise Tax is the best option in terms of legal compliance.
- Save Time: Do not waste your time and fill up the paperwork, pay online instead.
- Reduce Errors: If a client requests a filing with the IRS, there are a number of tools at their disposal to assist in submitting a compliant return.
- Convenience: The client does not have to go to the office, they can file from any place and at any time using the application.
- Peace of Mind: Allay your fears over the timeliness of the filing of your Form 720 with the aid of confirmation and tracking features.