Q: I've noticed most VoIP companies charge taxes on top of their service every month. What's the deal? How do they decide how much to charge in tax?

A: There are a few kinds of taxes that most VoIP companies charge. The FCC currently requires VoIP providers to charge a small amount of tax as a telcom provider. Some local areas also impose additional charges based on state and city laws. Finally, VoIP companies charge taxes to cover the cost of the required E911 service, so you can use your VoIP connection to dial 911 and the operator will have the correct information about your location.

Most of the time taxes on your VoIP service will not be very high. VOIPo, for example, charges $3 per month if you pay month-to-month or $1.50 per month if you pay for two years up front (their best deal). Other services generally keep taxes down to just a few dollars each month. While some companies use a flat rate, like VOIPo, others vary taxes based on your specific location to account for cities and states with special taxes or fees on VoIP service. To be sure how much the taxes and fees will be on your account, it's best to get in touch with the provider directly to discuss your specific situation.

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