Taxes and Fees on Bills

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The following article is not exhaustive and is for informational reasons.

ACD's service contract language is specific to the fees and costs that are going to be passed through for various governmental taxes and fees. We pass through taxes and fees that are directly attributable to the services that are provided to you. Telecommunications services have substantial taxes and fees. Typically these are within the 10-30% range for services. While the government has lighter fees on Internet services, this is slowly changing at the state level and proposed to change at the federal level. The fees that ACD puts on its bills are typical of the industry.

ACD remunerates these fees to the government as they are charged to us, and are directly tied to governmental mandates for fee or tax payment.

ACD does not charge fees that are from ACD and/or other providers for services that are not tied to governmental mandated taxes or fees.

Certain fees, that the cable companies charges are not directly tied to governmental mandates, specifically they are tied at times to service such as local television channel fees that they charge. Due to the nature of some of these contracts, these can exist on local service fees.

911 Service Fee: ACD and all other telecommunications companies collect 911 service fees that are paid to the local 911 agency. The governmental entities are supposed to use these fees solely for operating 911 service for the lines. The rate that ACD charges is the same rate that the governmental entities charge without mark up.

State of Michigan service fees and other information are located here: http://www.michigan.gov/msp/0,4643,7-123-1593_47748_47753---,00.html

Universal service fund fees: This fee is tied to any service that is deemed to be long-distance as defined by the government. This rate varies based upon the rate defined by the FCC, and is typically high, in the range of 16% or more. ACD charges this fee and remunerates these funds to the federal government without markup. The USF fee is supposed to be used by the government to subdize access in high cost areas, and for subsidized services for certain schools, hospitals, and libraries and other service set by the universal service. Long-Distance service is defined as inter-lata service, such as long distance phone calls, circuits that cross state or interlata borders. These rates are always separated out and billed to the customer for additional service fees.

The following link lists the FCC rates for universal service fund. http://www.fcc.gov/encyclopedia/contribution-factor-quarterly-filings-universal-service-fund-usf-management-support

The FCC is in process of reforming this fee and more widely distributing the cost for this, which will likely decrease the fee for interstate traffic overall, information about this reform is located here: http://www.fcc.gov/encyclopedia/universal-service

Regulatory Recovery Fees: These fees are charged on by various state agencies, and also charged by the FCC for certain interstate service, i.e. service that goes across state lines. The FCC has defined the contribution factors here : http://www.fcc.gov/regfees. Various state agencies define these fees as well. These fees are the cost for the federal government and / or state government to cover the cost of regulating services on behalf of the industry.

Sales and Use Taxes: In certain states, sales taxes are to be charged on various internet and telecommunications services. Sales taxes vary by state. Local municipalities can also charge sale taxes on various telecommunications services.

Federal Excise Taxes: These taxes are generally charged on interstate services where there is no local component to the service. IRS explanation of excise taxes are here. http://www.irs.gov/pub/irs-drop/n-07-11.pdf

Property Tax Surcharge: Certain state jurisdictions charge property taxes on the average cost of equipment deployed to support the services to the end user. Certain areas also specify property taxes are charged on the cost of the service rather than the cost of the actual equipment deployed. Typically they tax the service provider's equipment that is part of the service delivery. The states that tax this equipment and/or property, these fees are passed on. Often when services cross various jurisdictions, such as long-haul circuits this fee is complicated by the various entities that the network infrastructure passes through.

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