CPUC Telephone Surcharges Reporting and Payment Filing Directions
Revised February 26, 2019
Starting January 1, 2019, the directions described below applies to ALL telecommunications services – including intrastate prepaid wireless services, previously subject to the Prepaid MTS Act.
All telecommunications corporations and Voice over Internet Protocol (VoIP) providers offering telephone service to the public in California, who are authorized by the California Public Utilities Commission (CPUC) to operate in California, are required to assess surcharges on their end-user Intrastate service revenues, and to remit the collected funds in accordance with these directions.
I. Who must assess and collect telecommunications surcharges?
All telecommunications corporations that sell telephone service to the public are required to assess and collect surcharges from end users, and to remit these surcharges to the CPUC. These surcharges fund the CPUC public purpose programs.
Interconnected VoIP service providers must also collect and remit public purpose program surcharges to the CPUC pursuant to PU Code §285. A VoIP service is a service that:
- Enables real-time, two-way voice communications;
- Requires a broadband connection from the user’s location;
- Requires Internet protocol-compatible customer premises equipment (CPE); and
- Permits users generally to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network. (47 CFR § 9.3)
II. What telecommunications services are considered intrastate?
“Intrastate” means a telecommunications service that originates and terminates within California. Generally, services subject to tariff (or formerly tariffed) with the CPUC are subject to California surcharges, whereas interstate services, taxes and surcharges, and financial charges and fees, are not. Intrastate services that are subject to surcharges include, but are not limited to, residential or business lines; wireline services; pre and postpaid wireless services and any associated services, including, but not limited to:
- Custom calling features (such as Caller ID, Voice Store and Forward, Call waiting);
- Private line service;
- 800/900 service; and
- Non-recurring charges (such as installation and connection charges)
III. Are some intrastate telecommunications services exempted from the assessment of surcharges?
Carriers must assess surcharges on all of their revenues for intrastate telecommunications services except for the following:
- California LifeLine service revenue;
- Charges to other certificated carriers for services that are to be resold;
- Coin-sent paid telephone calls (coin in box) and debit card calls;
- Customer-specific contracts effective before 9/15/94;
- Usage charges for coin-operated pay telephones;
- Directory advertising; and
- One-way radio paging.
IV. What about telecommunications services that are both intra and interstate or that cannot be separated?
The CPUC does not prescribe one methodology to determine intrastate revenues subject to Universal Service program surcharges. Telephone Corporations and VoIP providers that are required to assess universal service surcharges on intrastate telephone service revenues from end-user customers may use any of the methods below to determine the intrastate revenues. Examples of reasonable methods to determine intrastate revenues include, but are not limited to:
- FCC Safe Harbor Percentage – Carriers may apply California revenues using the inverse of the Federal Communications Commission (FCC) adopted Federal Interstate Safe Harbor Percentage adopted by the FCC to fund federal universal service programs for the respective type of carrier.
- Traffic Study- A carrier may develop a jurisdictional allocation through a Traffic Study factor, representing the average usage patterns of the carrier’s own customers, and then apply this to their California revenues.
- Books and Records- Intrastate revenues subject to the surcharge may be calculated by a service supplier based upon books and records kept in the regular course of business or for other purposes, including nontax purposes.
For VoIP providers, the California legislature endorsed three methods of determining which revenues are subject to intrastate surcharges (see recently enacted AB 841, now codified at PU Code §285(e). In addition to the above two methods, AB 841 provided the additional option of any other “means of accurately apportioning interconnected VoIP services between federal and state jurisdictions.”
- Surcharges are applied to the price that the end-user customer pays for service and not any other lesser amount such the wholesale price that a carrier may get from third party retailers.
- Surcharges are not assessed on equipment cost. It is the carrier’s responsibility to make a reasonable determination of what portion of a charge is for services subject to surcharges when service is bundled with equipment or other services that are not subject to universal service surcharges.
V. What CPUC surcharges are assessed on intrastate revenues? (Collectively “Public Purpose Program Surcharges”)
The six public purpose program surcharges to be assessed on intrastate telecommunications services are as follows:
- California High Cost Fund A (CHCF-A)
- California High Cost Fund B (CHCF-B)
- California Universal Lifeline Telephone Service (LifeLine or ULTS)
- California Teleconnect Fund (CTF)
- Deaf & Disabled Telecommunication Program (DDTP)
- California Advance Service Funds (CASF)
VI. What are the current surcharge rates?
Current and historical CPUC surcharge rates can be found at:
- (six) public purpose programs- Surcharges, Fees & Taxes
VII. How are public purpose program surcharges collected from end-user customers?
The CPUC does not have a prescribed method for how a carrier collects universal service surcharges from end-user customers. However, carriers must disclose and itemize Public Purpose Program on customer bills, invoices or receipts, pursuant to Revenue and Taxation Code Section 42010 (3) (i).
VIII. How are the CPUC surcharges reported and remitted?
The CPUC requires all telecommunications carriers and VoIP providers offering telephone service to the public to calculate and report surcharges online using the Telecommunications & User Fees Filing System (TUFFS), and remit the owed funds through a link to the California State Agency Electronic Funds Transfer (EFT) System. The TUFFS website allows any carrier, whether postpaid or pre-paid, to calculate, report, and remit surcharges in a user friendly fashion. Once a carrier has determined its aggregate intrastate revenues subject to surcharge, the carrier enters that amount for a given month into an online surcharge transmittal form in the TUFFS system. The system then calculates the surcharge amount due for each surcharge fund. Payment is then made by Automated Clearing House (ACH) debit through the EFT system for each surcharge fund.
All certificated carriers and VoIP providers must report and remit surcharges on a monthly basis, except for those that bill a de minimis amount of surcharges (the de minimis rule). The de minimis rule permits a carrier to report and remit all surcharges semi-annually for each month of a six-month period. The de minimis periods are January through June and from July through December.
The de minimis rule applies to carriers whose average intrastate service revenues subject to surcharge are equal to or less than $10,000 a month. Carriers that meet this criteria and wish to report and remit surcharges semi-annually may send an e-mail to email@example.com including: the carrier’s legal name, the four-digit utility identification number assigned by the CPUC, and a statement to the fact that the average intrastate service revenues subject to surcharge are equal to or less than $10,000 per month. Although de minimis carriers are only required to report and remit payments twice a year, carriers must still report revenue for each month during the six-month period. Qualified carriers may change to de minimis after reporting for the month of June or December. The de minimis period would start with January-June or July-December.
Please note that all carriers are required to report intrastate revenue and remit resulting surcharges even when total intrastate billings subject to surcharge are zero.
In the event that the total intrastate revenues subject to surcharge exceed $60,000 for carriers reporting under the de minimis rule, carriers must advise the CPUC and begin to and file monthly. It is the carrier’s responsibility to be aware that the frequency of its reporting obligation has changed and to notify the CPUC of this change from semi-annually to monthly.
Surcharge funds must be reported and remitted no later than 40 days following the close of a reporting period. Carriers that report and/or remit surcharge funds after the due date will be charged a penalty equal to an annual rate of 10%. The penalty funds will be assessed on the surcharge amount due, including any adjustments, starting from the 41st day after the close of the reporting period to the date that the carrier reports or surcharge monies are remitted, whichever is later.
Additional instructions regarding how to use the online system to report and remit payments may be found in the TUFFS and EFT payment system user guides.
- Interconnected VoIP service providers that do not have a registration number must obtain a registration number via the VoIP Provider Self- Registration form in order to report and remit fees.
IX. What are the further compliance requirements and what enforcement mechanisms are available to the CPUC?
All reporting and payments are subject to audit verification by the CPUC or CPUC designee(s). As such, carriers are expected to maintain data for at least five (5) calendar years, unless specifically authorized otherwise by a CPUC order or a director’s letter. Carriers that are 90 days or more in arrears in reporting and remitting surcharges may be subject to administrative or judicial collection actions and/or revocation of their authority to operate in California.