There isn’t any need to be as verbose as Dickens, I suppose. But, due to the nuances of how voice products are billed, the “tale” (comparison) of two invoices with identical services can be quite different. Here’s a real example: two subscribers have the same service offerings and they are both located in the same tax jurisdiction. Yet, the taxes on the invoices are different. How can this be? Well, there are several potential explanations for the differences.
Some factors include how the products are categorized within the billing system e.g., tax mapping. There are 147 different tax descriptions that can be assessed on a voice communications invoice – so discrepancies in this area are, not too surprisingly, common. What is the percentage of interstate usage (PIU) for the provider? If the provider is using the Safe Harbor rule, which is the most common calculation, the potential for the USF to be higher than the other invoice is a likely explanation. Additionally, other differences could be due to the jurisdictional boundaries – a city sales tax usually falls within city limits, but a tax for a school district can extend outside the incorporated area. When the taxes are higher or lower it’s important to your business to understand why there’s a difference.
The good news is – this doesn’t have to be something where you need to invest a lot of time or money to provide accurate invoices to your clients. If you’re already generating your billing through a reliable tax engine, periodically auditing the taxes and tax mapping on a handful of invoices is prudent. Remember to review tax exemptions as well. I would suggest doing this at least once a year, and since it’s the beginning of a new year, now is great time.
So, to quote Dickens, a bill audit may not be “a far, far better thing that I do, than I have ever done;” But, hopefully ensuring that your invoice taxes are compliant and correct might lead to some better rest: “It is a far, far better rest that I go to than I have ever known.” I think having some better “rest” for the rest of 2022 is something we can all look forward to.
-Jeff Lytle, President of Sandy Beaches Software