What Counts as Local Telephone Service for the Tax
The statutory definition
Under IRC §4252, local telephone service is access to a local telephone system plus the privilege of telephonic-quality communication with substantially all persons having a station on that system. Amounts paid for that service are subject to the 3% tax (IRS No. 22). For the overview, see the 3% communications excise tax.
What's outside it
Long-distance and bundled service is no longer collected (Notice 2006-50). Whether a particular VoIP or wireless plan is taxable "local telephone service" can be fact-specific — classify your service carefully. Some buyers and uses are exempt; see communications tax exemptions.
FAQ
What counts as local telephone service for the excise tax?▼
Local telephone service generally means access to a local telephone system and the privilege of telephonic-quality communication with substantially all persons having a station on that system. The 3% tax under IRC §4251 applies to amounts paid for that service.
Is long-distance service still taxed?▼
No. After IRS Notice 2006-50, the IRS stopped collecting the communications excise tax on long-distance and bundled service. The tax continues to apply to local telephone service.
Does the tax apply to VoIP or mobile service?▼
It depends on how the service is characterized. The 3% applies to taxable "local telephone service" as defined by the statute; whether a given VoIP or wireless plan falls within that definition can be fact-specific. Confirm your service classification.
File the communications excise tax
EasyFile720 handles IRS No. 22 with Schedule A and IRS-authorized e-file.
Reflects the Instructions for Form 720 (Rev. June 2026), IRC §§4251–4252, and IRS Notice 2006-50. General information, not tax advice.
