Explaining Fees, Surcharges and Taxes on Your Phone Bill

In addition to the charges you pay for the services you use, you'll find various fees, surcharges, and taxes on your bill. The Commission has recommended that companies include thorough and detailed descriptions of all taxes, surcharges, and other fees on their web sites, including the purpose of each item, and routinely remind customers on bills that this information is available. Additionally, companies may link to the Department's web site, www.dps.ny.gov, where an appendix of taxes and surcharges is listed.

New York State Gross Revenue Tax Surcharge - This surcharge recovers telephone company expenses associated with mandated New York State Transportation and Transmission Corporation Franchise taxes. It is applied to all services except the E911 surcharge.

Federal Universal Service Fund Recovery Charge - The Universal Service Fund is a federal program designed to provide phone service and access to the Internet to schools, public libraries and rural health care facilities, and to subsidize local service to high-cost areas and low income customers. Telecommunications companies with interstate operations are mandated by the federal government to contribute to the Universal Service Fund. The Federal Communications Commission (FCC) permits companies to use the FUSF surcharge to recover their cost of contributing to the fund.

E911 Surcharge - 911 has been designated as the Universal Emergency Number for all citizens in the U.S. to request emergency assistance. The purpose of the fee is to pay for the cost of such systems-consumers do not pay this fee in order to be provided with E911 service. A consumer has access to E911 whether or not the locality in which the consumer lives has imposed the charge. There is no per-call charge for calling 911. This surcharge is a flat fee, not to exceed $.35 per phone line per month within each municipality imposing the surcharge, other than New York City. The City is authorized to impose a monthly charge of up to $1.00. Lifeline customers are exempt from the E911 surcharge.

Local Number Portability Surcharge (LNP) - This charge pays for the technology that allows customers to keep their phone number, at the same location, when they switch from one local telephone company to another.  The FCC authorizes telephone companies to assess this monthly charge on a customer's bill for a maximum of five years.

FCC Subscriber Line Charge (SLC) - This charge is also known as "Network Access Surcharge" or "Federal Line Cost Charge" on some bills. The charge is a flat fee that customers pay to be connected to the telephone network. The charge is intended to cover a portion of the cost of your local telephone line, is added separately to local service bills, and recovers telephone company costs previously recovered from high toll rates.

Metropolitan Transportation Authority (MTA) Tax Surcharge - This surcharge recovers telephone company expenses associated with the mandated New York State temporary transportation business surcharge and applies to customers located in the New York metro area only. This surcharge is applied to all services except the E911 surcharge.

Federal Excise Tax - The Federal Excise Tax was introduced in 1898 by the federal government as a temporary tax to support the nation's efforts in the Spanish-American War. The tax revenue from this tax goes directly into the Federal General Fund. The tax rate is 3% and is applied to all local telephone services except installation charges.

State and Local Taxes - These are taxes paid by consumers and directly submitted to appropriate state, county, or city authorities. City school district taxes are also collected under sales tax law provisions. Taxes are applied to all intrastate services, except the E911 surcharge.

Municipal Surcharge - This surcharge recovers telephone company expenses associated with municipal revenue taxes which apply to calls originating and terminating within a village or municipality. The rate is not to exceed one percent except in Buffalo, Rochester, and Yonkers, where the rate may not exceed three percent. This surcharge is applied to all local charges, the LNP surcharge, FCC Line Charge, and Federal USF Surcharge.