Understanding the Taxes Imposed on Your Telecom Bills

This issue contains the second part of a two-part article on … and … charges and taxes placed on them. … the subject of taxes as it applies to your telecom bills is bro

This issue contains the second part of a two-part article on regulated and non-regulated charges and taxes placed on them. Unfortunately the subject of taxes as it applies to your telecom bills is broad enough to warrant a lengthy discussion.

In Part I,Guest Posting we covered the regulated and non-regulated charges that will appear on your bills. This issue will describe the different kinds of taxes that you will find, what they are paid for and who is exempt from them.

Taxes and tax-like charges can add as much as 25%, and more, to local telephone charges in some jurisdictions. This is an area to which no rules are universally applicable, so all generalities have exceptions. That being said, there are three “rules-of-thumb” which can be useful in understanding the taxes placed on your bills.

1. Generally, the four types of taxes include service fees and charges; franchise tax or surcharges; sales use or special taxes; and federal excise tax.

2. Taxes are not uniformly imposed on all services.

3. Some categories of users are exempt from some taxes.
Let’s take a closer look at specific taxes you’ll encounter on your bills.

Specific Service Fees and Charges
These charges may be imposed to support 911 services, operation of the Public Utility Commission (California), provision of special equipment for handicapped persons (California), Universal Service Funds, poison control centers (Texas), etc. The Presubscribed Interexchange Carrier Charge (PICC) would also fall into this category. Such charges may be calculated on a per-line or percentage basis. These fees apply universally and there are no exceptions.

Franchise Taxes or Surcharges

Usually local items, these charges can and may be imposed by the county or state governments. Most often these are calculated as a percent of the items that apply, (various local service charges, additional calls or message unit charges, and installation charges), but they may be calculated on some other basis. This tax is called a variety of names, including franchise fee, city tax, municipal charge, surcharge, additional charge (AC), gross receipts tax, etc. As usual, this varies from state to state.

Sales, Use or Special Taxes

These taxes may be imposed by a municipality, county, school district, transportation district, state or other taxing body. The “state and local taxes” section of your bill may be a combination of such items. Sales, use and special taxes generally apply to local service charges, additional calls or message unit charges, installation charges, and intrastate toll charges. (Most states also tax interstate toll charges.) And again, these taxes are most often a percent of the items to which they apply. That base may include franchise taxes, surcharges or other service fees. In other words, you are taxed on taxes!

Federal Excise Tax

This tax is imposed by Congress on non-exempt items. It generally applies to regulated services, except private lines, mileage, centrex-related enhancements, service and installation charges, and some other services. The base on which the tax is calculated may include franchise taxes, surcharges, and gross receipts taxes. Originally a Spanish-American War “luxury” tax, the rate has varied between 1% and 10% over the years, but has been held constant at 3% since 1983.

Remember, taxes are not uniformly imposed on all services. For example, white-page directory advertising is not taxed in most states, unless this statement item includes other items. (Arkansas and Oklahoma are exceptions, however.)

Who is Exempt?

Charities, churches, schoools, nonprofit educational and hospital operations, certain other entities that receive government funding, foreign counselor operations, and others, may be exempt from state and/or federal taxes. For example, common carriers, newspapers and broadcast companies may be exempt from federal tax on some services.

To understand the specific services that are exempt from federal tax, refer to the Internal Revenue Service publication 510 entitled Communications Tax. This publication is very specific as to what taxes are federally imposed and which are exempt. Contact me directly if you’d like your own copy.

As you can see, taxes can be a complicated subject as it applies to your telecom bills. But understanding them can be a major step in reducing your costs when doing a cost-reduction study.

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Understanding Real Estate Taxes And Tax Lien Properties

Many homeowners do not understand much about real estate taxes and for this reason can end up in the position of losing their homes. Real estate taxes or property tax is normally calculated on the land value,Guest Posting the location, the county laws, and other factors. Real estate taxes are utilized for the upkeep of roads and other public services like emergency services and other municipal services enjoyed by the local residents. Real estate taxes are also in one way limited to the United States alone but for almost every country worldwide as well. Other names used for real estate taxes are rates and land levies and every homeowner will have to pay them.

How Much in Real estate taxes must I pay?

Real estate taxes are assed according to the sale value of your land or home. Rates are likely to be reassessed each year and normal inflationary increases and land values mean that your real estate taxes will increase with them. There are strict laws in place to ensure that these real estate taxes are paid and if you fall behind you are likely to even lose your home. The bill of rights requires that your property tax bill shows your assessment value of the property and the percentage of the how the figure has been arrived at. Real estate taxes can change according to the local municipal needs and area upgrades that need financing so your real estate taxes can change at any time in relation to municipal budgets.

Do I benefit from Real estate taxes?

Everyone benefits from real estate taxes because this money is used to the good all of all residents. In addition to this there are certain IRS benefits for real homeowners as well. Homeowner, are entitled to deduct payments of real estate taxes that they are paying on their property if you claimed for itemized deductions on your tax return. The IRS allows you to deduct real estate taxes on your main home as well as on any other homes and real estate you own. There are no also limits on the dollar amount of real estate taxes you can deduct either so this is certainly beneficial. For real estate investors with multiple properties and homes, there are also no limits on the number of these houses or properties for which deductions can be claimed for in real estate taxes.

How is Real estate Taxes paid?

When you pay monthly mortgage payment to a bank or financial institution holding your mortgage then the amount generally includes the real estate taxes that have to be paid on your property. The bank or mortgage holder pays these real estate taxes to the proper taxing county authority on their due dates. When your real estate taxes are included in your mortgage payments then you may claim an IRS deduction only in the tax year you actually pay your real estate taxes. You will find the real estate taxes paid for the year on the statement than the bank or mortgage lender gives you on the end of the year mortgage statements.

Buying Cheap real estate land and Homes with Tax Liens

Knowing the Ps and Qs or real estate taxes and tax lien foreclosures can make investing in real estate very lucrative. As mentioned above real estate taxes are tax deductible from the IRS no matter how many homes you own. If you have the right knowledge it is possible to purchase homes at a fraction of their prices for back real estate taxes but realtors and property investors in the know will rather prefer to keep this knowledge secret. It is possible to purchase luxury dream homes of your own or buy and sell property to make handsome re

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