Telephone Federal Universal Service Fee Tax Law and Legal Definition

Since May of 1997, the Federal Communications Commission (FCC) requires telecommunications carriers to pay into the Universal Service Fund. This helps provide affordable phone service and gives schools, libraries, and rural healthcare providers access to the Internet. Telecommunications carriers are required by the FCC, to pay a percentage of their revenues for state-to-state and international services into the Universal Service Fund. The FCC sets this percentage on a quarterly basis. Some phone companies have chosen to recover its payments into the Universal Service Fund by charging customers the UCC, which is now equal to the percentage set by the FCC.

The Universal Service Fund helps provide affordable telecommunications services for low-income customers and customers in rural areas. It also provides discounts on Internet access for eligible schools, libraries and rural health care providers. The USF is collected from telecommunications carriers and administered by the Universal Service Administration Corporation. They are responsible for disbursing the funds according to eligibility criteria established by the FCC. The phone company may recover its costs for the required payments into this fund through a separate charge on each residential customer's bill. This charge is sometimes called the Universal Connectivity Charge.