How to Override FCC Safe Harbor Rates Based on Traffic Study Results

How to Override FCC Safe Harbor Rates Based on Traffic Study Results

By default, CereTax implements the following Safe Harbor rates from the FCC to determine the interstate portion of a service. The Safe Harbor rates are only available for certain Wireless and VoIP services, as described in the instructions to Form 499-A. In addition, many states permit providers to apply the inverse Safe Harbor rate to determine the intrastate portion of those services, which may be subject to state regulation. CereTax will automatically apply these Safe Harbor rates for the relevant Tax Types and PS Codes where they are permitted.

As an alternative to the Safe Harbor rates, the FCC permits telecommunications providers to conduct traffic studies of their services and use the results of those studies instead of the Safe Harbor rates. For full details, pleas see the Instructions to the Telecommunications Reporting Worksheet, FCC Form 499-A.

The following article explains how your business may override the default Safe Harbor rates with your own traffic study results. Be sure to consult with your Trusted Tax Advisor before implementing any overrides.

Create the Rule Type

1. Once logged into CereTax, navigate to Rules >Manage Rule Types

2. Select the Profile that this Rule Type is for. If there is only one Profile, this should already be displayed as the default

3. Click + Rule Type

4. Enter the Rule Type Name (i.e. Safe Harbor Override)

5. Select the Rule Level. For this type of configuration, the Rule Level will be Tax.

6. Click Create Rule Type

If there are multiple Profiles within your CereTax account and this Rule Type is needed for each Profile, complete these steps for each Profile.

Set the Criteria and Action Elements

1. Click the Edit icon next to the newly created Rule Type

2 . Set the Criteria element as percentTaxableTypeCode by dragging the percentTaxableType.percentTaxableTypeCode field to the Criteria Element Table

3. Set the Action element as percentTaxable by dragging the percentTaxable field to the Action Element Table

4. Click Save Elements

Create the Rule  to Override the Interstate Safe Harbor Rate

1. Navigate to Rules > Manage Rules

2. Select the Profile that this Rule Type is for. If there is only one Profile, this should already be displayed as the default.

3. Click Set-up New Rule

4. Fill out the following fields on the Create Rule form:

• ‍Rule Name: Enter a name for your rule, ex. “Override VOIP Safe Harbor - Interstate”. This field has a maximum value of 50 characters.‍
• Description: If desired, enter a description for this rule, “Overrides the Interstate portion of safe harbor for VOIP services to Traffic Study Results". This field has a maximum value of 200 characters. ‍
• Start Effective Date: Enter the start date this rule is in effect for, ex. 01/01/2024‍
• End Effective Date: Enter the end date for this rule, ex. 12/31/2099‍
• Rule Type: Select the Rule Type that was created in the previous step‍
• Status: Select Active

Add the Criteria Elements

1. Click + Add criteria

2. Fill out the following fields on the Add Criteria form:

• ‍Criteria Element: select “percentTaxableType.percentTaxableTypeCode”from the drop-down‍
• Operator: select “equals” from the drop-down
• Select Value and Enter one of the below values:
  • 03 - this overrides the FCC Safe Harbor Rate for VoIP, current rate 64.9%‍
  • 05 - this overrides the FCC Safe Harbor Rate for Wireless, current rate 37.1%‍
  • 07 – this overrides the FCC Safe Harbor Rate for Paging, current rate 12%

3. Click Add Criteria

Add the Action Elements

1. Click + Add action

2. Fill out the following fields on the Add Action form:

• ‍Action Element: select “percentTaxable”from the drop-down.
• Select Value and enter the % value of your traffic study in decimal format, ex. enter 0.15 if you want to override the percent taxable to 15%. The value entered must be in this format.

 3. Click Add Action

Save & Sync the Rule

1. Once returned to the Create Rule screen, click Create Rule.

2. Once returned to the main Manage Rules screen, click Sync Rules.

This rule overrides the Interstate portion of the FCC Safe Harbor Rates only, an additional rule will need to be configured to override the Intrastate portion

Create the Rule to Override the Intrastate Safe Harbor Rate

1. Navigate to Rules > Manage Rules

2. Select the Profile that this Rule Type is for. If there is only one Profile, this should already be displayed as the default.

3. Click Set-up New Rule

4. Fill out the following fields on the Create Rule form:

• ‍Rule Name: Enter a name for your rule, ex. "Override VOIP Safe Harbor - Intrastate”. This field has a maximum value of 50 characters.‍
• Description: If desired, enter a description for this rule, “Overrides the Intrastate portion of safe harbor for VOIP services to Traffic Study Results". This field has a maximum value of 200 characters. ‍
• Start Effective Date: Enter the start date this rule is in effect for, ex. 01/01/2024‍
• End Effective Date: Enter the end date for this rule, ex. 12/31/2099‍
• Rule Type: Select the Rule Type that was created in the previous step‍
• Status: Select Active

Add the Criteria Elements

1. Click + Add criteria

2. Fill out the following fields on the Add Criteria form:

• ‍Criteria Element: select “percentTaxableType.percentTaxableTypeCode”from the drop-down‍
• Operator: select “equals” from the drop-down
• Select Value and Enter one of the below values:
  • 04 - this overrides the Inverse of FCC Safe Harbor Rate for VoIP, current rate 35.1%‍
  • 06 - this overrides the Inverse of FCC Safe Harbor Rate for Wireless, current rate 62.9%‍
  • 08 – this overrides the Inverse of FCC Safe Harbor Rate for Paging, current rate 88%

3. Click Add Criteria

Add the Action Elements

1. Click + Add action

2. Fill out the following fields on the Add Action form:

• ‍Action Element: select “percentTaxable”from the drop-down.
• Select Value and enter the % value of your traffic study in decimal format, ex. enter 0.85 if you want to override the percent taxable to 85%. The value entered must be in this format.

 3. Click Add Action

Save & Sync the Rule

1. Once returned to the Create Rule screen, click Create Rule.

2. Once returned to the main Manage Rules screen, click Sync Rules.