Frequently Asked Questions (FAQs) about Avalara Tax Follow

What does this mean for me?

  • If you are located in a U.S state or foreign country where Zoom’s services are not currently being taxed, you will only see the format of your invoice change.
  • If you are in a foreign country where EU VAT is assessed, and you have not provided Zoom with your VAT ID number, you will see the VAT charge directly associated with each service on your invoice, and further summarized at the end of your invoice.
  • If you live in a U.S. state where Zoom services are subject to state taxation, you will see the taxes directly associated with each service on your invoice, and a summary of all tax types at the end of your invoice.  This may include local taxes that were not previously charged. Additionally, because we can now determine the taxability of each individual service, you may find that you are not being charged tax on some items.
  • If you are a Zoom Phone customer, you will see that federal and state telecommunications taxes and fees are now applied to the sale of the product.  This includes Federal Universal Service Fund (USF) and possibly state level USF and/or other local telecommunications taxes. The details of all Zoom Phone telecommunications related taxes and fees are summarized at the end of the invoice.

Why does my invoice look so different?

When Zoom implemented its new system, it gave us the ability to present tax and fee charges with much greater detail and specificity.  Now, you will see the detail for all taxes applied at the federal, state and local level for all Zoom services, including the telecommunications taxes and fees which are new for Zoom Phone customers.

Why am I being charged state taxes at all?

Zoom is required to charge and collect state taxes (e.g., sales taxes, gross receipts taxes and certain telecommunications taxes) from customers in certain states where Zoom either has a physical presence (i.e., employees or office locations) or where Zoom maintains a significant market based on the amount of its sales and/or transactions with customers (subject to state specific rules).

Zoom is not required to collect these state taxes from customers residing in states where Zoom’s services are not subject to state or local taxes, regardless of Zoom’s physical presence or its sales/transaction volume in that particular state.  However, it is important to note that customers may still be required to self-report and remit use tax (on purchases) in certain state and local jurisdictions that would subject Zoom’s services to tax, even if Zoom is not required to charge and collect sales tax on the transaction.   

When Zoom collects these state taxes, we remit the entire amount to the relevant state taxing authorities on behalf of our customers.  The amount and type of tax collected depends on your location, the type of products/services purchased and the particular rules of the state and local jurisdiction.

What are all these tax items?

Because of our system upgrade, Zoom is able to present much greater detail about the taxes that apply to each service.  For example, while state sales taxes may still apply, local taxes may also be calculated and federal fees may be passed through for regulated services.  The type of taxes varies by location and the service provided. The chart at the end of the invoice displays all tax types for each line item of tax charged.

What will my invoice look like now?

The new presentation will show the tax amount applied to each service, for example:

At the end of the invoice, a summary of tax details for every tax shown in the “Charge Details” section will also be included, which will show the tax type and jurisdiction of the tax, for example:

Are there any new taxes?

Generally, the only new types of taxes that you will see (aside from presentational differences) are local and district taxes that can now be computed and telecommunications fees that apply to Zoom Phone.  State sales tax continues to be applied as it was on previous invoices, however, we are now able to charge the tax on a separate service basis. We note that as we determine our future obligations to charge and collect other state taxes or telecom based taxes, we will make every effort to notify you promptly and in advance of any charges appearing on invoices.

What are telecom taxes and fees?

Taxes may be imposed by state, local, and municipal governments on goods and services, including phone services (i.e., telecom).  In addition, federal, state and local governments may impose regulatory charges on providers of certain communications or telecommunications services, including interconnected VoIP service like Zoom Phone.

Why do certain taxes apply only to Zoom Phone?

Zoom Phone is taxed differently than other Zoom services because the voice services are generally treated differently by various state taxing authorities.  Zoom Phone is also subject to certain regulatory fees and assessments that apply to an interconnected VoIP service but do not apply to Zoom’s other services.

What fees should I be seeing?

All Zoom Phone customers will see a Federal USF charge.  This is a charge that Zoom Phone uses to recover the cost of Federal USF contributions that Zoom (and other similarly situated providers) is required to make to support the provision of communications services in rural and high-cost areas, income-eligible consumers, and to support access to communications for schools, libraries and rural health care providers.

Certain Zoom Phone services are subject to a federal excise tax; for those services, Zoom Phone collects those taxes on behalf of the government using a “Federal Excise Tax” line item.

Zoom Phone also charges state and local telecommunications taxes as permitted or required by law.

My last carrier had a longer list of fees.  Why are there fees missing?

Zoom Phone has chosen not to charge additional fees to recover certain costs associated with providing the service.  Many other providers use additional fees to recover costs. These fees may be called “regulatory recovery fee” or “cost recovery fee” or “911 recovery fee.”  While Zoom Phone is also permitted to make similar charges, we have decided to use more transparent pricing and not charge separately to recover these costs.

Who can I talk to if I have questions about these new taxes and fees.

You can always reach out to us at billing@zoom.us and we will be happy to help you.

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