IRS Denies Plan to Tax VoIP

SMBs looking to cut costs have replaced — or are considering replacing — traditional telephone service with Voice over Internet Protocol (VoIP). Now, in what appears to good news for IP vendors and SMBs, the Internal Revenue Service (IRS) and Treasury Department strongly deny they are considering an excise tax on Internet telephone calls or any other IP-based services.

On July 1, the IRS published in the Federal Register a request for public comments on changes in the telecommunications industry since 1965, when the tax code was last updated to define telecommunications services. Based on those definitions, the IRS currently imposes a three percent excise tax on telecom services.

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