The 3% Federal Communications Excise Tax Explained
What's taxed
The 3% applies to amounts paid for local telephone service and teletypewriter exchange service. After IRS Notice 2006-50, the government stopped collecting the tax on long-distance and bundled service — so today it's principally a local-service tax. See what counts as local telephone service.
Who collects and files it
The communications provider collects the 3% from the customer and remits it on the quarterly Form 720. As a Part I tax, it follows the semimonthly deposit rules and Schedule A. For who's off the hook, see communications tax exemptions.
FAQ
What is the federal communications excise tax?▼
It is a 3% federal excise tax on amounts paid for local telephone service and teletypewriter exchange service, under IRC §4251. It is collected by the service provider from the customer and reported on Form 720, Part I, IRS No. 22.
Does the tax still apply to long-distance calls?▼
No. Following IRS Notice 2006-50, the IRS stopped collecting the tax on long-distance and bundled service. The 3% communications excise tax now applies to local telephone service.
Who remits the communications tax to the IRS?▼
The communications service provider collects the 3% from customers and remits it on the quarterly Form 720. As a Part I tax, it is generally subject to semimonthly deposit rules and Schedule A.
File the communications excise tax
EasyFile720 handles IRS No. 22 with Schedule A liability tracking and IRS-authorized e-file.
Reflects the Instructions for Form 720 (Rev. June 2026), IRC §4251, and IRS Notice 2006-50. General information, not tax advice.
