With technology now impacting on all parts of our lives, it is also true that communications tax too is becoming more prominent amongst businesses. Being exposed to this brand new and highly complex form of taxation is something that many companies are not ready for and so do not have a good understanding of the various regulations that they now found themselves having to work under.
Difference between communications tax and sales tax
The vast majority of businesses out there are fully aware of sales tax, how it works, and what impacts it has on their own company. However, given how complicated that communications services tax can be, there are lots of companies out there who are subject to it, but do not really have any sort of understanding about it.
Whilst a simple sales tax can be quickly worked out based on the price of a transaction, communications tax cannot be so quickly or easily established as it is calculated using many different mathematical calculations and is subject to a number of complicated rules. In addition to this, the communications tax that a company has to pay needs to be managed through not only local authorities, but also through various authorities at federal and state level.
Knowing exactly when to and how to apply communications tax depends greatly upon the individual circumstances of each business and is based on a series of highly specialized and particularly nuanced rules. It is also important to remember that when calculating this tax, sales and use tax is included in it.
For those companies out there that are potentially subject to communications tax, it is of vital importance that they have a comprehensive understanding of how this system of taxation works and what makes it so very different from regular sales tax.
Services that are subject to communications tax
It used to be the case that communications tax was only applied to those companies that were traditionally considered as telecoms ones but given the technological advancements that have affected all parts of our lives, this is no longer the case. For instance, industries that were not previously considered telecoms, such as utilities or even construction, are now so as a result of changes to how the tax is categorized.
The three main types of services that fall into the communications bracket are tech, video, and voice. These include services such as unified communications, streaming solutions, and VPNs. If your company operates any of these types of services then it is likely that it makes the business liable to pay communications tax. However, because of how complex it is, timing it right to find out more information is important in minimizing your risk.
Implementing a solution
Regardless of whether your company has paid communications tax before or if this is the very first time that the business has experienced it, keeping abreast of the constantly changing rules and regulations that govern it can be an overwhelming thing to do. This is why some companies use the help of a trusted partner, who can help to implement a streamlined solution.