[Asterisk-biz] VoipJet's Terms of Service

asterisk_help at iwishi.nu asterisk_help at iwishi.nu
Tue Nov 16 14:15:45 MST 2004

>And how you are to determine that the call traffic actually did
>originate or terminate within the township, let alone at the customer's
>home address?

>If their laws/ordinances/etc. are written to cover traffic for an
>account with a "billing address" within the township, then they have a
>pretty good case. If they aren't, but are based on the traffic actually
>originating or terminating there, then as the ITSP you have no control
>over that, and can't be held responsible for determining if the call
>actually did involve the customer's home location or not.

>This is a big failure in all current attempts to apply taxes to VOIP
>services; as ITSPs we can only make an educated guess as to where the
>traffic originated/terminated (on the IP side), and bill accordingly.

Here's the text from one of the dozens of letters I've recieved.
Sorry about the formatting, don't have time to fix it up to look better as
plain text.

           CITY OF LA VERNE
             CITY HALL
         3660 .D. Street, La Verne, California 91750

         October 28, 2004

                     Re Apphcation of UUT to VoIP Services

                Dear VoIP Service Provider

                     The City of La Verne is aware that an increasing
number of telecommunication and
                CATV companies are now providmg, or are about to provide,
telephone services through the use
                of VoIP (voice using internet protocol). The purpose of
this letter is to provide your firm with
                ~general tax application information regarding the
application of the City.s UUT to such services:

                            Taxability of VoIP Services

                General Rule of Taxation Sec 3 10040 of the City of La
Verne Municipal Code requires
                telephone service providers to collect and remit a Utility
Users Tax to the City from all
                customers using telephone communication services with a
billing or service address in the City.
                ~The current rate is four (4)% and applies to all charges
made, unless those charges are exempted
                ~or excepted from the federal excise tax (26 US.C.

                Application to VoIP. We understand that VoIP services may
come in different forms. Some
                VoIP services involve .private communication services.,
which are typically .computer to
                computer., and incapable of communicating with the general
telephone public, and especially
                those phones on the public switched telephone network
(PSTN). Most other VoIP service
                providers, however, offer their customers the ability to
communicate with the general telephone
                public via the PSTN and other networks. Since the federal
excise tax specifically exempts
                .private communication services. [26 U S.C. 4252(d)], the
City.s UUT, like the federal excise
                tax, only applies to charges for VoIP services that permit
communications with the general
                telephone public (which typically includes access to the
PSTN). In fact, Sec. 3.10.010 (~9
                specifically defines .telephone communication services. to
include telecommunications using
                .internet protocol.. We understand that a number of VoIP
service providers are already
                applying the FET to such services. This letter makes clear
that the City.s UUT should be applied
                as well.

         Billing Address or Place of Primary Use. Since the City.s UUT
applies to the use of
         .telecommunication services with a billing or service address
within the City., there is a
         possibility that more than one taxing jurisdiction could apply
its tax to the same transaction (e.g.,
         if the VoIP call were billed to an address in the City, but the
VoIP call originated outside of the
         City). There are two possible ways to address this theoretical
possibility. First, Sec. 3.1 0.040
         (E) of the City.s UUT ordinance specifically allows the customer
to seek a tax adjustment
         (credit) in the event of multiple taxes. A simpler approach,
however, would be to use the
         customer.s .place of primary use. as the billing address, as that
term is used in the wireless
         industry (see Sec. 3.10.010(0) of the City.s UUT ordinance and
the federal Mobile

         Telecommunications Sourcing Act, (Pub. L. 106-252; 114 Stat. 626;
4 USC Section 116 et. seq.).
         For ease of administration, the City will allow this. Of course,
your company will have the
         responsibility to find out from the customer what its .place of
primary use. is. This is a current
         practice of the wireless industry, and would likewise make sense
for VoIP service providers.

         Bundling of Taxable and Non-taxable Services. Unless the IRS
establishes a different rule,
         the City would allow the following .bundling rule.:

              If taxable VoIP services are bundled with non-taxable
services under a single charge,
              then the entire charge is subject to the UUT unless your
company can reasonably identify
              the charges for the taxable and non-taxable services from
its books and records that are
              kept in the regular course of business. The burden of
establishing a reasonable
              allocation of such charges will be on the service provider.

              We understand that the VoIP service is a relatively new
service, and that there will be
         many new variations in the nature and billing of this service as
it evolves over time. We also
         understand that the above information is general in nature, and
may not answer a specific
         question that you may have. In that event, you are encouraged to
write us a letter describing in
         detail the nature of the service and how it is proposed to be
billed (e.g., a sample bill is very
         helpful). We will then advise you regarding the application of
the City.s UUT to such service.

              If you are currently providing VoIP services that are
clearly subject to the City.s UUT, as
         provided in this letter, please begin collecting and remitting
the City.s UUT at your earliest
         ~convenien~e-(ifyotrare not already doing so), but by no later
than January 1, 2005, to avoid
         the imposition of penalties and interest as provided by the
City.s UUT ordinance. Also, to assist
         your company, you may wish to refer to the tax remittance
information on the following website:
         www.uutinfo.org. If you have any questions regarding this matter,
please call me Monday
         through Thursday at (909) 596-8716.


                                       Ronald L. Clark
                                       Finance Officer/Tax Administrator

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