Why Texans pay more for the Internet than others


On his Verizon wireless bill, Wald finds a jarring discrepancy. The sales tax he is charged for his two wireless phone lines does not make sense. He calls Verizon to ask about it.

During a span of several weeks, he talks to six Verizon employees. Of course, being who he is, he keeps notes. Nobody knows the answer.

Most of the Verizon people he talks to promise to call him back. But no one ever does. This stinks. Verizon doesn’t take Michael Wald seriously.

Working for the FTC years ago as a young lawyer, Wald helped write rules for the funeral industry, sued famous companies for product deception and helped write used car warranty disclosure rules. Like I said, our new pal.

The mistake Wald finds is so small, a needle in a haystack. But I’m glad I decided to dig into this. Wald’s curiosity leads us to something astounding that affects almost everyone in Texas who uses the Internet or carries a cellphone with a Web browser. Please, pull up a chair.

Simple questions

Wald asked this: Why is he charged $2.10 in state sales tax for one wireless phone and $3.25 for the other? Why is he charged 33 cents in Dallas city tax on one line and 51 cents on the other? Shouldn’t it all be the same?

Everybody he talks to at Verizon, before they promise to call back, gives him a different theory. Wald listens, then points to numbers on his bill and refutes the answer. Remember who he is.

“Six people, and I hadn’t gotten anywhere,” he says. “Spent over two hours.”

The answer

The answer I get for him from Verizon fascinates me. Maybe I’m too much of a geek. All I know is that what I’m about to tell you excited me because I didn’t know it.

As explained to me, there is a beautiful law passed by Congress in 1998 called the Internet Tax Freedom Act. I never heard of it, but it’s now one of my all-time favorites. This law forbids all governments from taxing us for using the Internet. Amazing when you think of it. Back then, in 1998, Congress was so thoughtful.

This means that Americans are not supposed to pay any taxes on their Internet use.

That’s the good news. The bad news is there are a few exceptions, Texas being the biggest of all.

Because Texas already had a tax on the books before Congress passed that law, Internet providers are required to charge us sales taxes, but in a twist, Texans are only taxed for charges above a $25 threshold.

It’s a makeup ploy because we get taxed while most Americans don’t. The $25 Internet tax exemption is written into state law. (Check your Internet bill and see if you get taxed on the first $25 of your monthly Internet bill. If you do, that’s wrong. But please don’t tell me. Argue with your Internet provider.)

This revelation turns out to be the answer that nobody at Verizon seemed to know. Wald has two wireless phones in his family. The first uses most of the exemption because the monthly bill is $21. The remainder goes to the second phone. That’s why the numbers aren’t the same.

Hearing that, I can understand why the Verizon employees didn’t know the answer. It’s too archaic and unique to Texas. If it isn’t in their call center playbook, how would they know? We forgive them for their ignorance of Texas tax law.

What’s unforgivable is that they promised to call back and didn’t. When you make a promise that you’re going to call back, keep it. Southwest Airlines (although it uses an automated system) called back four times the other night. Apple customer support is exceptional about calling back. Not so in this case at Verizon.

Verizon agrees with me. “There’s no excuse,” says Audrey Lundy, who speaks on behalf of Verizon Wireless. “This is not the way Verizon works. We’ll take the opportunity to revisit employees who may not have performed to our own customer service standards and refresh their training as necessary.

“We definitely want to go back and work with that person to make sure that the next caller who gets a promise gets a call back in a timely manner.”

I’ll end with a final lesson from our new pal Michael Wald teaching us another strategy.

This week Verizon calls Wald to straighten this mess out, Wald asks Verizon:

“Can you do anything to make me feel better about spending hours on the phone and getting completely wrong information?”

The answer is yes. He gets a free month of service.