Cellular Taxes and Fees

Cell Phone Taxes make up almost 19% of your Wireless Bill!   So, they are not to be ignored.

• According to the Tax Foundation,” typical American households with four wireless phones paying $100 per month for wireless voice service can expect to pay about $221 per year in wireless taxes, fees, and surcharges”
• Washington, Nebraska and New York Pay the Highest Taxes while Idaho, Nevada and Oregon have the lowest rates
• 51% of  US Adults are wireless only
• Wireless consumers paid an estimated $17.1 billion in taxes, fees, and government surcharges in 2017

 

And here’s the kicker:

High competition allows for wireless prices to fall:  Average revenue per subscriber or unit (ARPU)  fell significantly from $44.65 per month to $41.50 per month since 2008.  However, the disproportionate tax rates do not allow subscribers to fully realize the overall price reductions because taxes, fees, and surcharges remain high.

• Since 2008, average wireless monthly bills have dropped from just under $50 per month to $41.50 per month – a 17 percent reduction – while wireless taxes have increased from 15.1 percent to 18.5 percent – a 22 percent increase.
• Many states impose a much larger tax on wireless service than the sales tax imposed on the purchase of other goods and services. Some of this highest examples include Alaska (8.8 times the normal tax rate) Nebraska (2.7 times), Pennsylvania (2.5 times).  Might want to think about moving!

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Here’s What To Do: 

• Keep your base rates low:  Bill Police recently renegotiated rates and reduced a Client’s bill by over $83,000 per month (no, that’s not a typo, that’s a bunch of green).  In doing so, taxes were decreased by over $15,000 per month because taxes are figured as a percent of the billed amount:  lower rates, lower base to tax as a percent, lower tax. So, the first BIG way to reduce taxes is to reduce your wireless spend.   Keep monitoring those bills and continuing reductions:  this will keep your taxes lower as a result.

• Watch your Device Types with Surcharges and Rates:  In a recent Bill Police Audit it was determined that a significant portion of the incorrect billings were due to State Taxes and Surcharges by device type:
• Tax rates are different for different device types. In Virginia, for example, Smartphones should be charged a tax rate of 4% while Phone-only Devices should be charged a rate of 3.3%.  BPI found examples of Phone-Only Devices being charged at the Smartphone Rate.
• State surcharges were charged for a smartphone but the billed device was phone-only. This was a 40% difference in rate and can add up over many devices.

So on this Tax Day,  make your taxes work for you: go ride on some publicly provided roads, enjoy your local library and if you go celebrate too hard, maybe you’ll have some cool interaction with some fellow brothers and sisters in blue.

If you have questions about saving your company money through the auditing, optimizing, or managing of your wireless services, please click here to contact The Bill Police.