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How To Avoid Getting Audited at Tax Season

By April 9, 2019No Comments

Regardless of the industry your company operates within – industrial, healthcare technology solutions, agricultural, software development – chances are your company might be working on a technology solution that blurs the lines between your industry and the telecommunications industry. From a business perspective, this is great, as your cutting-edge solution will help you capture more of the market share in your industry. But from a tax perspective, you’ve opened your organization to possibly being classified as a telecommunications company, which increases your tax burden. We’ve identified three key areas you must consider to determine if you’ve crossed over into providing telecom services and expose your company to the possibility of a telecommunications audit. And don’t worry, because if you have, we’ve also got the answer to help you track down the necessary additional funds through effective telecom invoice audit practices and telecom expense audit practices.  

Are You Providing Communications Services?

As wireless services and devices saturate the market, tax authorities are beginning to pay more attention and have started to apply tax treatments that were once reserved for more traditional wired telecommunications services. For example, if you’ve built an application that allows users the ability to click-to-call or click-to-chat through Voice over Internet Protocol (VoIP) you could be subject to telecom taxation and regulatory oversight based on complex state-level regulations. Similarly, devices that allow video chats or direct connections with your support team, or if it syncs with your cell-phone data plan, you could be required to adhere to telecom taxation requirements. These additional telecom tax and regulatory obligations could also apply to every company seeking to capitalize on the Internet of Things (IoT) movement by creating industry specific devices that use their own designated cellular-based internet connections, rather than pre-existing connections.

Are You Advertising Using Telecom Terminology?

How you present your services or products to your client base on your website can greatly impact an auditor’s assessment as to whether your organization is providing telecom services and thus required to pay more in taxes as well as adhere to specific regulatory requirements. If you advertise as offering “internet calling,” “video conferencing,” “click-to-call,” or related telecom-related services through your product or service, you’re likely to be considered a telecom company for taxation purposes.

Does Marketing Team’s Script Align with Website Listing?

Your organization’s website and marketing materials provide the base litmus test used by telecom auditors to gauge the services offered by your organization. It’s vital that the terms and language used in your marketing materials align with the language used by your tax team to overview your company’s services and products to an auditor. The dangers lie in that, the language that might make for effective advertising copy to drive ad clicks and email opening rates, might also be considered language that positions your company as a telecom services provider. It’s vital that you find a balance between accurately describing your services and products without unnecessarily using industry buzzwords that could draw unnecessary scrutinization during an audit.  

If You Do Owe More, We’ll Help You Find the Funds

As businesses expand product and service offerings to capture market share, there’s a chance that the scope of your business will expand to such a degree that it will become liable for additional telecom taxation and regulatory obligations. A partnership with TelResource can alleviate some of the fiscal burden such a transition might cause. At TelResource, we provide telecom invoice audit services and telecom expense audit services, as well as telecom project management services, to our clients in the San Antonio market. These services are designed to minimize your telecom expenses, manage your company’s telecom needs, and manage any large telecom-based projects you might have on the books.

With effective management in these areas, and careful oversight of how you package and present new products and services as discussed in this article, you will be able to minimize the risks of a telecom audit this tax season. And if you are audited, our services will greatly minimize the financial impact such an audit might have on your organization.  

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