Federal Excise Tax Of Telecommunications

The Federal Excise Tax (FET) generally appears on both your local and long distance phone bills. It is charged as a set percentage (3%) regardless of which telephone service provider you use. Little known fact is that it started as a temporary luxury tax in 1898 on telephone service to pay for the Spanish-American War. Now the proceeds go to the U.S. Treasury as general revenue, since the war is over. It has been proposed by the Americans for Tax Reform (ATR) that since this federal 3% excise tax on telecommunications is an anachronism, is should be repealed immediately before it has an impact on Internet access and E-Commerce transactions.

The following questions have been addressed in this article:

Can the tax authorities impose excise tax on networking equipment?
What are the Franchise Taxation of Telecommunications?


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