Supreme Court Says Yes to VoIP Departure from State Regulations

Supreme Court Says VoIP Isn’t a Taxable Information Service

HRCT provides business telephones and telecommunications services for businesses of all sizes. Contact us today to find out more about our services for business telephones.  

One of the main attractions of VoIP is that it provides flexibility and works in numerous environments, from analog desk phones to software-driven phone services you can access on smartphones. These systems often integrate their softphone clients on other applications, such as customer relationship management or help desk tools. The possibility of deregulation at the state level could impact companies that use VOIP phone systems.

Supreme Court Passes on Ruling for State Regulatory Power

The U.S. Supreme Court has opened the door to VoIP providers wishing to challenge state regulatory oversight. On October 21, 2019, the Court decided not to hear the case of Charter Advanced Services versus the Minnesota Public Utilities Commission.

The case was an appeal of a District Court finding that Charter’s VoIP service was classified as an information service, thus beyond the purview of state regulation and taxes. This debate has been ongoing for decades. An old FCC rule states that if VoIP is considered a telecommunications service, it should be taxed and regulated at the state level. However, the same rule says that VOIP as an information service isn’t subject to state rules.

Despite its specific rules on the matter, the FCC refuses to classify VoIP as either a telecommunications or information service. Instead, it’s been put on the steps of the courts to rule on individual cases. In 2005, the FCC did say that ‘computer-to-computer (or peer-to-peer) VoIP does classify as an information service, which exempts it from taxation.

How Many States Tax VOIP Services?

Currently, 33 states tax and regulate VoIP services by classifying it as an information service. The Supreme Court refused to take Minnesota’s appeal of a court decision that declassifying VoIP as a telecommunications. As a result, the Court has endorsed VoIP as an information service. This is bound to impact the other states that tax VoIP services.

This is good news for businesses that widely use VoIP for their communications. However, it could end up being a mixed blessing. The decision may prompt Congress to pass regulations that impact VoIP. With the current political environment supporting oversight of cloud services, this is a distinct possibility.

Who Can You Count on for VoIP and Other Phone Business Needs?

HRCT provides business telephones and telecommunications services for businesses of all sizes. Contact us today to find out more about the following products and services:

  • Hosted – VoIP
  • Managed Services
  • Business Voicemail/Unified Messaging
  • Money-saving SIP Trunks
  • Solutions for Hospitality, Hotels and Motels
  • Variety of Manufacturers
  • Computer Telephony Integration
  • Business Telephone Endpoints
  • Structured Cabling and Wiring – Telephone and IT

We customize your business telephones to save money and improve performance. Besides focuses on the hospitality sector, HRCT provides affordable hosted phone systems for various companies and industries in Virginia and beyond.