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Avotus announces Spanish-American War FET recovery services

Helps companies “win the last battle” of the Spanish-American War…

TORONTO and BOSTON – June 12, 2006 – Avotus Corporation, the leading provider of communications expense management (TEM) and e-Procurement solutions, has rolled out Spanish-American War Federal Excise Tax (FET) recovery services. Avotus’ service is in response to the U.S. Treasury Department’s May 25 announcement that it “will no longer pursue litigation and the Internal Revenue Service (IRS) will issue refunds of tax on long-distance service for the past three years.”

This “temporary” luxury tax (since only rich people used phones) was instituted in 1898 to finance the Spanish-American War. Now, 108 years later, one provision of the tax is being terminated. The announcement applies to only the long-distance portion of the tax and does not affect Federal taxes on “local telephone service” and “teletypewriter exchange service.” However, in addition to the traditional, wired telephony of the beginning of the 20th century, it also applies to wireless services.

The three-year refunds could be substantial windfalls for companies with multimillion dollar communications budgets. “The challenge is in isolating and quantifying the amount of the Federal tax refund,” commented Fred Lizza, Avotus president and CEO. “At best, it is a line item in each bill – and some companies receive hundreds of telephony invoices each month. At worst, the tax is buried deep in invoices as direct tariffs associated with specific calls.”

Avotus Intelligent Communications Management (ICM) with its Expense Management capabilities analyzes, calculates and reports every aspect of enterprise communications bills and can break out the FET. Just as important, it is able to document findings to comply with Sarbanes-Oxley regulations to protect companies from errors and omissions.

“Corporate management is caught in a bind,” continued Lizza. “In some companies three years of the FET can add up to hundreds of thousands of dollars, so they have fiduciary responsibility to recover FET costs; at the same time, they have regulatory responsibility to get it right. Anyone who is familiar with telephony billing understands that even telecommunications carriers cannot always provide accurate information at a sufficient level of summary.”

Companies use Avotus ICM Expense Management in-house, or as a hosted service, or they completely outsource these activities to Avotus in order to manage their entire telecommunications spend. ICM Expense Management processes and reconciles invoices and can save companies substantial money by identifying invoice errors and expediting the payment and dispute process to reduce penalty fees. It works with Enterprise Resource Planning (ERP) systems and other internal control systems.

Current Avotus customers have a leg up on the process. “If we have been handling their telecom bills for any part of the last three years, we will, for a vast majority of the bills, be able to reanalyze the data and provide almost immediate results. Furthermore, if Congress does repeal the balance of the FET in a future session, as Treasury recommends, we’ll be able to capture those savings even more quickly,” concluded Lizza.