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498/499 Spotlight - October 2015

498/499 SPOTLIGHT BANNER

4th Quarter 2015

In this issue...

 

Deadlines   |   Revenue Reporting   |   Did You Know   l   At the FCC

 

DUE ITEM More Details
Oct 15 Universal service contributions Making Payments
Nov 2 FCC Form 499-Q File FCC Form 499-Q
Nov 13 Universal service contributions Making Payments
Dec 15 Universal service contributions Making Payments

 

De Minimis Exemption

Email USAC each quarter to confirm your de minimis status!
 
The FCC's de minimis rules provide a contribution exemption for companies whose annual universal service contribution is less than $10,000. In October of each year, a carrier should review its interstate and international revenue forecasts for the upcoming year. Based on the FCC's estimated contribution factor on its de minimis worksheet, the FCC predicts that carriers with less than $65,789 of annual interstate and international revenues will be de minimis for 2016.
 
If a company no longer meets the requirements of the de minimis exemption, it should prepare an FCC Form 499-Q filing for submission to USAC and notify its underlying providers that it will be contributing directly to the universal service fund in the coming year. 
 
If a company, however, continues to meet the requirements of this exemption, it should email USAC to confirm the company's continuing de minimis status each quarter and notify its underlying providers that it is not contributing directly to universal service, so that it may be treated as an end user when the underlying provider files the FCC Form 499-A.
 
The de minimis exemption is applicable to universal service support only, and does not affect a company's contribution obligations for Local Number Portability (LNP), North American Numbering Plan (NANP), or Telecommunications Relay Service (TRS). 
 
To check any company's de minimis status, please visit the FCC Form 499 Filer Database.

File successfully by reviewing USAC's filing tips and common audit findings. Each quarter, there will be a different common finding and related filing tip! This quarter we're focusing on the FCC Form 499-A Line 403. Read More

 


Fourth Quarter 2015 Contribution Factor Decrease to 16.7 Percent

The FCC released a Public Notice (DA 15-1016) announcing that the proposed universal service contribution factor for the fourth quarter (October-December) of 2015 will be 0.167, or 16.7 percent.

 

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Late Filing Fees and Late Payments

All intrastate, interstate, and international providers of telecommunications (including VoIP providers) within the United States, with limited exemptions, are legally obligated to file the FCC Forms 499-A/Q in a timely manner. To be considered on-time, a certified FCC Form 499-A/Q must be received by USAC on or before the due date. Form due dates are available on the When to File page. 
 
Forms not received on time will be assessed a monthly late filing fee. More information is available on the Late Filing Sanction page of our website. 
 
Additionally, invoices that are paid late are considered debts owed to the United States, and USAC is required by the Debt Collection Improvement Act (DCIA) of 1996 to impose interest on the first day of each delinquency. The Filer ID and all associated SPINs will also be put on Red Light status, and all future universal service fund disbursements will be netted against the outstanding delinquent debt. More information is available on the Late Payments, DCIA, Red Light page of our website.

Report Revenue on FCC Form 499-Q by November 2, 2015

Each quarter, all telecommunications carriers and all interconnected VoIP providers that are not de minimis and thus required to contribute directly to the universal service fund must file the FCC Form 499-Q (Quarterly Telecommunications Reporting Worksheet) with USAC.
 
The FCC Form 499-Q is used to collect carrier revenue information and to determine the carrier's universal service contribution obligation for the upcoming quarter. 
 
Contributors with access to the Internet must submit their FCC Form 499-Q using USAC's online filing system, E-File. Users can pull up historical forms, edit and submit changes, and certify online.
 
If you have questions about the revenue you are reporting on your form, call USAC's Customer Operations team at (888) 641-8722.

 

Revenue data you will provide on the November FCC Form 499-Q 
  • Actual billed revenue from July 1 - September 30, 2015, on lines 115-118
  • Projected billed and projected collected revenue from January 1 - March 31, 2016, on lines 119-120
November FCC Form 499-Q revision deadline December 17, 2015
Resulting USAC invoices
Based on the January 1, 2016 - March 31, 2016, projected collected revenue reported:
  • Invoices issued in January, February, March 2016
  • Payments due in February, March, April 2016

 

De minimis carriers do not need to complete FCC Form 499-Q. Visit the De Minimis page on the USAC website to find out if your company qualifies as de minimis.

The Bottom Line: FCC Form 499-A Revenue Reporting and Audit Tips

USAC wants to help your company file successfully. A successful filing reports revenues correctly the first time and retains the right documentation in case of an audit. This new recurring feature in the Spotlight will present a common filing error carrier's make and how to avoid it. This quarter, our focus topic is universal service fund surcharge revenues. 
 
Line 403 - Revenue from All Other Sources (end-user, telecom, & non-telecom)
 
What is this line for?
Surcharges or other line items on bills identified as recovering state or federal universal service contributions are universal service charges that have been passed on to the end-user. So revenue reported on Line 403 should include line items presented on customer bills to recover or collect contributions to state and federal universal service support mechanisms. In this case, customers are end-user consumers and/or carriers, depending on who is buying the service. Federal universal service revenues are reported on Line 403 as part of the total in column (a) and as interstate in column (d). Filers wishing to distribute their universal service revenues between the appropriate interstate or international jurisdictions [columns (d) & (e), respectively] may do so.
 
Many states (e.g., Texas, California, and New York) have state universal service programs of their own.  Filers should report state universal service revenues on Line 403 in column (a) only to the extent that actual payments to state universal service programs were recovered by pass-through charges itemized on customer bills. These line items might not explicitly state "universal service" on the bill, but if the underlying intent of the program is the same as the federal universal service fund, filers should add those amounts to the total in box 403a.
 
Worried about double billing?
Don't worry about double billing because USAC will mathematically back out the federal universal service revenues that you report on your FCC Form 499 filings. In determining what a filer contributes to the universal service fund each quarter, both a contribution factor and a circularity factor are applied as percentages to the filer's revenue. The contribution factor is the percentage of end-user revenue that will be contributed to the universal service fund. The circularity factor adjusts the quarterly contribution base by approximating the filer's contribution for that quarter and subtracting it from the total, thus decreasing a filer's contribution base. This prevents the assessment of universal service fees on the pass-through universal service fund charges that filers bill to their customers and are reported as revenue on the FCC Form 499.
 
You can find a list of the most current contribution and circularity factors on the Contribution Factors web page.
 
Common Audit Findings
Filers often fail to report itemized state and federal universal service fund surcharges as revenue on Line 403 because they believe that by including it in the contribution base as revenues they are contributing on those revenues again. This belief is incorrect, as the circularity factor subtracts out the amount of universal service fund that would be paid on the universal service fund collected.
 
When auditing a filer's FCC Form 499-A, USAC will typically ask for a copy of end-user bills to ensure the company is assessing the federal universal service fee properly. So companies should save their end-user bills in the event of an audit. Companies should also be prepared to produce a report detailing the amounts that were collected for state and federal universal service represented as a line item on an end-user bill.
 
In some cases, companies choose to record the pass-through state and federal universal service fund in a liability account rather than a revenue account in their general ledger. If this is the case, the company must report the amount on Line 403 on the FCC Form 499-A. Companies often exclude this liability from the reporting on Line 403, mistakenly categorizing the charges as a liability, when in fact, the pass-through charges are considered revenue collected for the purpose of contributing to the universal service fund.
 
We hope you've found this information helpful. If you have any questions about Line 403, please contact our team.

New E-File User Interface for FCC Form 498 Revisions

Updates have been made to E-File! The FCC Form 498 section has a new user interface (to match the interface of the FCC Form 499), and General Contacts and Company Officers listed on the FCC Form 498 will follow a new process to submit changes and certify the form.
 
What Has Changed?
  • The term SPIN (Service Provider Identification Number) has been changed to "498 ID." When you log in to E-File, wherever the term SPIN had been used, it now reads "498 ID." Your ID number itself has not changed. The change is only to the terminology used to reference it. This change comes in anticipation of a December 2015 update to the FCC Form 498, which will include a change to the form name. Other than the terminology change, the December 2015 changes to the form itself will only affect Schools and Libraries Program participants. Stay tuned for more information about this form change in future issues of the Spotlight!
Additional Assistance
If you have any questions on completing revisions to the FCC Form 498, call us at (888) 641-8722, or you can email Customer Support. You may also visit the Service Providers section of our website for additional information.

Credit Balance Refunds (CBR)

Occasionally, filers may notice that their USAC invoice shows a credit balance. There are many reasons for this to occur, but the most likely reason is due to an FCC Form 499-A true-up. 
 
If your account contains a credit balance, you can request a refund. Initiate a CBR by completing a CBR Request Form. Mail it to USAC by the 25th of the month. USAC will then review the account status, calculate the current account balance, and process an approved CBR by the beginning of the following month.
 
CBR request forms must be signed by the Company Officer listed on their company's FCC Form 499-A. If the Company Officer signing this form is not listed on their company's FCC Form 499-A, their banking information form must be notarized. 

Service Providers Participating in the Rural Health Care (RHC) Program

System Updates to My Portal Invoicing
The RHC Program has received feedback from several service providers about their invoicing process and is currently developing system improvements as a direct response to service providers’ current needs. These future system developments will be deployed in My Portal in the next few months, resulting in a more streamlined invoicing process for service providers for the Telecommunications Program, and improvements to the HCF Program invoicing process that will reduce the possibility of errors by HCP applicants, decreasing service provider review time.
 
Upcoming Deadline Reminder for Healthcare Connect Fund: FCC Form 463 Invoices
Per the FCC Healthcare Connect Fund (HCF) Order, Paragraph 305, all FCC Forms 463 must be submitted to USAC within six months of the end date of the funding commitment. For funding year (FY) 2014, single-year funding commitments ending June 30, 2015, the FCC Form 463 must be approved by both the applicant and service provider and submitted to USAC by December 31, 2015.
 
Note: This deadline is for the HCF Program only and does not apply to the Telecommunications Program, and is only for FY2013 applications.
 
Steps to Complete FCC Form 463
After the applicant submits their FCC Form 463, the service provider should complete the following steps to review and submit the form to USAC:
  1. Log in to My Portal.
  2. Select the RHC invoice numbers you want to review.
  3. Review the form's "General Information" section, the FCC Form 463 Excel document, and supporting documentation, and upload supporting documentation if you choose.
  4. Once your review is complete, accept or reject the form. If the form is rejected, it is returned to the applicant so they may fix any errors. (A service provider must provide a detailed reason for the rejection.)
  5. Once a rejected form is corrected and accepted, the service provider should accept and submit it to USAC for payment. 
 
Additional Assistance for RHC Program Service Providers
  • If you are experiencing any issues in submitting your FCC Form 463, please do not hesitate to contact the RHC Help Desk by email or by phone at (800) 453-1546.

 

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4Q 2015