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Tax cost savings between Pre-pay and Post-pay. Why?

by Gatordoug / March 29, 2013 12:06 AM PDT

Does anyone know why Virgin only charges state sales tax on service, and the contract carriers charge the Federal Fees and Sales Taxes = 15%-20%.

I notice Cnet in their cost breakdowns between T-Mobile, At&T and other post-pay carriers do not discuss this significant cost difference.

Any communications-law people out there to explain, or Cnet writers, as to explain why these significant charges are not discussed when comparing post-pay vs. pre-pay ?



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All Answers

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In my opionion......
by birdmantd Forum moderator / March 29, 2013 12:20 AM PDT

Prepaid carriers still charge the same fees but instead of showing as a monthly fee/tax it is built into the prepaid minute cost which is higher than the large carriers. All smoke and mirrors. Certain fees cannot be classified as taxes and it is up to the discretion of the carrier on how to pass the cost on to the consumer.

BTW: I am not an attorney, nor a tax professional, just offering my opinion.

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Not so
by Gatordoug / March 29, 2013 12:43 AM PDT
In reply to: In my opionion......

Well if your answer is true then how does Metro PCS and Virign charge $25 - $50 at that cost structure. Only sales tax on the cost of monthly minutes. No it is not as you explained. You need to understand the total out the door cost I pay is $27.00 /month for unlimited text, 350 calls and unlimited data. This cost does not fit your "smokes and mirror."

Truly I am looking for the non opinion "Answer" . What is the specific answer?

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My point was....
by birdmantd Forum moderator / March 29, 2013 1:21 AM PDT
In reply to: Not so

.....that such carriers wrap the fees and taxes into the monthly cost. I don't pretend to know exactly how they do so, just offered an a possible answer to your question.

As stated, I am not a lawyer or tax professional. Do you really think anybody on this forum is qualified to offer a definitive answer to your question? We can only speculate.

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You may need a lawyer when it comes to tax code.
by R. Proffitt Forum moderator / March 29, 2013 12:57 AM PDT

But I do go to the usual CTIA and other shows and the issue of taxation on cellular is a big topic there. Well there is a web site specific to tax rates. Let's see if I can find it.

At you read about congressional bills but as far as I know they didn't find their way to law.

Aha, finds the other site I was looking for.

But I can't find anything that really nails down an answer to your very good question.

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Owning the network vs. leasing ?
by Gatordoug / March 29, 2013 1:03 AM PDT

Maybe it is because Virgin is not the owner of the towers/infrastructure, so they are not responsible for taxation on the network? Just a thought....



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Hey, my kid is on Virgin Mobile.
by R. Proffitt Forum moderator / March 29, 2013 1:31 AM PDT

And even I added another. But remember the following is just my thought on why it's not detailed out.

VM has a flat rate across the USA of say 35 bucks. There is no way they could do that without pissing off customers if they broke it down to what their true rate is before taxes. As you can see by the links I gave, each state differs in the tax rate so if VM did want to have a pre-tax dollar amount it would be all over the map and complicate what is a simple plan.

So it's easy to see they work it all in reverse from the 35 bucks backwards and absorb the costs or make a little more from state to state.

There's not much magic here, plenty of smoke and mirrors.

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