IoT/M2M Solutions

For several years now Solution Providers have been building connectivity into everyday products and deriving new ways of adding value to their customer experience. Subscription based solutions are transforming the way we do business but hidden in that service based transformation there is a seldom discussed issue that has potentially huge implication on business: taxation.

When a company sells a product the taxes are relatively straight forward, if it sells service there are more complexities and when telecommunications services are included the service will be taxed more like a utility. This creates a very complex billing situation that many solution providers are not aware of Telecommunications, Regulatory and Taxation Compliance is complicated, expensive and NOT optional. No one wants tax issues to limit what customers they can serve but IoT is blurring the line between products and services.

There are thousands of companies operating out of compliance and very few know how to address the issue, assuming they are even aware of it. Organizations may not have access to tax professionals with a sophisticated understanding of service and telecommunications tax issues.

Modas Systems is here to help.


Through a unique partnership agreement with Solution Providers, Modas becomes the “carrier of record” and bills the end customer on behalf of the solution provider. This allows Modas to aggregate the tax filing, regulatory registrations and remit to thousands of jurisdictions with economy of scale.

  • Invoice the customer using a customized, co-branded bill with the Solution Providers logo and address.
  • Calculate, file and remit the appropriate taxes including telecommunications.
  • Protect companies that may face a nexus tax issue when operating in multiple states.
  • Maintain wireless carrier compliance at the local, state, and federal levels.
  • Provide detailed billing reports and alerts to the solution provider.
  • Provide end customers with a web based portal to review and pay invoices electronically.

Navigating the complex world of taxation and regulatory compliance for the Internet of Things is not easy. The Modas team of experts can limit Solution Providers exposure to potentially devastating audits.

IoT graphic

Tax Calculations
  • Telecommunication taxes are usually determined based on primary place of use, but in the case of cellular services where devices may be mobile, the billing zip code of the customer often becomes the determining factor. (Requirements vary State to State.)
  • With approximately 43,000 jurisdictions, manual calculation is nearly impossible
  • Complex calculations are not possible with QuickBooks
  • Tax engines only provide a partial solution
    • Taxes based on value of service:
    • Do not address telecommunications element
    • Do not address regulatory compliance issue
Interested Parties
  • Wholesale Wireless Carriers & MVNO’s – Offers wholesale telecommunications services to solution providers with bundled solutions
  • Solution Provider– Sells telecommunication service bundled with their product or service to end users and is now responsible for taxation and regulatory compliance
  • End Users – Ultimately the party responsible for paying telecommunication tax on services
New Solution Providers
  • Simple billing setup
  • Instant Regulatory Compliance
  • Savings in not having to register in foreign jurisdictions
  • No tax exemption management
  • Protection from Nexus issues with existing business providing tax savings to customers