In the United States, as in other countries worldwide, a tax rate is established that can vary depending on different factors. The objective is to have the money available for public improvements and to maintain other aspects of each city, precisely how many parts of each town are maintained.
Although some individuals may think of skipping the payment of taxes, you should not do it. The recommendation is to keep up to date in all aspects. Furthermore, do not forget to pay the Communication Services Tax if applicable.
Now, do you know what the tax is and why you should pay it? Don’t worry. It is effortless to understand.
Get to know the Communications Services Tax (CST)!
Under RSA 82-A:3 and RSA 82-A:4, paying a 7% tax on two-way communications services is mandatory. Prepaid wireless retail providers, VoIP, must collect the money given by consumers.
It is mandatory to file a declaration with the relevant department to avoid inconvenience. Services included in the payment start with long-distance telephone, local and collect, video, TV, or broadcast service.
Direct-to-home satellite services, private line services, pager and beeper, mobile communications, telegram, teletype, telex, and facsimile are also included.
Don’t forget estimated payments
When the tax amount is greater than $10,000 per month, you must pay 90% of the total tax. It would be best to do this before the 15th of the month when payment is due.
Are there extensions?
In this type of declaration, you will have the possibility to request an extension of 31 days to declare your tax. This is possible by filing form DP-137 at the corresponding department.
Don’t forget that only the time to file the complete return is extended, you still have to make the payment.
How are the rates applied in this kind of tax?
We are talking about local, long-distance, pay, VoIP telephone services, motels, hotels, and fax. These must pay a rate of 7.44% plus local tax. Video and mobile communications services have the same value, and there are no exceptions. The number comprises a state rate of 4.92% and a gross receipts rate of 2.52%.
Service sold to a residential household does not pay the state rate tax or the 0.15% gross receipts tax. There are no exceptions. Finally, satellite service in homes has a state rate of 9.07% plus 2.37% gross income. The total payable is 11.44%. There is no exception or local tax.
Exceptions for the collection of the Tax on Communication Services
As a merchant of communications services, it is essential to know what exceptions exist for collecting the tax. Educational and religious entities and homes for the elderly are exempted. Also, resales and sales made to any political subdivision.
In some residential services, there is an exception for the tax payment. Although the regulations on the subject are a bit complex, it is easy to understand them and avoid problems.
Benefits of filing CST tax
The main benefit of filing the CST tax is to help the government fund important programs for the nation, such as the National Youth Employment Program (NYEP). The support for national development is also fantastic.
Note that the emergence of the tax generated the elimination of import duties, the national health insurance rate, and VAT. The action led to a reduction in the value of electronic devices and mitigation of the tax burden.
In general terms, the payment of this tax is completely beneficial to many individuals in the country. We recommend you comply with your obligations to avoid problems.
Do not evade your responsibility because it is as significant as any other tax you must pay. If you have any doubts, you can always turn to experts in the area to guide you and carry out the procedures more accurately.
Of course, a professional will charge fees, but they will make you comply with your obligations without the possibility of making a mistake.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.