What's New in Communications Taxes
For 2017, the cable rights-of-way fee will remain $1.11. Please see the attached notice for information.
Effective July 1, 2016 taxpayers must file and make payments electronically using the CT-75 eForm and accompanying Schedule CT-75B, if applicable. This eForm is free, secure, and available at any time on Virginia Tax's website. Payments can be debited from your checking account or made by ACH credit through your bank.
If you are unable to file and pay electronically, you must submit an Electronic Filing Waiver Request.
Virginia Communications Taxes Overview
Under legislation enacted by the 2006 General Assembly, House Bill 568, the Virginia communications sales and use tax, also referred to as the communications sales tax, replaced most of the previous state and local taxes and fees on communications services, effective January 1, 2007.
The communications sales tax, which is imposed on the charge for or sale of communications services at the rate of 5%, is generally collected from consumers by their service providers and remitted to Virginia Tax each month. In cases where a consumer purchases taxable communications services and no tax is collected from the consumer on the purchase by the service provider, the consumer is responsible for paying a communications use tax.
A uniform statewide E-911 tax of $0.75 per line also took effect on January 1, 2007, replacing local E-911 taxes for landline telephone service. In addition, the public rights-of-way use fee imposed on landline telephone service was expanded to include cable television service. Finally, House Bill 568 changed the way that cable service providers pay the franchise fees on their local cable franchise agreements, as discussed below under "Cable franchise fees."
Impact on previous taxes and fees: The communications sales tax replaced the following state and local taxes and fees on communications services:
- Local consumer utility tax on landline and wireless telephone service
- Local E-911 tax on landline telephone service
- Virginia Relay Center assessment on landline telephone service
- A portion of the local Business, Professional and Occupational License tax assessed on public service companies by certain localities that impose the tax at a rate higher than 0.5%
- Local video programming excise tax on cable television services
- Local consumer utility tax on cable television services
The following taxes were not affected by the communications taxes provisions:
- State E-911 fee on wireless telephone service
- Public Rights-of-Way Use fee on landline telephone service
- Local Business, Professional and Occupational License tax of 0.5% on public service companies
Administration of the tax: The communications sales tax is generally administered in the same manner as the Virginia Retail Sales and Use tax. The tax is imposed on communications services at the rate of 5%, and appears as a line item on customers' bills.
Taxable services: The services subject to the communications sales tax include but are not limited to:
- Landline and wireless telephone services (including, but not limited to local, intrastate, interstate and international service) including Voice Over Internet Protocol;
- Teleconferencing services;
- Private communications services;
- "Push to talk" services;
- Pager and beeper services;
- Automated or partially automated answering services;
- Facsimile services;
- 800 number services;
- Telegraph, telegram, telex and teletypewriter services;
- Cable television (including but not limited to basic, extended, premium, pay-per-view, digital and music service); and
- Satellite television and satellite radio.
Nontaxable services: The following services are not subject to the communications sales tax.
- Information services
- Installation or maintenance of wiring or equipment on customers' premises (may be subject to retail sales and use tax)
- Sale or rental of tangible personal property (may be subject to retail sales and use tax)
- Directory and other advertising
- Internet access service
- Digital products that are delivered electronically, such as software, downloaded music, ring tones, and reading materials
- Over-the-air radio and television services broadcast without charge
- Bad check charges
- Charges for billing and collection services
- Charges for customers on any federal military bases or installations when a franchise fee is payable to the federal government (HB 2723, 3/23/07)
Taxable and nontaxable amounts: The communications sales tax is imposed on the sales price of the taxable services. The following items are not included in the sales price for purposes of computing the tax:
- Excise tax, sales tax, and similar taxes that are permitted or required to be added to the sales price of the service, provided the taxes are separately stated on the customer's bill
- Federal, state, and local government fees and assessments that are required to be added to the price of service, provided these items are separately stated on the customer's bill
- Coin-operated communications services
- Sale or recharge of a prepaid calling service
- Air-to-ground radiotelephone services
- A provider's internal use of communications services in connection with its business of providing communications services to customers
- Separately stated charges for property or services that are not part of the sales of communications services
- Sales for resale
- Charges for communications services provided to a federal, state, or local government entity
Landline E-911 tax: The state E-911 tax on landline service, imposed at the rate of $0.75 per line, appears as a line item on customers' bills.
Cable franchise fees: Under the provisions of House Bill 568, cable franchise agreements that are entered into or renegotiated after January 1, 2007 will not include a franchise fee. Agreements in place as of January 1, 2007 will remain in effect until their stated dates of expiration; however, providers no longer make franchise fee payments directly to localities. Instead, these amounts are reported to Virginia Tax on a schedule submitted with the communications taxes return. The franchise fees are then paid to localities from revenues generated by the communications taxes. Although localities no longer collect their franchise fees directly, local governments retain the right to audit cable franchisees and to enforce franchise agreements.
Public rights-of-way use fee: Cable television providers are required to collect the public rights-of-way use fee from subscribers and include it in their monthly communications taxes return and remittance. Landline telephone service providers should continue to remit ROW fees as they currently do, unless they provide both telephone and cable services and the locality does not impose a public rights-of-way use fee on telephone services. Please refer to the Guidelines for additional information. Effective July 1, 2016, the ROW fee will be $1.11, an increase of $0.06 from the last fiscal year.
Post-paid Wireless E-911 Fee: Service providers are required to collect the postpaid wireless E-911 surcharge from their customers and include it in their monthly communications taxes return and remittance. The imposed rate is $0.75 per cell phone.
Virginia Relay Center: The Virginia Relay Center, a telephone relay service for the hearing impaired, receives funds each month from the communications taxes revenue. No separate tax or fee is assessed on customers' bills for the Relay Center.
Disbursement of funds received with communications taxes returns: After payment for the direct costs of administration of this tax and for the Virginia Relay Center, the remaining revenues received from the communications sales tax, the E-911 tax, and the public rights-of-way use fee are distributed to counties, cities and towns.
Communications Taxes Guidelines
The Guidelines and Rules for the Virginia Communications Taxes contain comprehensive information concerning the compliance requirements and administration of the communications taxes as of November 2, 2006. This document may be updated or revised as the agency proceeds with final implementation of 2006 House Bill 568 (Acts of Assembly 2006, Chapter 780). Please check back frequently for updates.
Frequently Asked Questions
For further assistance, please call 804.404.4195.