Fax transmissions over VOIP are always a challenge. The Skype plug-ins suggested in this thread probably use a third party to carry the actual transmission, i.e. I don't think they would be using your SkypeOut service.
I have been using
www.send2fax.com for many years. They give you a dedicated number in an area code of your choice for receiving faxes and let you send faxes via a web interface or even via e-mail, which is useful if you have something to fax from your PDA or blackberry.
I signed up on a 2.95 / month plan which they no longer offer to new clients.
They now expect people to pay something like 10 dollars per month, even if you have zero usage that month which is ridiculous. As far as their features and reliability are concerned, I can still recommend them.
Prior to that I was using
www.j2.com for a couple of years. They like to tease you to sign up by offering you a dedicated incoming fax number for free and then up-sell you to a subscription that lets you send faxes. Their reliability was good. Customer service was crap (scripted responses from India, similar to what you get from PayPal and Ebay customer service).
As I am writing this I opened the j2 web site in another browser window and discovered that they want 19.95 a month for a premier account. That's even crazier than send2fax.com.
I recently discovered vitelity.com for VOIP. They have awesome pricing, service and features. They, too offer an e-fax service which is only about 3 dollars a month and a recent feature update allows people to upload faxes to a web interface.
Sending costs 3 cents per minute within the US.
Faxes can be uploaded in JPG, PDF, Adobe PostScript, TIFF, Microsoft Word, Excel, CSV, HTML & Plain Text formats.
I have not used their fax service long enough to really give a thorough appraisal but from what I have experienced with their VOIP service, it's definitely worth taking a look at.
Edit: I just found a major drawback to the vitelity fax service: For some reason they only let you send faxes to destinations in the US.
