Again, as in Canada, EU tax authorities struggle with the following questions. The situation does not improve in the United States, where the application of US sales taxes to the telecommunications industry can be a nightmare with layer upon layer of federal, state and local taxes, not to mention property taxes. A carrier may have to pay or collect sales and use taxes, gross receipts taxes, franchise taxes, licence taxes and a host of fees and surcharges. To complicate things further, a carrier may be an LEC in certain states and an IXC in all states. Fees may be imposed on intrastate telecommunication, interstate, either or both.
Compliance is obviously a constant challenge.
As in Canada, a carrier in the United States needs a very sophisticated billing system and substantial configuration simply to administer indirect and property taxes. The indirect tax issues in the telecommunications industry are numerous and complex in all jurisdictions. At the same time, regulators lag behind the innovative services now available and show no signs of being able to catch up. Indeed, there are significant risks associated with indirect taxation within the telecommunications industry and errors can be costly. One can only hope that tolerance will be exercised when audits are conducted and differences in interpretation arise.