Is it correct to classify the revenue dollars two ways as decribed in
the following example as it pertains to invoices rendered to
Customers.

An interexchange carrier (IXC such as AT&T, Sprint, Qwest) provides
dedicated access service from a customer's location to the IXC's POP
(Point of Presence) which is located in the same State. The IXC
classifies the dedicated access service/revenue (e.g. local loop) as
both intraState and as interState. For example if the dedicated access
service costs a $100.00, the revenue is classified as intraState to
calculate State taxes/surcharges, and then the same $100.00 is
classified as interState to calculate federal charges.

I am trying to confirm if this dual calssification represents "double
dipping" and if the Customer is being overcharged since the same
revenue carries a dual calssification.

For an acceptable answer, I am looking for some formal acceptable
reference to tax/accounting tax/principles that can be used to pursue
this issue.

Thank you

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Request for Question Clarification by pafalafa-ga on 04 Jan 2005 08:56 PST

Interesting question.  As far as know, fees collected as taxes have to
be passed through to the feds or the state, so any incentive for
double-dipping would seem to be limited to the cash float.  Still,
that can be substantial, I suppose.

Take a look at this document, and see if it provides any insight:


http://www.dpuc.state.ct.us/dockhist.nsf/0/d268b8a3fec72cbc8525672a004e2d71/$FILE/Snt119.doc
INTEREXCHANGE TELECOMMUNICATIONS SERVICES TARIFF OF SOUTHNET TELECOMM
SERVICES, INC.


In particular, there's language in the document along these lines:

"When utility or telecommunications assessments, franchise fees, or
privilege, license, occupational, excise or other similar taxes or
fees, based on intrastate receipts, are imposed by certain taxing
jurisdictions upon the Company or upon any LEC and passed on to the
Company through or with intrastate access charges, the amounts of such
taxes or fees may be billed to the Customer in such a taxing
jurisdiction on a prorated basis.  The amount of charge that is
prorated to each Customer's bill is determined by the intrastate
telecommunications services provided to and billed to a Customer
service location in such a taxing jurisdiction with the aggregate of
such charges equal to the amount of the tax or fee imposed upon or
passed on to the Company..."


==========

Is that on target at all...?


pafalafa-ga

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Clarification of Question by jogger12-ga on 04 Jan 2005 10:34 PST

In the scenairio listed the only that suffers is the customer. It
appears to me that the same revenue dollars associated with an item
can not classified as both intrastate and interstate. There is no
indication by the vendor (IXC provider) that they are apportioning a
portion of the revenue as intrastate and the remaining portion as
interstate. If this was the case than there would be no issue. I
believe that what the vendor is in violating some basic rule/concept
with the effect that the customer is overcharged state sales
taxes/surcharges in some States.

I hope this helps.

Thank you