Audit Report on Verizon New York, Inc.’s Compliance with New York City’s Enhanced 911 Surcharge Regulations

Executive Summary

The New York City Administrative Code (NYC Administrative Code), Title 11, Chapter 23-A- Enhanced 911 Telephone Surcharge requires telecommunication providers (Service Providers) to impose a monthly surcharge of $1, known as the 911 surcharge, on each telephone line (landline and VoIP).^[1] The surcharge is capped at $75 per location. The 911 surcharge is used to pay for the costs associated with obtaining, operating, and maintaining telecommunication equipment and telephone services needed to provide an enhanced 911 emergency system serving the City of New York (the City). The 911 surcharges are remitted to the Department of Finance (DOF) every month, less a 2% administrative fee retained by Service Providers. The NYC Administrative Code also requires Service Providers to submit an annual accounting of billed and collected 911 surcharge amounts, and a monthly listing of customers who did not pay the 911 surcharge.

This audit was conducted to determine whether the largest provider within the City—Verizon New York, Inc. (Verizon)—complied with the regulations related to billing, collection, remitting, and reporting of 911 surcharges. For Calendar Year 2020, Verizon remitted approximately $10.3 million in 911 surcharges to DOF.

Audit Findings and Conclusion

Although Verizon promptly remitted monthly 911 surcharges to DOF, the auditors were unable to determine whether Verizon billed and collected the 911 surcharge from all customers required to pay the surcharge, or whether Verizon paid all 911 surcharge revenues that it collected from customers to DOF. This is because Verizon did not provide requested access to relevant information and staff. As a result, the auditors were unable to determine the accuracy and completeness of Verizon’s data and obtain sufficient evidence to verify that Verizon properly billed, collected, and remitted the correct 911 surcharge amounts.

In addition, Verizon did not submit the required annual report and monthly lists of non-paying customers to DOF. As a result, there was no assurance that Verizon complied with the requirements set forth in the NYC Administrative Code.

Audit Recommendations

To address these issues, the audit makes 4 recommendations, including that:

Verizon should:

• Ensure that the 911 surcharge amounts reported to DOF are fully supported by the underlying data, and that its billing and payment information is readily available for review.
• Ensure that all required reports are submitted to DOF timely, including the annual reports and monthly lists of non-paying customers with amounts owed to DOF, as required by the NYC Administrative Code.

DOF should:

• Request that Verizon submit the underlying data to support the amounts reported on the E-911 Surcharge Tax returns.
• Ensure that Verizon submits all required reports, including the annual reports and monthly lists of non-paying customers with amounts owed to DOF, as required by the NYC Administrative Code.

Agency Response

In its response, Verizon generally disagreed with the report’s findings and stated that “no action needs to be taken by Verizon” to comply with the two recommendations that were addressed to it. In DOF’s response, the agency agreed to take steps to try to implement the two recommendations that were addressed to it.

[1] VoIP stands for Voice over Internet Protocol.