Communications Excise Tax Exemptions & Who Collects It
Common exempt customers
- Federal, state, and local governments
- Nonprofit hospitals and nonprofit educational organizations
- The American Red Cross
- Certain common-carrier, news-service, and coin-operated uses
How exemptions are documented
An exempt customer provides the provider an exemption certificate; the provider keeps it to support not collecting the tax. For the basics, see the 3% communications excise tax and what counts as local telephone service.
FAQ
Who is exempt from the communications excise tax?▼
Statutory exemptions include the federal government, state and local governments, nonprofit hospitals, nonprofit educational organizations, and the American Red Cross, among others. Certain services — like long-distance and bundled service after Notice 2006-50 — are also no longer collected.
How does a customer claim a communications tax exemption?▼
An exempt customer generally provides the provider with an exemption certificate establishing their exempt status. The provider keeps the certificate to support not collecting the 3% tax on that customer's service.
Are coin-operated and certain other services exempt?▼
Yes. The statute exempts certain services — such as some coin-operated telephone service, news services, and specific common-carrier and government uses — from the communications excise tax. Check IRC §4253 for the full list of exemptions.
File the communications excise tax
EasyFile720 handles IRS No. 22, Schedule A liability tracking, and IRS-authorized e-file.
Reflects the Instructions for Form 720 (Rev. June 2026) and IRC §§4251–4253. General information, not tax advice. Confirm exemption eligibility and certificates with a qualified advisor.
