State VoIP Regulation
Stay Ahead of State VoIP Regulations and Out of Trouble
While federal regulation of interconnected VoIP services is robust, state-level requirements are increasingly fragmented and difficult to navigate. Some states require advance registration. Others impose a growing patchwork of taxes, surcharges, and fees that VoIP providers must account for at the state, county, and even municipal level.
Do States Regulate VoIP?
Yes, and state oversight is evolving quickly. While most states have taken a lighter regulatory approach to interconnected VoIP services, they often still enforce laws related to:
- Consumer protection
- E911 obligations
- CPNI regulations
- Tax collection and remittance
In a handful of states, pre-registration is required before offering VoIP services. Even in states without registration mandates, providers must comply with applicable state business and telecom tax laws, which are often ambiguous or inconsistently applied.
State VoIP Taxes
and Assessments
State taxation of VoIP is not standardized. Some states apply existing telecom or utility tax laws to VoIP, while others have introduced VoIP-specific rules. In many cases, VoIP taxability is enforced even in the absence of clear legislation.
Your business may be subject to:
- Sales and use taxes
- Gross receipts or utility taxes
- Excise and franchise taxes
- E911 surcharges
- Local assessments and fees
With nomadic VoIP services, sourcing becomes even more complex. A customer could place a call from anywhere, raising questions like:
- Which state’s taxes apply, such as billing address, service address, or call origin?
- Do municipal-level taxes need to be collected and remitted?
There is no single standard across states, and errors in interpretation can lead to audits, penalties, and back taxes.
State-Level Compliance
Illinois
Imposes an 8.65% telecommunications excise tax that specifically applies to VoIP
Pennsylvania
Applies a 6% sales tax to all telecom services, including interconnected VoIP
911 Service Fees at the State and Local Level
Unlike federal USF or TRS contributions, 911 surcharges are often managed locally. In some states, each county or municipality sets and collects its own fee, creating an additional compliance burden.