 vonsenJust BecausePremium
join:2005-01-06 | [Lingo] Complain here about 18% in new fees/tax!!Lingo has announced that they intend to charge all Lingo subscribers a $1.50 per number "regulatory recovery fee" and 3% tax. This amounts to 18% in surcharges for the average Lingo customer. Lingo is under no government requirement to collect tax at this time. And the RRF is just a blatant money grab to pad their bottom line.
There is a more detailed thread about this located here. The purpose of this post is to provide a template complaint letter. If you feel as outraged as I do about these un-necessary charges that Lingo is trying to add, I urge you to call, fax or email Lingo to let them know that you aren't happy. If they don't get a lot of complaints and/or cancellations, they will figure that we (Lingo subscribers) have just rolled over and they will go ahead. And what is stop them from doubling the RRF next year? Before you know it, your VOIP bill will be as high as your old telephone bill. The time to cut this cancer out is now. Please take the time to voice your opinion! An original letter will carry more weight, but a lot of us don't have the time to draft a letter. Feel free to use the template below if you want to. Change it if you want to add something. This is just the letter that I sent to Lingo.
("Primus" is Lingo's parent company)
To: "Paul Singh, CEO" <psingh@primustel.com>
CC: "Neil Hazard, COO" <nhazard@primustel.com>
"Thomas Kloster, CFO" <tkloster@primustel.com>
"John DePodesta, Exec. V.P." <jdepodesta@primustel.com>
"Tracy Book, V.P." <tbook@primustel.com>
Primus Telecommunications
1700 Old Meadow Road, Suite 300,
McLean, VA 22102
Switchboard: (703) 902-2800
Fax: (703) 848-4641
Gentlemen:
I am a very upset Primus customer. I am upset because Lingo has sent me a letter on January 7th announcing that you are going to gratuitously impose an average 18% surcharge on Lingo customers. While it is true that the FCC is considering various applications regarding the regulation of the VOIP industry, no order has been made compelling Lingo or Primus to collect a 3% tax at this time. That you would wantonly impose such a tax in advance of any requirement to actually do so disturbs me. That you portray these surcharges as being beyond your control is deceptive and less than honest. As most of your competitors are not trying to alienate their customers with gratuitous surcharges, I have to wonder if I wouldn't be happier taking my business elsewhere. In addition you state that you will be imposing a $1.50 per number, "regulatory recovery fee" on us. For Lingo subscribers with a second virtual number this amounts to a 15% surcharge. As you are in no way obliged to charge such a fee, this is nothing more than an outrageous and blatant money grab that only serves to pad your bottom line.
It is nice that Mr. Singh was paid $400,000 plus 1.1 million stock options in compensation last year. However, I subscribed to Lingo in large part due to the reduced costs and lack of regulatory charges that the FCC is seeking to limit. Web sites such as broadbandreports.com are getting thousands of hits, with largely negative commentary about this ill-advised move by Lingo. I strongly urge you to reconsider these surcharges. If you do not, then you are obliging me to move to your competitor, as I will not remain a Lingo customer if you implement these surcharges. And I will certainly be counseling other Lingo subscribers to do the same.
Yours truly,
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| Re: [Lingo] Complain here about 18% in new fees/ta Two thoughts:
1. A good way to chase off new customer (and perhaps old) in the highly competitive VOIP playing field today.
2. Attorneys have told them they'll be responsible for paying these taxes/fees unless they collect them from their customers first.
I'd say they fear being held responsible for the money later. Otherwise, raising consumer costs doesn't seem to be the trend today. |
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 TrimlinePremium
join:2004-10-24
Windermere, FL
 ·voip.ms
·Callcentric
 ·RoadRunner Cable
| What the heck are you trying to say in stated option #2. It makes no sense.
What attorney? To whom are they responsible? What the heck does "collect them from their customers first" mean.
Please be more descriptive, your posting makes absolutely no sense although I am sure there is a message here. |
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| reply to vonsen
Re: [Lingo] Complain here about 18% in new fees/tax!! Good letter, vonsen. I would like to offer just a slight clarification, however, regarding the 3% tax. This tax has nothing to do with the FCC. Pursuant to section 4251 of the Internal Revenue Code, there already exists a 3% federal excise tax on certain telecommunications services. These services are defined in IRC Sec. 4252, and to date, they have not included VoIP services. The IRS published an Advanced Notice of Proposed Rulemaking in July of last year seeking comment on how certain advanced telecommunications services might fit within this scheme. Comments were due last October, I believe. The next step will be for the IRS to publish proposed rules governing the interpretation of section 4252. After that notice and comment period has run, the IRS could begin applying the Federal Telecommunications Excise Tax to VoIP services.
This information is based on a quick review, with the caveat that I have not had an opportunity to research this thoroughly. |
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 eperosPremium
join:2004-05-02
Brooklyn, NY | reply to vonsen
Re: [Lingo] Complain here about 18% in new fees/ta And as far as the excise tax on telecoms go, Didn't Vonage go to court and argued they were some sort of an information service and not a telecom service. How can they on one hand argue one thing and on the other collect telecom taxes? And they did win that case did they not? So across the board all these VOIP services should not, at least for the moment, be classified as a telecom service? Just was wondering about that all day today.:) |
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vonsenJust BecausePremium
join:2005-01-06 | reply to caseydoug
Caseydoug, I believe what you say is correct. But the key point (IMO) is that the tax has not yet been levied on VOIP services. It may be imminent, but I can't see it becoming retroactive - so what is Lingo doing collecting it at this point? |
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eperosPremium
join:2004-05-02
Brooklyn, NY | reply to vonsen
Also this excise tax is not only being charged by Lingo. I know for a fact Vonage and CV charge it. |
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vonsenJust BecausePremium
join:2005-01-06 | said by eperos:Also this excise tax is not only being charged by Lingo. I know for a fact Vonage and CV charge it. Yes. And if we don't start complaining en mass, then other providers may feel emboldened to levy large surcharges as well. They are doing it because they think that they can get away with it. Not because they have to. |
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| As for the $1.50 charge per line, Broadvoice already does it but for primary line only, not for Virtual numbers. Lingo it seems will add the $1.50 surcharge to the virtual numbers also.
This letter from Lingo came just in time. I was considering moving from Packet8 either to Lingo or to Broadvoice. The balance was in Lingo's favor (because of no tax). Featurewise, I think both Lingo and Broadvoice are exactly the same. But now that Lingo is starting to charge $2.00 worth of taxes, Broadvoice seems to be a better option. |
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 wesmPremium
join:1999-07-29
Redmond, WA | For the record, BroadVoice does charge both a 3% federal excise tax, and a $1.50 RRF. As you said, primary lines only.
--
Do not meddle in the affairs of sysadmins, for they are easy to annoy and have the root password. |
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| reply to Trimline
said by Trimline:What the heck are you trying to say in stated option #2. It makes no sense. What attorney? To whom are they responsible? What the heck does "collect them from their customers first" mean. Please be more descriptive, your posting makes absolutely no sense although I am sure there is a message here. Sorry I wasn't descriptive enough in my first post, usually I'm too long winded, as I'm about to be 
At the moment, states are forbidden to regulate VOIP, only the federal government in the U.S. can but that doesn't mean VOIP will be free from all taxes. Fees/taxes etc. are still being worked out. Your internet service is taxed, right? Well expect some VOIP charges and taxes eventually, whether it be state, local, or federal. Not being able to regulate VOIP doesn't mean it can't be taxed by some government entity somewhere and if the government decides that taxes should have been charged all along, then the VOIP provider will have to pay all the taxes themselves.
Since raising prices right now in the highly competitive VOIP market seems downright stupid, I was trying to make the point that perhaps Lingo is adding these fees/taxes because they feel, based on attorney's advice I'm sure, that they'll be responsible for paying the bill eventually, once the entire what taxes/fees VOIP should/must/will pay question has been decided, probably in court (meaning you ask an attorney what to do).
Just a comment/thought. Perhaps they are stupid. |
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| Not stupid at all. While I doubt the IRS will attempt to collect excise taxes on VoIP service prior to issuing new regulations, such a step is not out of the question. In any event, there is a strong possibility that excise taxes will be imposed on VoIP services in the not-too-distant future. Here is a recent BNA alert dealing with the subject: »www.bnatax.com/tm/insights_Telecom.htm.
The IRS Advance Notice on this topic is attached: |
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| reply to vonsen
OK, I'm thinking of writing my own letter, but had a question.
Lingo says:
What is the Federal Excise Tax?
Lingo is required by Federal law to collect a 3% federal excise tax on the amount which it charges its customers for all communication services. This tax applies to monthly subscription fees as well as to any additional usage charges.
Does federal law require this, or is Lingo just lying? If false, I'm surprised that they would just lie outright.
Also, in order for the changes NOT to be profitable for Lingo nearly 1 in 10 customers would have to drop the service. I wonder how many people just believe what Lingo has said is true. |
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| reply to vonsen
Re: [Lingo] Complain here about 18% in new fees/tax!! The FET does not need to be charged currently. Or wait maybe it does. It hasn't yet been tried so nobody really knows if it needs to be charged or not. The issue at hand is that currenlty a VOIP provider can "voluntarily" charge and submit to the government the FET taxes. If they do this they are "safe" (FET wise) "no matter what". If a VOIP provider chooses not to charge this fee (or submit it to the government), and the courts say that VOIP is required to pay the FET then it may well be retro-active.
That means that if today Lingo doesn't charge this fee and the courts decide they must it will likely be they will have to back pay it! If they don't start chargning now and the courts rule that way they will be out of the FET tax they have to submit to the government.
So no, they can't claim it is reguired. On the other hand you can't claim it isn't required. The FET you can be sure their attorney's have advised them to collect and that is what they are doing. The RRF is a B.S. fee, I say this because they aren't submiting it to anyone currently. It is currenlty padding their wallets. It is true later taxes could be imposed even potentially retroactively, but for the time being that fee is not a tax. If they simply came out and said (and Vonage, and BV should do this as well), this currently is a "extra" fee for our service that is not government related, but we are collecting it to ensure that we are covered should we be required to retroactively pay taxes in the future. I wouldn't object so much (I would simply add it to the cost of the service). It might be reasonable to collect it, and state if it turns out it isn't needed in some reasonable period of time all that money will be donated to a charity. My objection to the RRF is it sound like a tax but it isn't. |
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| Re: [Lingo] Complain here about 18% in new fees/ta nsumner,
Thank you for the thorough reply! |
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1 edit | reply to nsumner
Re: [Lingo] Complain here about 18% in new fees/tax!! This is essentially correct, nsumner. The tax depends on statutory definitions of "local telephone service" and "toll telephone service" that were enacted in 1965. The IRS regulations relating to this tax pre-date these definitions, so there is a real lack of clarity about whether and how the tax should be imposed on VoIP providers (a pretty good analysis can be found at »www.techlawjournal.com/topstorie···0702.asp ). It is not necessarily retroactive to apply this tax to VoIP providers, because the IRS could claim that they have always met the statutory definitions.
What I'd like to know is whether Lingo intends to pay these funds over to the federal government. If they do, then I have less objection to their collecting them. But somehow I doubt it.
The regulatory recovery fee is another story. That is a concept borrowed from the world of regulated utilities, which often seek and obtain approval to pass on added costs to ratepayers (e.g., a fuel cost adjustment) in between general rate cases. But those utilities at least have to justify the increase to a regulatory commission that has staff to investigate and challenge it. We have no such protection here, but we do have the ability to vote with our feet. |
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| Re: [Lingo] Complain here about 18% in new fees/ta My key objection is to the regulatory recovery fee on virtual (aka secondary) numbers. Those numbers aren't lines but just place holders for incoming calls. To tax them at 33% of what one pays for a domestic one is outrageous. And, the international ones don't fall under the purview of any american taxation.
-er |
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vonsenJust BecausePremium
join:2005-01-06 | reply to vonsen
More Lingo email addressesA few posters were saying that emailed complaints to Lingo were going through fine yesterday but bounced today. On the off chance that those mailboxes are now full, here are some alternate email addresses for Lingo.
Stephen McIntyre, V.P. <:smcintyre@primustel.com>
Ambuj Nayar, V.P. <anayar@primustel.com>
Tracy Lawson, V.P. <tlawson@primustel.com>
Mark Guirgis, V.P. <mguirgis@primustel.com>
John Melick, V.P. <jmelick@primustel.com>
Jay Rosenblatt, V.P. <jrosenblatt@primustel.com>
Geoffrey K. Hicks, V.P. <ghicks@primustel.com>
Mike Magill, Senior Director Sales NA <mmagill@primustel.com>
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| reply to nsumner
Re: [Lingo] Complain here about 18% in new fees/tax!! said by nsumner:If a VOIP provider chooses not to charge this fee (or submit it to the government), and the courts say that VOIP is required to pay the FET then it may well be retro-active. I'm not an expert, but I do know a few things about taxes. First, courts are not the ones to decide if it is retroactive. *When* the law is written to include VoIP service (there is no such law at this time!) that is when it will be decided if it is retroactive or not.
HOWEVER...I cannot recal, ever, ANY tax law being established, and it being made retroactive. This notion is ridiculous. It is like saying "OK, we made a law today requiring you to collect these taxes, but we really meant to apply it to you 4 months ago, so why don't you go ahead and pay us what you owe."
If anyone can find a tax law that was made retroactive, it could change everything. Otherwise, I'm highly suspicious of what Lingo will be doing with these additional funds they will be collecting. |
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| said by Gericurlswrl: *When* the law is written to include VoIP service (there is no such law at this time!) that is when it will be decided if it is retroactive or not. HOWEVER...I cannot recal, ever, ANY tax law being established, and it being made retroactive. It's not that simple. Section 4251 of the Internal Revenue Code imposes a 3% tax on "communications services." This provision has been in place in one form or another for over 100 years -- since the Spanish American War. "Communications services" includes "local telephone service" and "toll telephone service." "Local telephone service" is defined in section 4252 as:
"(1) the access to a local telephone system, and the privilege of telephonic quality communication with substantially all persons having telephone or radio telephone stations constituting a part of such local telephone system, and
(2) any facility or service provided in connection with a service described in paragraph (1). "
A reasonable argument could certainly be made that, by connecting its customers to the local telephone system, Lingo is providing communications services within the meaning of section 4252. Section 4252 was enacted in 1965, and therefore the IRS could claim Lingo should have been collecting this tax from the time it first sold VoIP service.
There are, of course, lots of arguments against the applicability of this tax to VoIP service, and against any obligation of Lingo to collect it. But it would not necessarily be retroactive to charge Lingo with this responsibility now.
Finally, I should add that there are many instances in which tax laws have in fact been adopted which apply retroactively. Usually these are given wide publicity before their final passage (to give people a chance to adjust their affairs accordingly), but unlike criminal statutes, there is no constitutional bar to retroactive taxation. |
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