I just received my latest phone bill and had a Frequent Flyer Excise Charge posted. When I called Sprint to ask about this, they said they can do this per FDC regulations. Sprint now charges $1 per 1000 posted to account. Anyone know anything about this?

Regrettably, Sprint AND MCI now do this. They do claim the FCC makes them do it, though they pretty much say that all the time anyway. Still pretty cheap given the number of miles involved, though it is annoying, I'll give you that.

Sprint started this back in November last year. I think MCI started even earlier.

Imagine if every business operated like this?

Does your accountant, Dr, lawyer, etc charge you, in addition to their stated fee, the sales tax they pay on office supplies?

This latest practice of adding every imaginal tax recovery surcharge is nothing short of a scam.

Dollar rental car charged .50 cents for 76 lousy miles. That is 2/3 cent per airline mile!!! http://www.flyertalk.com/forum/frown.gif almost the price they probably purchased the miles for.

This is not a tax or fee that is a part of normal business expenses. This is a tax that the Federal Government REQUIRES the carrier to collect on behalf of the government and remit. If the company chooses to just absorb this cost more power to them but you cannot begrudge a company for collecting and remitting a tax.

If we all complain loud enough about it we will get what we all seem to want, no bonuses. http://www.flyertalk.com/forum/eek.gif

In the meantime the complaints should be to the FED's.

TW

I hadn't heard that the tax was required, but that the Federal Telecommunications Act of 1998(?) allows phone companies to add these types of taxes. Just like the other "fees" and "taxes" that are now included in our phone bills that were never there before the Act.

Here it is:
http://www.irs.ustreas.gov/prod/form...ubs/p51004.htm

A brief slice:

Air Transportation Taxes
Taxes are imposed on amounts paid for all the following services.

Transportation of persons by air.
Use of international air travel facilities.
Transportation of property by air.

.....

Percentage tax. A tax of 7.5% applies to amounts paid for taxable transportation
of persons by air. Amounts paid for transportation include charges for layover or
waiting time and movement of aircraft in deadhead service.
The percentage tax applies to any amount paid (in cash or in kind) to an air carrier
(or any related person) for the right to award air travel benefits. These include
mileage awards and other reductions in the cost of any transportation of persons by
air. This applies to frequent-flyer miles purchased by credit card companies,
telephone companies, restaurants, hotels, and other businesses.


If you fail to collect and pay over the taxes, you may be liable for the trust fund
recovey penalty. See Penalties and Interest, later
......

This has nothing to do with the communications act whatsoever!

TW

I am not a tax lawyer but I think that companies that are remitting the tax but not actually collecting it are asking for trouble.

In a previous life I worked for a company that included a specific tax (not the sales tax) in the total price of an item because their systems could not break out this additional new tax. During a tax audit the examiner said. You show that you have paid the tax but where have you collected it. etc...etc... Penalties and fines came next and they lost on appeal.

TW

Thanks TW! And like I have mentioned before, I'll fork over $1 tax per 5000 miles thereby getting a rountrip domestic ticket for $5 ($4 on CO or NW off-peak). And I agree with something I saw posted somewhere else, if we keep complaining about this puny charge, we'll get exactly what we want - no more tax on no more miles!

The thing that makes this whole thing different is that the excise tax is imposed on the transaction between (for exmple) Delta and MCI, not between MCI and the customer. Ehen you go into a restaurant, the sales tax is on the transaction between you and the restaurant, where passing along the tax is ASSUMED even if not stated in the price.
For MCI to pass along a tax IT was obligated to pay based on its purcahse of FF miles from the airline is no different than if they tried passing along social security taxes on its employees, water bills at its HQ or sales taxes on its purchases.

The tax is one imposed upon the carrier, in this case SPrint. It is not imposed by the feder governmetn upon the customer-- the frequent flier himself.

Sprint pretends this is a direct tax on the customer by calling it an "Excise charge." It is a tax on the customer by the carrier, not by the government.

It came as a surprise to me. I just signed up for Sprint/NW miles a couple months ago. I looked at their application, and all I saw was a requirement to sign up for their Nickel Nights. Nothing about an extra $5.03 per month. I find this misleading at best, and probably a lot worse. I am pursuing this.