New state law means fewer fees on telecom bills

By carolyn shapiro
The Virginian-Pilot

The telecommunications bills of Virginia consumers will look a lot different starting in 2007.

The heap of state taxes and fees now listed on those bills will go away – most of them, anyway. In their place, a straight 5 percent tax on the monthly service charges will appear.

The General Assembly passed a telecommunications tax reform bill this year that will take effect Monday, transforming the process of collecting money from phone users and pay-television subscribers. Legislators intend for the total revenue collected – including the tax on satellite television and Internet-based phone services for the first time – to equal or exceed the amount that the state and localities glean from the current myriad taxes and fees.

Satellite TV and heavy wireless-phone users are more likely to see their overall monthly payments increase, while consumers with land-based phone lines and cable TV will tend to save money .

Most of the federal fees on telecommunications bills, such as the Universal Service Fund charge, will remain. The exception is the federal excise tax on long-distance phone charges. In May, the Internal Revenue Service announced it would stop collecting that 3 percent tax.

Consumers can collect a one-time refund in their 2006 federal income tax filings for the federal excise tax they paid on wired, wireless or voice over Internet protocol, or VoIP, phone service between Feb. 28, 2003, and Aug. 1, 2006. The IRS is offering a standard refund amount, from $30 to $60, depending on the number of exemptions a taxpayer claims.

The federal excise tax also continues to apply to local phone service.

li>Reach Carolyn Shapiro at (757) 446-2270 or carolyn.shapiro@pilotonline.com.