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Attachment to Industry Director Directive #2 on Section 118 Abuse

Guideline for an Information Document Request (IDR)
Universal Service Fund (USF)

This IDR seeks documents and information for the purpose of determining whether [Taxpayer] (or any of its subsidiaries or affiliates) received federal and/or state universal service support during the years at issue that it did not report as gross income on its federal income tax returns.

For each entity (including [Taxpayer], its subsidiaries, and its affiliates) that received federal and/or state universal service support, please respond to the following requests for documents and information:

  1. Describe the entity's financial and tax accounting methodologies for reporting the federal and state universal service support payments received.
  2. State whether the entity is a National Exchange Carriers Association (NECA) pool member.
    a. If so, state whether the entity is average schedule or cost company.
    b. If not, state whether it is a price cap company.
  3. Identify:
    a. the amount of federal universal support received each year by universal service support program (e.g., LifeLine, LinkUp, High Cost Loop);
    b. the amount included in gross income each year for tax purposes; and
    c. the amount included in gross income each year for financial purposes.
  4. Identify:
    a. the amount of state universal service support received each year by state and state universal service support program;
    b. the amount included in gross income each year for tax purposes; and
    c. the amount included in gross income each year for financial purposes.
  5. To the extent that the entity did not report all of the federal and state universal support received as gross income,
    a. explain why the entity did not report these amounts as gross income (the explanation should identify the case law, statutes, and other legal authority on which the entity relied in support of its  position and explain how that authority supports its position);
    b. describe how the amounts received were treated for tax purposes (the description should include a statement regarding whether the entity reduced the basis of assets in accordance with I.R.C. § 362(c)),
    c. identify Schedule M-1/3 entries reflecting difference between financial and tax accounting treatment;
    d. provide supporting workpapers for Schedule M-1/3 entries identified in item 5.c., above;
    e. to the extent the entity reduced the basis of its assets in accordance with I.R.C. § 362(c),
      i. provide the specific fixed asset general accounts that were reduced;
      ii. identify the amount of the reduction to each general ledger account;
      iii. describe how this reduction flowed through the tax return via the   depreciation deduction.
  6. If an entity did not report all of the federal and state universal support received as gross income provide:
    a. FCC Form 499-A filed with Universal Service Administration Company (USAC) and/or NECA for each year;
    b. State equivalent to FCC Form 499-A filed with each state authority for each year;
    c. NECA Disbursement Notification received for each month;
    d. NECA Form AS3000 with Attachment 1000 and 2053, if the entity is an average schedule company, for each month;
    e. NECA Form EC3050 with Attachment 1050 and 2053, if the entity is a cost company, for each month;
    f. FCC Form 497 LifeLine and LinkUp Worksheets;
    g. State equivalent to FCC Form 497 filed with each state authority for each year.
Page Last Reviewed or Updated: 27-Nov-2013