One device consistently used by Americans is our cell phone. Every month our phone bill lists a multitude of charges, fees, and taxes that we are regularly assessed. And yes, in addition to all of the fees and charges, there are taxes on cell phone use. When you consider how much the telephone is used, these taxes annually collect hundreds of millions of dollars in revenue.
The price for service listed in wireless companies advertising is rarely the one which a consumer pays on a monthly basis. According to a November 2015 report by the Tax Foundation, there are over 75 different “fees” a carrier may charge, and the average U.S. wireless customer pays nearly 18% in federal, state and local fees. Despite the fact that the amount of the average monthly bill has fallen since 2008, the tax rate on cell phone bills has increased almost three percentage points. Some of the charges on a phone bill may include:
- gross receipts surcharge
- city taxes & fees
- administrative charge
- regulatory charge
- 911/emergency response fees
- state telecommunications excise surcharge
- state taxes
- Universal Service Fund fee
And not surprisingly, New York ranks among the highest in cell phone charges as New Yorkers pay a wireless tax rate that exceeds the national average and ranks as the third-highest in the nation, according to a study by the Tax Foundation. With as many as nine state and local charges, New Yorkers pay as much as 25 percent of their cell phone bill in taxes, fees, and other surcharges.
New York’s combined state and local wireless taxes and fees are slightly more than six percentage points higher than the national average. New York’s tax and fee rate is about 18 percent compared to the national average of 11.9 percent. With the 6.6% Federal Universal Service Fund rate, New York’s combined federal and state wireless tax rate is nearly 25 percent, ranking behind only Washington and Nebraska for the largest in the United States.
An average household with four wireless phones and monthly charges of $100 may expect to pay $225 a year in taxes, fees, and surcharges. New York allows for state and local sales tax, an excise tax, and a gross receipts tax. New York State also allows New York City, other selected cities, school districts, and certain transit districts to levy various wireless taxes in addition to county 911 fees.
If you have any questions related to your taxes, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
