CloudTechWhitePapers

A Survival Guide to Communications Tax

The rapid pace of tech trends, innovations, mergers, and acquisitions – not to mention the ever-evolving political landscape – all impact communications industry taxation. And that’s before you begin to factor in complexities related to things like bundling and identifying customer locations.


Communications Tax Survival Guide
Published By - hitechnectar

The communications industry changes every day. The rapid pace of tech trends, innovations, mergers, and acquisitions—not to mention the ever-evolving political landscape—all impact the taxation of services ranging from wireless and VoIP to unified communications and managed services. And that’s before you begin to factor in complexities related to things like bundling and identifying customer locations.

It’s no wonder those charged with communications tax responsibility struggle to remain compliant. With more than 70,000 tax jurisdictions in a constant state of flux, the mere act of monitoring all those changes is a full-time job. It can often feel like a struggle to simply survive.

And when you’re in survival mode, you need a survival guide.

Challenge #1:

Managing Compliance Processes with Complex Nexus Survival Tactic:

Dedicated Communications Compliance Specialists Knowing when nexus is triggered can be difficult for any business. Factor in communications technology where there’s little more than invisible, undetectable radio waves and digital signals to track, and the process of managing compliance across numerous jurisdictions has the potential to become incredibly painful.

The reason: Many companies think of sales and use taxes when determining if they have compliance obligations to a state, and consider retail scenarios where there are physical facilities, equipment, employees, and products that are relatively easy to track. But while a large warehouse or retail storefront presence may be a strong indicator that a company will fall within a state’s definition of nexus from a sales and use tax perspective, a very different set of factors will apply when deciding when a CSP is obligated to register and comply with states’ communications tax.

Even if a CSP does not own any network infrastructure in a state, complicated resale relationships with companies that do have infrastructure can create a legal relationship with physical facilities that may be counted towards a seller’s presence in the state.

To complicate matters further, the minimum thresholds vary wildly from state to state.

In this white paper, we summarize the top challenges facing communications service providers (CSPs) today, and offer several tactics that can be used to not only survive, but thrive, in their midst.


You May Also Like to Read-
Communication Service Providers: Losing Money To FCC Safe Harbor Ratios?
The Tax Challenges of Accurately Identifying Customer Locations

 

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