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Federal Tax Explained
A tax assessed by the U.S. government on telecommunications services. Proceeds go to the federal government's general revenue fund.
Who put it on my bill?
United States Congress (1898)
What is it?
Taxes assessed by the United States government on telecommunications services. It was created in 1898 as a luxury tax to pay for the Spanish-American War. It was not applied to telephone bills until 1971. Today, all proceeds go into the general revenue fund.
The percentage has decreased on a steady basis from its original 10% in 1971 to its current level of 3%. The Federal Excise Tax was set to expire in 1982; however, government action that year made it a permanent tax.