California's New Property Tax Grab On VoIP Providers Highlights FCC's Failure To Act On The CCA–CVA Petition To Enforce Vonage Preemption

The California State Board of Equalization (BOE) has begun issuing notices to VoIP companies operating in the state, advising that, beginning with the January 1, 2026 lien date, the BOE will assert state assessment jurisdiction over interconnected VoIP providers as "telecommunications companies." Under this new framework, affected providers will be required to file annual property tax statements with the BOE by March 1 each year, starting in 2026.

This is a direct byproduct of the California Public Utilities Commission's (CPUC) Decision 24-11-003, issued November 12, 2024, which reclassifies interconnected VoIP providers as "telephone corporations" and introduces the Digital Voice Fixed (DVF) and Digital Voice Nomadic (DVN) categories.

Just as importantly, this tax development is precisely the sort of state-level creep the Cloud Communications Alliance (CCA) and the Cloud Voice Alliance (CVA) sought to prevent when they filed their Petition for Declaratory Ruling at the FCC on January 27, 2025—a petition the FCC has still not acted on!

The BOE letter explains that:

• In light of CPUC Decision 24-11-003, VoIP providers are now treated as regulated telephone companies under California law.
• Under Article XIII, section 19 of the California Constitution, the BOE has centralized assessment authority over regulated telephone companies, and it will now apply that authority to VoIP providers.
• Beginning with lien date January 1, 2026, VoIP providers designated DVF or DVN must:
  • Be treated as BOE-assessed telecommunications companies; and
  • File a property tax statement annually with the BOE by the March 1 deadline.

The letter also points providers to a forthcoming Letter To Assessors (LTA 2025/040) for more detail on how VoIP property will be valued and reported.

In short, once the CPUC decided to regulate VoIP like legacy telephony, other state agencies quickly followed suit—and found new ways to tax VoIP providers.

The CCA–CVA Petition: What It Asks the FCC To Do

On January 27, 2025, CCA and CVA jointly filed a Petition for Declaratory Ruling with the FCC. The petition:

• Challenges the CPUC's VoIP framework in Decision 24-11-003 as inconsistent with federal law and FCC precedent, including the Vonage Preemption Order, which recognizes the inherently interstate nature of nomadic VoIP services.
• Asks the FCC to reaffirm its exclusive jurisdiction over interconnected VoIP services and apply the end-to-end jurisdictional analysis as the controlling standard for VoIP regulation.
• Argues that CPUC's state-specific requirements—such as separate treatment of "fixed" vs "nomadic" VoIP, new registration mandates, and performance bond obligations—create barriers to entry, stifle innovation, and disproportionately harm small and mid-sized providers.

In February 2025, CCA and CVA followed up with meetings at the FCC and public statements urging the Commission to docket the petition, seek comment, and issue a ruling reinforcing Vonage preemption and blocking California's regulatory overreach.

How Long Has the Petition Been Sitting at the FCC?

• Petition filed: January 27, 2025.
• Follow-up advocacy: CCA and CVA publicly pressed the FCC in February 2025 to docket the petition and open it for public comment, underscoring the urgency of the issue.
• Status as of late 2025: Public reporting continues to note that the FCC has not yet acted on the filing—no docket, no notice, no ruling.

In other words, the petition has now languished at the FCC for nearly a year with no visible procedural movement, even as California agencies push forward with expanded regulation and taxation of VoIP providers.

Why the FCC's Inaction Matters in Light of the BOE Letter

The BOE letter is a real-world example of the harms CCA and CVA warned about:

1. Regulatory creep from one state agency to another
   • CPUC reclassified VoIP as telephone service in late 2024.
   • BOE is now leveraging that classification to pull VoIP providers into state-level property tax assessment traditionally reserved for incumbent telephone utilities.
2. Fragmented, state-by-state frameworks
   • Without an FCC ruling clarifying federal preemption, California's approach becomes a template for other states to copy—each with its own twist on licensing, reporting, bonding, and now taxation.
3. Increased compliance and tax burdens (especially for smaller providers)
   • BOE's property tax regime requires annual complex filings and valuation of VoIP-related property, adding another layer of cost and risk.
4. Undermining nearly two decades of "light-touch" VoIP policy
   • The CCA–CVA Petition asks only that the FCC enforce existing Vonage preemption doctrine, not create new law. USA Herald – The People's Voice+1
   • Every month of delay invites more state experimentation that erodes the uniform national framework that allowed VoIP to flourish.

Key Takeaways for VoIP Providers

• California is now treating interconnected VoIP providers as state-assessed telephone companies and will require property tax statements beginning with the 2026 lien date and a March 1 annual filing deadline.
• The CCA–CVA Petition, filed January 27, 2025, directly targets the CPUC framework underlying this expansion, asking the FCC to reaffirm Vonage preemption and federal jurisdiction over VoIP.
• Despite repeated industry requests to docket and act on the petition, the FCC has taken no public action nearly a year later.
• The BOE letter is not an isolated event—it's an early warning sign of what a future without a strong federal preemption ruling will look like:
  • more state-specific rules,
  • more agencies asserting jurisdiction,
  • more cost, uncertainty, and risk for VoIP providers.

What You Should Do Now

1. Evaluate Your California Footprint: Inventory property and operations that could be subject to BOE assessment and ensure you are prepared for the 2026 filing requirements.
2. Monitor and Engage on the FCC Proceeding: Consider supporting the CCA–CVA Petition through trade associations or direct outreach to the FCC and key Congressional offices.
3. Plan for Copycat Actions in Other States: Assume other states may follow California's lead unless and until the FCC restores clarity under Vonage preemption.

Conclusion and Call to Action

California's latest move is more than just another compliance box to check—it is a test case for how far states can go in reclassifying and taxing VoIP services in the FCC's continued silence. Unless and until the FCC acts on the CCA–CVA Petition for Declaratory Ruling and reaffirms federal preemption under the Vonage line of precedent, other states will be tempted to copy California's playbook, allowing this model to spread like a virus across the country and further fragment the regulatory landscape.

VoIP providers should not wait for that to happen. We encourage you to reach out to Jonathan Marashlian at jsm@commlawgroup.com, or to your contacts at the Cloud Communications Alliance (CCA) and/or the Cloud Voice Alliance (CVA), to discuss coordinated strategies—legal, regulatory, and advocacy-focused—to push back against this trend and work to prevent the "California model" from becoming a de facto national standard by default.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.