Telecom Tax Compliance: Learn the issues and and how to put together a solution for your business

Transcription

1 Telecom Tax Compliance: Learn the issues and and how to put together a solution for your business

2 2 Today s Presenters Mike Sanders CCH SureTax Chief Product Strategist Mike is a seasoned technology professional. As Chief Technologist for SureTax, Mike provides the product vision for SureTax Telecom and the other products in SureTax s portfolio of calculation solutions. Jonathan Marashlian Managing Partner Marashlian and Donahue, LLC - The CommLaw Group Mr. Marashlian is the Managing Partner of Marashlian & Donahue, LLC, The CommLaw Group. He is also the founder and CEO of The Commpliance Group, the firm s affiliated regulatory compliance and consulting services firm. JK Chelladurai CEO OneBill, Inc JK Chelladurai is responsible for OneBill s technology direction, operations and product development. JK has over 25 years of experience in software development including over 17 years of experience in building BSS/OSS solutions for the Telecommunications industry.

3 3 Agenda 45 minutes Overview Tax Calculation Regulatory and Legal Issues Billing 15 minutes Questions

4 Tax and Fee Calculation

5 Simplified View of Communications Tax Compliance Registration and Legal Issues Service Provision Tax Calculation Funds Collections Reporting Remitting

6 Simplified View of Communications Tax Compliance Registration and Legal Issues Service Provision Tax Calculation Funds Collections Reporting Remitting

7 Tax & Fee Calculation 7 Telecom Tax Rules are Complex Complexity increases exponentially as your business adds customers in more state and local jurisdictions Nationwide, over 7,000 unique taxes & fees apply to communications services Proper tax applicability - VoIP, UCaaS, SIP, MVNO and even one-way and Machine-to-Machine are not tax exempt!

8 Tax & Fee Calculation 8 Taxing Issues Simplified Through Technology Proper Tax Situs (jurisdiction / tax authority) Determination Zip+4 is critical Consider address validation when customers subscribe Capture the Point of Primary Use [PPU] Customer creates the nexus in telecom (billing address / PPU) Varying Taxability by Service Postpaid is taxed more than prepaid PSTN is more heavily taxed than non-pstn Retail transactions will give larger universe of taxes than wholesale If you do not unbundle where allowed, taxability is more stringent

9 9 Other Considerations Tax & Fee Calculation Taxing Issues Simplified Through Technology In come cases, you must process the transaction twice to determine the correct unit based fees (i.e., E911s) Tax on tax impacts overall effective rate and creates significant tax exposure in many states (NY example) Prepare for customer-specific tax exemptions Tax information for products and services can be relevant in sales process

10 10 Tax & Fee Calculation Taxing Issues Simplified Through Technology Post Calculation Reporting Information is Critical Revenue and tax information for monthly reconciliation Effective rates by state for proper accruals (prepaid services) Transparency of details for future audits Reporting data for taxes, fees, surcharges and regulatory filings

11 Tax & Fee Calculation 11 Solutions? Technology Solutions / Calculation Software As footprint expands, technology and tax database access becomes essential

12 Real-Time Calculation of Communications Taxes in the US, Canada and around the world.

13 Superior Tax Content from Wolters Kluwer, CCH s tax and legal research. Data so accurate, even the IRS uses it.

14 Regulatory and Legal

15 Myths & Misperceptions MYTH: It s over the Internet, so it must be tax free Found on blog: VoIP services, however, dodge these high levies because communication occurs almost entirely over the Internet rather than the PSTN line when you make a VoIP call. Currently, the government has taken a hand s off approach when it comes to taxing VoIP services because of their means of transferring information over an IP network. The only tax imposed on VoIP providers right now is the Federal Excise Tax. While paying taxes can be, well, taxing, on our bank accounts, why not choose a phone service that will charge fewer taxes and ultimately save you money? Source: Voxilla

16 16 Myths & Misperceptions MYTH: It s over the Internet, so it must be tax free Found on VoIPReview.org: No Federal Universal Service Fund Contributions for VoIP services. Cheaper 911 Taxes/Surcharges for VoIP services. Tax season hurts the wallet, but at least VoIP users know that each and every month they save an average of 13% of taxes over traditional phone service. Death and taxes might be certainties, but so is cheap VoIP service year round. Source: VoIPReview.org Press Release, Posted February 14,

17 17 Myths & Misperceptions FACT: Taxes and Fees do Apply Taxes States often use differing definitions for taxable services Administered by state Departments of Revenue ( DORs ) or local jurisdictions Includes sales tax, telecommunications excise tax, utility users tax, business and occupation tax, gross receipt tax, and 911 fees Regulatory Fees Federal Regime Universal Service Fund ( USF ) Telecommunications Relay Service ( TRS ), North American Numbering Plan Administration ( NANPA ), Local Number Portability Administration ( LNPA ) FCC Regulatory Fee State State USF and TRS PUC Fees

18 18 Myths & Misperceptions You say po-ta-to, I say po-ta-to... You say taxes, I say fees? WRONG! Taxes Consumer owes taxes to government, Service Providers are tax collectors Nexus matters Technology, configuration generally irrelevant Bundling = More Taxes Supply chain enforcement? Yes, but upstream exposure limited and manageable Remediation options exist Regulatory Fees Service Providers owe fees to government, Consumers may pay pass-throughs Nexus is irrelevant Technology, configuration matters Bundling More Fees Supply chain enforcement? Yes, but upstream exposure magnified and uncertain Remediation options limited There are Differences and the Differences Matter!

19 Nexus Nexus refers to the amount or degree of business activity that must be reached before a state can impose taxes on a business s revenue Income tax nexus and sales tax nexus are not the same Nexus determination for sales tax purposes is fact intensive and fluid Supreme Court s decision in National Bellas Hess established physical presence requirement for sales and use tax purposes Supreme Court clarified nexus requirements in Quill v. North Dakota Due Process and minimal contacts Dormant Commerce Clause and substantial nexus Determinations grounded on whether there is physical presence but little uniformity Evolving concepts of affiliate nexus and economic nexus Amazon laws Conflict and court decisions 19

20 Nexus cont. Communications Taxes and Attributional Nexus Conservative View: Even in the absence of physical presence and minimal contacts, attributional nexus may be found where a customer is (a) billed for service provided in jurisdiction and (b) provider derives economic benefits thru ability to establish and maintain market for sales, even when using 3 rd party facilities Annox, Inc. v. Kentucky Revenue Cabinet, 2003 Ky. Tax LEXIS 246 City of Baltimore v. Vonage America, Civil No. JFM Popular View: Some physicality, some minimal contacts or unambiguous statute/regulation e.g., Los Angeles Communications Users Tax Regulatory Fees and Jurisdiction Nexus irrelevant; FCC expressly authorizes State Utility Commission to impose state USF, TRS and other fees Kansas/Nebraska State USF Declaratory Ruling WC Docket No

21 21 Regulatory Issues Universal Service Fund, Universal Service Fund, Universal Service Fund, Universal Service Fund Shall I continue? The combination of a USF Contribution Factor in the high teens with the increased likelihood of USAC audits, the practice of highly leveraged & unyielding enforcement, and the threat of ending up in the never-ending spin cycle of the FCC audit appeals process create strong incentives to ensure defensible Form 499 revenue reporting positions, without sacrificing competitive positioning.

22 Risk Management What if annual compliance costs more than your annual tax burden? Compliance with local, state, and federal taxes and regulatory fees often involves a significant upfront investment As a result, tracking and filing taxes in a local jurisdiction may cost nearly the same amount of money whether the taxpayer owes $10,000 in monthly taxes or $1 in monthly taxes For some companies, the cost of complying with taxes and regulatory fees may cost more than the taxes and fees themself This can put smaller companies at a competitive disadvantage to larger companies that can more easily absorb the cost of compliance

23 Compliance Options Ignore: most cost savings and highest level or risk Prophylactic: highest cost and lowest level of risk Managed Risk: maximize cost savings while minimizing risk Risk Management Targeted Non-Compliance

24 Risk Management How Does It Work? Combine tax & fee calculation solutions with the expert knowledge of compliance consulting professionals with the Commpliance Group s Compliance Risk Monitoring & Management Service We will deliver a customized Risk Assessment Report that will identify High Risk, Moderate Risk, and Low Risk jurisdictions Our flat-fee Compliance & Reporting Service can proactively implement measures designed to remediate non-compliance in High Risk areas to minimize financial exposure and ensure prospective compliance thereafter Through this risk management system, your company s risk exposure can be balanced between the cost of compliance and the cost of remediation.

25 Risk Management

26 The Complete Billing as a Service Platform maximizing your market and margin opportunities

27 Our team at your service Click to edit master style JK Chelladurai Founder CEO Anna Kennedy Chief Strategy Officer Raj Padmanadham VP Product Management Eric Farnham Senior Director of Sales Sunitha Shetty VP Strategic Accounts and Business Operations #onebillsoftware GO-1BILL

28 Billing challenges we see in the telecom space Complex product portfolio Getting the right product and pricing mix Slow time-to-market of new products Manual management of subscribers, products, billing How to up-sell / cross-sell after initial subscription Click to edit master style Billing mistakes Revenue leakage Taxation and compliance challenges Lack of reporting and analytics Partner / agent / reseller management #onebillsoftware GO-1BILL

29 What telecom companies need Click to edit master style FOR TELECOM SERVICE AND SOLUTION PROVIDERS, BILLING NEEDS TO OFFER: from their billing solution A billing system that is automated, accurate and takes the worry out of telecom billing A solution that serves the whole enterprise with functionality and information from Finance, to Marketing, Sales and CSRs through to IT An ecosystem that gives you the power to enhance your revenue #onebillsoftware GO-1BILL

30 What a billing solution looks like DEPARTMENTS MARKETING SALES/SELF SERVICE FINANCE CSR (SALES) FINANCE FINANCE FINANCE/SALES/ CSR/MARKETING ONEBILL MODULES & FUNCTIONS PRODUCT CATALOG CUSTOMER ACQUISITION BILLING AND COLLECTIONS CUSTOMER MANAGEMENT TAXATION DATA TO ACCOUNTING PARTNER MANAGEMENT REPORTING AND ANALYTICS TASKS ACCOMPLISHED WITH ONEBILL Define or Import Products, Promotions Bundling Capture Customers, Orders & Subscriptions Assemble Billing & Invoice Collect & Manage Manage Accounts Cross Sell & Up Sell Tax Reporting for Tax Time Reconciliation Partner/Reseller/ Agent Setup Disbursement Management Identify Top Selling Products Promotions & Bundles ERP/ACCOUNTING SFA/CRM USAGE DATA. TAX SERVICE. PAYMENT GATEWAY SFA/CRM ACCOUNTING ACCOUNTING SFA/CRM DATA INPUT AND OUTPUT #onebillsoftware GO-1BILL

31 Focusing on taxation what are the key challenges? ACCURACY Click to edit master style COMPLIANCE How should your billing solution support these? #onebillsoftware GO-1BILL

32 What does the billing system do to support taxation accuracy and compliance? Click to edit master style PRODUCTS/ BUNDLES/ DISCOUNTS ASSISTED ORDERS OR SELF-SERVICE SUBSCRIBER DATA BILLING & INVOICING SURETAX APPLIED TAXATION ACCURATE TAX REMITTANCE AT TAX TIME CHARGE MODES AND TAXES ORDER CAPTURE COLLECT LOCATION AND PRODUCTS CHARGES, USAGE DATA, TAXATION DATA INVOICE DETAIL TO ACCOUNTING SYSTEM APPROPRIATE TAX PAID BASED ON JURISDICTION & TIME #onebillsoftware GO-1BILL

33 Telecom billing systems need to go way beyond billing Click to edit master style VARIED PRODUCT BUNDLING UNLIMITED PROMOTIONS REAL TIME ANALYTICS END TO END SUBSCRIPTION MANAGEMENT ROLE BASED FUNCTIONS SPEEDY ON-BOARDING FLEXIBLE PRICING PARTNER MANAGEMENT PRICELESS CUSTOMER DATA SEAMLESS BILLING & PAYMENTS #onebillsoftware GO-1BILL

34 Offering integrated business functions through enterprise integrations Click to edit master style Billing Platform Integrations With seamless integration across your enterprise Accounting Software Order Management Self-Service Portal And APIs that allow for rapid system set-up Device Management Taxation Payment Gateway CRM Platform Network Activation Mediation System Real time/ batch #onebillsoftware GO-1BILL

35 OneBill shameless self-promotion Billing-as-a-Service from OneBill Product Management Simple, Faultless Order Management Unlimited Product Bundling Instant Service Activation and Provisioning Pricing and Promotions Management Rating and Discounting Balance Management and Credit Control Robust Billing Engine with Personalization Capabilities Automated Rule-Based Pricing Business Management Real-Time Reporting Across Functions Role-Based Reporting Dashboards Real-Time Performance Updates - Products & Promotions Click to edit master style Billing Management Personalized and Timely Invoicing Multiple Payment Gateways supported Collection of Payments across Countries & Currencies Subscription & Subscriber Management Subscription Lifecycle Management Unified View of Customer Data with OneBill Salesforce Integration Customer Self Service Portal Timely Updates to Subscriptions Partner Management Easy Multi-Party Settlement Partner Performance Reporting #onebillsoftware GO-1BILL

36 Some of our clients driving their business with OneBill Click to edit master style #onebillsoftware GO-1BILL

37 Our business and integration partners...a solution ecology Click to edit master style and many more #onebillsoftware GO-1BILL

38 Thank you! #onebillsoftware GO-1BILL

39 39 Contact Us for More Information Brent Reeves CCH SureTax VP Business Development SureTax.com Jonathan Marashlian Managing Partner Marashlian and Donahue, LLC - The CommLaw Group JSM@CommLawGroup.com CommLawGroup.com JK Chelladurai CEO OneBill, Inc JK.Chelladurai@OneBillSoftware.com 844-GO-1Bill OneBillSoftware.com