Our nyc cpa office provides telecommunications businesses with specific federal taxation guidance and encourages you to discuss with us in person. It is easy in the daily rush of running a business to overlook or postpone reviewing tax laws that could, in some cases, generate savings.
Code Sec. 199 deduction. The Code Sec. 199 domestic production activities deduction (DPAD) allows qualified taxpayers to claim a deduction equal to the lesser of a phased-in percentage of taxable income or qualified production activities income. A provider of telecommunications services may or may not receive domestic production gross receipts (DPGR) from its customers, depending on the nature of the services and equipment that it provides to its customers.
Depreciation. Wireless telecommunications carriers have numerous tangible assets which are used primarily to provide wireless telecommunication services. Wireless telecommunication assets are classified for depreciation purposes using various depreciation methods, recovery periods, and/or conventions. A safe harbor method of accounting is available for determining the MACRS recovery periods of tangible assets used by wireless telecommunications carriers. The safe harbor also explains how a taxpayer may obtain automatic consent to change to these depreciation periods. Various types of property, cell as antenna support structures, computerized switches, and other items in the telecommunications industry, have different recovery periods.
Excise taxes. Federal excise taxes that apply in the telecommunications industry date back almost to the invention of the telephone. In 1898, Congress approved an excise tax on telephone service. Under current law, an excise tax is imposed on local telephone service and certain other services. Local-only service is local telephone service as provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. Certain private communication service is not local telephone service. Long-distance telephone services were for many years subject to the excise tax but no longer are. The Tax Code generally treats payments to a telecommunications carrier by a third party, such as a joint venture credit card company, as payments made by the holder of the credit card to obtain communications services.
We have highlighted only some of the many federal tax laws that impact the telecommunications industry. Please contact our nyc cpaoffice so we can set a time to discuss your business in more detail.