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Want to lower your cell phone tax rate? Consider moving

Cell phone tax rates vary depending on where you live. In this edition of Ask Maggie, I explain how a billing address and not the your phone's area code determine the tax assessed.

Death and taxes are the only thing certain in this life. And when it comes to cell phone taxes, the fees just keep climbing.

Most wireless subscribers are annoyed by the extra taxes and fees slapped onto their monthly wireless bills. But few likely realize how different the rates can be based upon where they live. Not only can states impose taxes on wireless service, but so can local governments. And many do.

In this edition of Ask Maggie, I explain how simply moving to a new part of the country can lower a subscriber's cell phone tax rate, even if he doesn't change his cell phone number. I also explain why taking over someone else's contract to avoid an early termination fee may be more trouble than it's worth.

Keep your number if you can

Dear Maggie,
After I graduate college in Philadelphia later this spring, I'll be relocating to northern Virginia. I have an iPhone 4 from AT&T, but I don't have a contract. I'm thinking about switching to Verizon Wireless because I heard it has a better nationwide network.

What I want to know is whether I should change my cell number to a local Virginia number when I switch carriers? These days, many people keep their cell numbers no matter where they relocate. But I know the sales tax in Virginia is much lower than it is in Pennsylvania. So I am thinking that switching my number may save me a few bucks.

What do you think I should do? Is there a benefit to keeping my old phone number? Please give me some advice as you always do on Ask Maggie.

Thank you!
New Grad

Dear New Grad,
First let me start by saying that the Federal Communications Commission requires all wireless carriers to let people keep their phone numbers if they change service providers. But the strict rule only applies to carrier switches within the same geographic area. If you move to a different state or part of the country, the new carrier may require you to get a local number.

But there are ways to keep your number. You could always make the switch to the new carrier before you leave town. In which case, you'd get to keep your number. And when you move, you could simply change your billing address.

I think keeping your existing phone number is a good idea. The biggest benefit is convenience. Friends and family that already have your phone won't have to program in a new number when you switch carriers. What's more, if you're applying for jobs, you won't have to worry about which number is on your resume.

The biggest downside to keeping your Philadelphia number is that if someone in Virginia calls you from a landline and they don't have free long distance service, they'll be charged a long distance fee to call your phone. But given that most people either have a cell phone with no additional charge for long distance calling or they have free long distance bundled into their home voice service, it's not as much of an issue for most people.

As for the tax issue you mentioned in your question, you are correct that you will be paying less tax for your cell phone in Virginia than you have been paying in Pennsylvania. But I've got some great news for you. You don't need to change your phone number to get the lower tax rate. The amount of tax you pay on your cell phone bill is based upon your mailing address and not your cell phone number.

So long as you change your mailing address and use your phone mostly in Virginia, you will be charged the Virginia tax rate, even if you keep the Philadelphia phone number. And as you mentioned in your question, the savings are noticeable. According to the site, Pennsylvania residents are likely to pay about 19.13 percent in federal and state taxes for their service. By contrast, Virginia residents pay about 11.61 percent.

These figures are estimates since local taxes may vary, said Amy Storey a spokeswoman for CTIA, the trade group that lobbies on behalf of the wireless industry and runs the Website. One of the big issues for the CTIA is lobbying against the increase of these local taxes and fees on wireless service.

In fact, the group is pushing Congress to pass the Wireless Tax Fairness Act, which will prevent local and state governments from levying additional taxes and fees only on wireless users. Specifically, the legislation calls for a five-year moratorium on all new, discriminatory state and local wireless taxes and fees.

Storey explained that this is a problem because a person living in Arlington, Va. could have a 703 area code, but a colleague living in Alexandria, which also has a 703 area-code could pay less in taxes on his wireless service, because of the difference in how the local government taxes the service. In other words, Arlington's local government could enact a tax or include a fee that the local government in Alexandria hasn't enacted.

"If the Wireless Tax Fairness Act was passed, this would prevent state and local governments from levying taxes and fees only on wireless users," she said in an email. "If the government increased the cost for all taxable goods, then they could increase a tax or fee, including on wireless users."

Storey explained that this would be more fair and would not increase taxes so dramatically for cell phone users.

In any case, you should still do better tax-wise in Virginia than in Pennsylvania. Congratulations on graduating soon. And good luck with your big move!

Swapping cell phone contracts?

Dear Maggie,
I recently read Jessica Dolcourt's article, 8 tips for ditching your cell phone contract early. For section 5, she said that you could swap your service with someone else to avoid the ETF. I was thinking I might buy my neighbor's contract. Just wondering what happens with the phone number? Can I keep/port my current number or do I have to use her number? Also, she has an unlimited data plan from AT&T, would I be able to keep that as well? Please help.


Dear Laheelahee,
Most wireless carriers will allow you to transfer a contract to another person. So if your neighbor wants to get out of their contract to switch to another carrier, he or she can transfer it to you. But the contract and the service is tied to a specific phone number. This means that when you make the account switch, the phone number goes with the new account holder.

The unlimited data plan should still be honored after a transfer of the account. But in order for you to take advantage of the unlimited plan, you'll have to use the existing phone number.

I reached out to Jessica Dolcourt to see if there is any way to get around this. She said there might be some workarounds. For example, you may be able to freeze your number for six months. So if the contract is up within half a year, you could transfer the old number back to your account. But this may void the unlimited plan, since that service is forever tied to the original phone number.

Another possibility she suggests is getting a Google Voice account.

"For $20, you can port your own number to Google Voice and forward it to any phone," Jessica explained in an email. "Nobody on the other end will know the difference."

I hope this advice was helpful. Thanks for reading Ask Maggie.

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.