Tax Costs Explanation

E911 fees, utility and other taxes are typically passed by local (county and city) ordinance. Each law can be subtly different. There is no standard way to find these ordinances and there is no standard template governing exactly what is taxed. For example, some utility taxes apply to porting fees, some do not; some are flat rates, some are % of revenue; some municipalities apply taxes to international charges, some do not.

In some jurisdictions, multiple taxes apply from multiple authorities. In some cases some municipalities provide credits for taxes paid to other overlapping municipalities, in some cases they do not. Sorting these situations out is time consuming and can sometimes require expensive legal review.

While Ooma's systems for collecting and calculating taxes are automated (at significant expense), the remittance process for most of these governmental entities requires paper records and checks (no electronic funds transfer). This adds significantly to the overhead of paying required taxes.

Each governmental agency has the right to audit our payments. Each audit can consume hours of administrative work as there are no standards for what information must be provided for an audit or what any particular auditor will want to review.

Taxes and assessments can change at any time. For example, since 2009 the federal universal service fund assessment on telecommunications has risen ~80%.

There is no fully automated mechanism to track changes for the taxes and assessments we must collect and remit.

In some cases, paying of taxes to an authority can trigger other tax compliance questions that consume significant resources. For example, some taxing authorities may assume that because we are providing telecommunications, we must have physical plant or facilities in their municipality and are therefore subject to local business taxes. Explaining that we are an internet service and not subject to local business taxes consumes resources and can require expensive legal review.