Taxes on telephone lines, like the levy in Montgomery County, might not be able to keep up with modern technology.
With more people turning away from landlines in favor of wireless technology, evading Montgomery County’s telephone tax is as easy as using an out-of-county billing address or using a prepaid phone, said county resident Louis Wilen.
Wilen’s Sprint cellphone bill is paid automatically online, and he never needs to receive anything in the mail from the company, he said. So as an experiment, the Olney resident switched his mailing address to that of a church in Howard County. The result is that he doesn’t have to fork over $3.50 a year for his cellphone.
Since he uses a Voice over Internet Protocol instead of a landline — an Internet-based phone service — he is able to avoid paying the annual $2 tax on that, too.
But helping his mother avoid the telephone tax in Baltimore, where she lives, was unintentional. He bought her a prepaid T-Mobile cellphone — 1,000 minutes for about $95 a year — and has never paid the telephone tax on it, he said.
“I don’t know how they would know that my mother lives in Baltimore City,” he said. “[The tax] was antiquated as soon as it came out because telephones by nature — they’re not really associated with a particular location.”
But Montgomery County says it will continue to collect the tax on wireless phone lines, regardless of whatever loopholes Wilen has discovered.
Although the amount of revenue earned from taxing landlines is dropping, revenue from wireless phones is on the rise, said Department of Finance Director Joe Beach. In fiscal 2011, the county earned $7.7 million on landlines — taxed at $2 a line each year — and $41.4 million on wireless lines. In fiscal 2012, the county brought in $5.9 million on landlines and $41.6 million on wireless ones.
Even with cellphones taxed at a higher rate, the growth in tax revenue from cellphones didn’t keep up with the drop in revenues from landlines. Overall revenues dropped from $49.1 million to $47.5 million.
But this fiscal year, Beach’s office expects to play catch up, with wireless phone tax revenues rising to $43 million and overall telephone tax revenues at $48.7 million.
The tax is certainly not antiquated, Beach said.
Wireless providers, for their part, would like to see the tax abolished and fought the county’s decision to increase the tax on cellphones in 2010.
“Montgomery County phone customers pay among the highest phone taxes, per line, in the country,” said AT&T spokesman Dan Langan.
