This is being caused by the choice of the method of sending and receiving touch tones on SIP calls. The problem not confined to the MagicJack USB dongle -- it's a MagicJack overall configuration issue. There are three choices for sending touch tones via SIP: always send in-band, negotiate with the other end, or never send in-band (send out-of-band instead). Apparently, MagicJack's servers aren't handling out-of-band DTMF (touch-tone) signaling properly. I am using a Cisco ATA 186, and I was able to prove and fix this by changing its DTMF setting from its default setting, "negotiate" to "always in-band". I also tried "always out-of-band" and proved that it's broken. Other ATAs and softphones have this parameter buried somewhere, too, but MagicJack would have to send a dongle client software update to fix it in their client, or else fix it on their server side.
I tested this by calling Vonage, Sprint and ATT Wireless voicemail systems, using in-band DTMF, and all recognized the tones from MagicJack.
Don't ask me how to configure your other ATA or softphone -- kindly RTFM.
Fix for IVR/VRU/voicemail not recognizing touch tones
Moderators: Bill Smith, Pilot