There will be a change in Zoom Phone’s billing strategy so that the Federal Universal Service Fund (USF) charges, as well as various state USF and city excise charges, will be passed on to customers.
What is the Federal Universal Service Fund?
Congress created the Federal Universal Service Fund (FUSF) as a federal agency, to assist with ensuring that communication services are available to all people within the territory of the United States. The Federal University System Fund supports the provision of communications services in rural and high-cost areas, qualifying consumers in rural and high-cost areas, and the provision of communications to public schools, libraries, and rural health care providers. Under the FUSF, the Federal Communications Commission (FCC) is in charge of administering the service as well as the Universal Service Administrative Company (USAC). A mandate from the FCC stipulates that all regulated telecommunications providers, such as Zoom, must contribute to the FUSFO based on the amounts they earn from interstate and international telecommunications end-users.
As part of the FUSF program, telecommunications companies that are regulated by the government are allowed to collect losses from their customers in the form of FUSF recovery charges. A FUSF recovery charge is a discretionary charge that the Federal Communications Commission allows and is not considered a tax. Under the FCC regulations, Zoom, as a contributor to the FUSF program, is authorized to pass through the costs of the FUSF to all customers that purchase regulated telecommunication services through an invoice pass through charge. The company has been allowed to recover sales tax for all customers, including those who may be exempt from sales tax, with the exception of those who are telecommunications service providers that pay FUSF contributions directly to USAC.
Why is the Federal USF charge appearing on my bill?
In 1997, the Federal Communications Commission, which regulates the telecommunications industry, created the Universal Service Fund. In addition, every company that provides communication services between states contributes a certain percentage of the total amount of their bills to the fund. These companies include providers of VoIP services as well. Nevertheless, Zoom Voice Communications—as a communications company—contributes to this fund, and recoups the cost of this contribution through the charges we impose, as per the FCC’s rules and regulations. Interested parties can find more information concerning the Federal USF on the FCC’s website.
Why are State USF and other state & local regulatory charges appearing on my bill?
It is also possible that Zoom will be required to contribute to the State Universal Service Fund (SUSF). Suppose you were awarded funds that could be used to assist in any means of providing universal service, as well as supporting a number of other state and local programs. Zooom recovers the applicable charges from those who use its services. It is important to understand that these charges are pass-through surcharges that are not taxes or government mandated charges. There are currently fifteen states where Zoom collects State USF data, which may change in the future.
The user utility fee extends to contributions towards the State Telecommunications Relay Services (TRS) Funds or the State Telecommunications Relay Services (TRS) Funds, in order to offset the costs of providing local interstate transmission services that are used by hearing or speech challenged people to engage in certain communications services. According to some states, Zoom is required to remit these fees to the governing authority on an annual basis. Zoom collects the applicable fees from its customers and remits them to the appropriate authorities.
Who pays Federal and State USF?
While Zoom and other regulated communication providers are required to remit the Federal USF to the FCC, Zoom is permitted to pass these charges through to end-users through line item charges for interstate communication services purchased in the U.S. Since Zoom and other regulated communication providers are required to remit the Federal USF to the FCC, Zoom will pass these costs on directly to the end-user.
How is the Federal and State USF collected?
The Federal United States Federal Tax, as well as any applicable State or local excise tax, will be charged on Zoom Phone services at the time of invoicing. On the invoice, the USF will be a separate identifiable charge that you can see separately from the other charges.
Are there any special exemptions applicable for government, schools, and non-profits under which the Federal USF or State USF will not be charged?
In 2021, all tax exempt customers, including government, schools, non-profits, and schools, will be charged the federal USF. Only telecommunications service providers that pay Federal USF contributions directly to USAC (including resellers) are usually exempted from the FCC rules, which require underlying providers such as Zoom Voice Communications to pay the Federal USF charges accordingly.
Why is Zoom charging the Federal USF and the various state and local fees on purchased Zoom Phone services?
Zoom follows the same FCC regulations as other regulated communication providers, which states that any Federal USF that is recovered may be recovered through interstate telecommunication-related line-item charges from the end user. On the other hand, the state and local communication charges that we apply are recoverable from the end user and are usually imposed on intrastate service. These charges will appear on the future invoices as separate and identifiable charges.
How are the Federal and State USF calculated on Zoom United services?
As part of the Zoom United bundles, you get access to video conferencing services, our core Zoom services, as well as Zoom Phone. In order to make clear, our Zoom Phone products are taxed differently from our core Zoom services. This is due to the fact that Zoom Phone products are generally subject to additional regulatory fees and assessments such as funding from the universal service funds of the federal and state governments as an interconnected VoIP product.
The cost of Zoom United must be allocated between Zoom’s core services and Zoom Phone products, due to Zoom United having a single price. As a result, all applicable taxes and fees must be calculated and applied correctly. As a reminder, a portion of Zoom United limited to Zoom Phone is subject to Federal and State USF charges regardless of the amount allocated to Zoom Phone. As a result of the aforementioned allocations, taxes and fees are automatically calculated based on the information you have supplied and are listed separately on your invoice.
How does Zoom identify when the Federal and State USF and state & local fees will be charged?
When a sale is sold to a customer, Zoom uses the address provided by the customer to determine the source of the sale. If the customer’s sold-to address is in an applicable U.S. jurisdiction and the Zoom Phone service is purchased, then both the Federal USF and the State USF as well as any applicable local fees will be charged.
Are there any Zoom Phone services not subject to the Federal and State USF?
Accordingly, Zoom Phone Pro, which requires the customer to maintain their own carrier of cellular phone service, is currently not subject to the USF regulations, both federal and state.
I still have questions regarding the Federal or State USF. Who can I contact?
We encourage you to chat with Billing if you have any questions.