Telecom Taxes and Surcharges: Are You Being Overcharged?
With sluggish economic recovery and ACA mandates to reduce waste, healthcare organizations — big and small — are carefully watching how every dollar is spent. Technology budgets are severely constrained. There are many competing critical priorities and not enough resources. The result: trying to do "more with less", which can often feel impossible.
So what now?
One area critical to profitability for tax-exempt organizations is often overlooked: telecom taxes and surcharges. Federal, state and local-level taxes can add up to tens of thousands of dollars. Regulatory surcharges and additional fees that carriers tack on can cost up to 25% of your invoice.
Even the largest organizations do not have an expert on staff with telecom tax and regulatory insight. Most organizations will bring in outside experts in corporate taxes and accounts payable auditing, but when it comes to carrier network expenses, many are still in the dark about what taxes and surcharges they should or should not be paying.
Right or wrong, carriers put the responsibility back on the customer to notify the carrier if they are tax -exempt. They do this because, if the carrier incorrectly exempts an organization, the IRS, State or Local taxing authorities will fine the carrier. Naturally, carriers won’t do anything that could result in tax liabilities for them.
Compounding this problem, many organizations mistakenly believe they can rely upon their carriers to make sure they receive all entitled exemptions from taxes and surcharges. Carrier reps don’t often know which taxes are exemptible, nor are they qualified to give tax advice.
And exemptions are not automatically added to new orders, even when the correct paperwork is on file.
Tax-exempt organizations can get that money back.
There is a federal statute of limitations that allows organizations to recover money charged in error from their carriers. But your carrier contract likely inhibits your ability to do so. These contracts often have specific language that limits your window of opportunity to dispute charges. This time frame can vary, but we’ve seen it as short as 90 days.
Many organizations struggle to validate the different state regulatory fees which the carriers apply to their bills. For instance, California’s regulatory ULTS surcharge increased 120% within the last year. That’s an additional 8.644% in regulatory fees on all enterprise bills in the Golden State.
Here’s the problem: these charges and how they apply are buried in tough-to-navigate websites, and some organizations may not need to pay these at all. But they don’t know it.
Unfortunately, organizations do not have the expertise to challenge the legitimacy of their telecom charges. Carriers justify these fees, and their front line reps don't have the knowledge or expertise to accurately answer your concerns. A lot of these charges can be recovered, but it takes an in-depth level of expertise and someone who is knowledgeable enough to advocate for the organization. Because carriers aren’t going down without a fight.
Overcharge Recovery Group has over 25 years of specialization in telecom taxes and surcharge recovery. Contact Christine Nesbitt for a no-cost no-obligation assessment at firstname.lastname@example.org or 424-241-2196.