Bureau Instructs USAC on Two High-Cost USF Support Issues

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The FCC’s Wireline Competition Bureau (Bureau) has provided guidance to the Universal Service Administrative Company (USAC) on two policy questions related to the universal service fund’s (USF) high-cost support mechanism.  The Bureau’s guidance is being provided in response to an August 2009 letter from USAC to the Bureau requesting assistance on various policy questions related to the federal USF.  First, the Bureau provides guidance on documentation retention requirements for recipients of high-cost USF support.  Specifically, the Bureau clarifies that, absent evidence of waste, fraud and abuse, USAC should not take action against carriers for document retention inadequacies during time periods when there was no document retention rule in effect.  Second, the Bureau provides the following guidance related to income taxes attributable to rate-of-return carriers structured as S corporations: “USAC should allow rate-of-return carriers structured as S corporations to include in their revenue requirement the income taxes paid by their shareholders that result from their ownership of the corporation’s equity.”

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