Cell Phone Taxes Explained


Cell Phone Taxes Explained

If you think charges on your bill are a mistake, question your provider as Kim Lankford helped one reader do.

Although I live in Rhode Island, this month the taxes, surcharges and fees on my Sprint wireless bill increased due to myriad new charges from Vancouver, Wash.; Clark County, where Vancouver is located; and Washington State. Sprint's customer-service representative explained that I would have to pay the taxes because my coverage area had changed. Another rep said that I could be charged state taxes just by staying in a state for a week (although I haven't been to the West Coast in more than a year). Is this a common billing practice among wireless companies?

No way. It's not even a common practice at Sprint, which admits that the taxes on your bill were a mistake and that you were misinformed by its representatives.

Cell-phone taxes, surcharges and fees, which often add up to more than 15% of your monthly bill, are based on the area you tell the service provider will be your primary place of use. That means you can be taxed by your home state, county, city or local district, but your taxes shouldn't be affected by changes in your service area or by travel. Nor should you be taxed by another jurisdiction just because you've made calls within its borders.

We asked Sprint to investigate, and the company discovered that until you retired in July 2006, your phone service was billed as a business account. When you asked to switch to a personal account but keep your phone number, Sprint's service rep should have asked for your primary place of use, which is Greenville, R.I. And you should have been charged federal, state and local taxes only for that area. Instead, you were erroneously charged taxes based on the move by your former employer's accounting office to Washington State.

P.S. To atone for its mistake, Sprint is giving you free phone service for a month.

Got a question? Ask Kim at askkim@kiplinger.com.