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Los Angeles Communications Users Tax
In 2008, Los Angeles voters passed Measure S. This measure replaced the Telephone Users Tax ordinance with a new the Los Angeles Communications Users Tax ordinance. The new ordinance, effective March 15th, 2008, made several changes to the former ordinance. The primary changes were a broadening of the tax base (discussed below) and a reduction of the tax rate from 10% to 9%. The Los Angeles Communications Users Tax (CUT) Ordinance expanded the tax base to include, not only traditional telephone services, but also taxes other types of telecommunications services. Per the Office of Finance website, the following types of telecommunications services are now subject to the CUT:
  • VoIP
  • Private Communications Services
  • Custom calling features
  • Text messaging
  • Instant messaging
  • Ancillary services
  • Prepaid and post-paid services
  • Paging services
  • 800 services
  • Covered charges such as monthly service fees, feature charges, equipment rentals, deaf trust surcharges, State PUC users fees, Universal Life Trust Fund, late payment charges
  • Charges for non-taxable services billed together with taxable services
The above list is not acomplete listing of the types of telecommunications services which could be subject to the CUT. However, despite the broader tax base, a number of issues remain unresolved. These issues include matters such as the following:
  • The taxation of new and/or changing technologies and services.
  • The application of the Internet Tax Freedom Act to certain internet services, such as T-1 lines
  • The taxation of bundled services which include both taxable and non-taxable services
  • The potential double taxation of services by various telecommunications providers
  • Audit sampling and testing methodologies employed by the Los Angeles Office of Finance
  • The taxation of separately itemized services and whether these items should be included in the measure of tax
  • Billing, sourcing, and tax coding issues related to the imposition of the tax
  • The treatment of exempt sales and the documentation necessary to support the exemption

  • Additional information about the Los Angeles Communications Users Tax can be found at the Los Angeles Office of Finance website below:
      http://finance.lacity.org/content/CUTInformation.htm

    In the past few years, the Cityís Office of Finance has significantly expanded its tax auditor staff. As a result, we have noticed that the number of CUT audits has risen sharply.
Other California Municipal Communications Users Tax Ordinances
Several other California cities have passed ordinances similar to Los Angelesís Communications Users Tax Ordinance. These ordinances have similar definitions of taxable services, including a broad tax base.
 
 
 
 
About Amico and Associates
Amico and Associates has extensive experience in the application and interpretation of the City of Los Angeles tax ordinance including the Communications Users Tax. We have special expertise in dealing with audit matters and a thorough knowledge of the administrative appeals process. We have successfully represented numerous clients at the Administrative Appeals Officer (ARO) and the Board of Review (BOR) hearings. Our team includes the retired Chief of the Tax and Permit Division and insightful attorneys who look forward to discussing your Los Angeles CUT matters.
Amico + Associates 4444 Riverside Dr. #203, Burbank, Ca 91505   747-477-1025   fax 818.301.2074