Q: My Qwest phone bill in Denver has a “city occupation” tax of 2.776% or $1.24. What is it and why am I paying it?— Cap Witzler, Denver
A: Telephone bills are notorious places for taxes, fees and other government surcharges to hide.
In this case you mean the Telecommunications Business Tax, which is an occupation tax in the sense that any telecommunications firm that provides basic dial-tone service in the city must pay the monthly tax every 20th day of the month.
But the state’s Public Utilities Commission allows the company, in this case Qwest, to pass along the fee to consumers.
The money goes into the city’s general fund and is separate from the city’s general sales tax on telecommunications.
The monthly amount, however, is $1.12. It’s converted to a percentage on your bill because, as Qwest explains it, the PUC authorization requires that the total amount of taxes paid be converted to a percentage of the total revenue collected. The percentage is then applied to each Denver customer to reimburse Qwest for what it paid to the city.
Interestingly, the tax is not applied uniformly to all telecoms. For instance, a cellphone provider that leases its connections from another company is not required to pay the tax because it is not a local exchange regulated by the PUC.
Neither does it apply to companies that provide only long-distance telephone service, since that service is not local exchange and, as such, not regulated by the PUC.
