The Skinny on Taxing Texts in California

The California Public Utilities Commission proposed the tax bill on texts as financial assistance of sorts to help low-income California residents access telecommunications services. Money from the tax will be reallocated to multiple programs like 911 services and assistive equipment for deaf users. This proposal is to make up for a former state tax on voice calls.

The final decision on the proposal will be made on January 10, 2019. The CTIA, representing Sprint, T-Mobile, and AT&T Mobility, is one industry trade group strongly opposing the proposed tax.

Presently, the Commission has not worked out who will be charged the tax and did not speak for ways people can avoid the tax such as by getting a phone number out of state. However, it was determined the tax will be for SMS or MMS messages set from built-in messaging apps such as those sent from an Android phone.

iMessages are excluded from the tax. Any app which uses the Internet and mobile data, known as “over the top” OTT services, to send messages is exempt from the tax. Also, texts for the previous five years will be retroactively charged the tax.

RCS, Rich Communication Services, is developed text messaging, dependent on the Internet and with added features such as stickers and bubbles to notify one when the other party is texting back. RCS was designed to replace SMS/MMS messaging. There was no word on whether the tax will extend to RCS messages.

Assumed from the Commission calling the tax a monthly surcharge, the tax is not expected to be too costly. For cell phone users, surcharges are prolific but typically only a few dollars at the bottom of a bill.

The Federal Communications Commission concluded SMS/MMS cannot be likened to commercial mobile services, creating an obstacle for the Commission in refining its tax bill. It ruled texting to be an “information service” like email is. On the plus side, carriers will be able to eliminate spam messages.

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