| (7) telecommunications services exclusively provided
or used for the navigation of machinery and equipment exclusively
used or employed on a farm or ranch in the building or maintaining
of roads or water facilities or in the production of:
(A) food for human consumption;
(C) feed for animal life; or
(D) other agricultural products to be sold in the regular
course of business.
(E) The purchaser must be an agricultural registrant
and provide the seller with an agricultural exemption certificate.
(F) This paragraph is effective September 1, 2015,
and applies to telecommunication services provided after this date.
(d) Billing and records requirements. If any nontaxable
charges are combined with and not separately stated from taxable telecommunications
service charges on the purchaser's bill or invoice from a provider
of telecommunications services, the combined charge is subject to
tax unless the service provider can identify the portion of the charges
that are nontaxable through the provider's books and records kept
in the regular course of business. If the nontaxable charges cannot
reasonably be identified, the charges from the sale of both nontaxable
services and taxable telecommunications services are attributable
to taxable telecommunications services. The provider of telecommunications
services has the burden of proving nontaxable charges.
(e) Resale of tangible personal property. See §3.285
of this title (relating to Resale Certificate; Sales for Resale).
(1) Transfer of tangible personal property to the care,
custody and control of the purchaser. A telecommunications service
provider may claim a resale exemption on the purchase of tangible
personal property that is transferred by the telecommunications service
provider to the care, custody, and control of the purchaser. A telecommunications
service provider must collect sales tax on charges for such items.
(2) Wireless voice communication devices. A person
may claim a resale exemption on the purchase of a cell phone or other
wireless voice communication device as an integral part of a taxable
service, regardless of whether there is a separate charge for the
wireless voice communication device or whether the purchaser is the
provider of the taxable telecommunications service, if payment for
the service is a condition for receiving the wireless voice communication
device. For example, if a person signs a contract for the purchase
of telecommunications services at the location of a retailer and the
retailer sells the person a cell phone as a condition of entering
the contract for the telecommunications services that will be provided
by someone other than the retailer, the retailer can purchase the
cell phone tax free with a properly completed resale certificate.
(f) Resale of a telecommunications service. See §3.285
of this title.
(1) Sales tax is not due on the charge by one telephone
company to another for providing access to a local exchange network.
The telecommunications service provider must collect sales tax from
the final purchaser on the total charge for the taxable service including
the charge for access.
(2) A telecommunications service may be purchased tax
free for resale if resold by the purchaser as an integral part of
a taxable service. The purchaser must give the service provider a
properly completed resale certificate to purchase the telecommunications
service tax free for resale. A telecommunications service is an integral
part of a taxable service if the telecommunications service is essential
to the performance of the taxable service and without which the taxable
service could not be rendered. For example, an Internet access service
provider (ISP) may give a resale certificate when purchasing the dedicated
dial-up line services to be used by the ISP's customers. However,
the ISP must pay sales tax when purchasing its own personal or business
use of telecommunications services such as charges for its office
phone lines, mobile telecommunications services for its traveling
salespersons, or for a customer service call-center.
(3) A mobile telecommunications service provider may
purchase roaming services from another mobile telecommunications service
provider tax free for resale to its customers that are using the roaming
services. For example, an out-of-state mobile telecommunications service
provider purchases roaming services in Texas for resale to its out-of-state
customers (i.e., persons who have a place of primary use outside Texas).
To be exempt from sales tax, the out-of-state mobile telecommunications
service provider must give the seller of the roaming services a resale
certificate showing either a Texas sales tax permit number or the
sales tax permit number or registration number issued by its home
state. Effective for billing periods that begin on or after August
1, 2002, these out-of-state customers do not owe Texas sales tax on
roaming charges incurred while visiting or traveling through Texas.
(g) Taxable purchases. Subject to the provisions of
subsections (e) and (f) of this section, a telecommunications service
provider owes sales or use tax on all tangible personal property and
services that are used to provide the service. See §3.346 of
this title (relating to Use Tax), §3.281 of this title (relating
to Records Required; Information Required), and §3.282 of this
title (relating to Auditing Taxpayer Records).
(h) Local tax.
(1) Subject to the provisions of paragraph (2) of this
subsection, jurisdictions that impose local sales and use taxes may
repeal the local sales tax exemption on telecommunications services.
See Publication 96-339 (Jurisdictions That Impose Local Sales Tax
on Telecommunications Services) for a list of jurisdictions that impose
local taxes on telecommunications services.
(2) Taxable interstate long-distance telecommunications
are only subject to state sales tax. Local taxing jurisdictions may
not repeal the local sales tax exemption on interstate long-distance
(3) A seller of taxable telecommunications services,
with the exception of mobile telecommunications services as explained
in paragraph (4) of this subsection and prepaid wireless telecommunications
services as explained in paragraph (6) of this subsection, must collect
local sales taxes based on the location from which the telecommunications
service originates. If the point of origin cannot be determined, the
telecommunications service provider must collect local taxes based
on the address to which the telecommunications service is billed.
(4) A seller of mobile telecommunications services
must collect local sales taxes based on the place of primary use as
defined in subsection (a)(8) of this section and per Tax Code, §151.061.
The location from which a mobile telecommunications service originates
does not determine whether the service is exempt or is subject to
state or local sales tax.
(5) A seller of telephone prepaid calling cards is
not selling a telecommunications service and must collect state and
local sales or use tax on the sale of the cards in the same manner
as sales of other tangible personal property.
(6) A seller of prepaid wireless telecommunications
services as defined in subsection (a)(9) of this section must collect
local tax based on the business address of the seller when the sale
occurs in Texas in person. However, if the sale occurs over the telephone
or Internet, tax is due if the primary business address of the purchaser
or residential address of the purchaser is in Texas.
|Source Note: The provisions of this §3.344 adopted to be effective December 30, 1985, 10 TexReg 4810; amended to be effective April 1, 1988, 13 TexReg 1342; amended to be effective April 18, 2000, 25 TexReg 3289; amended to be effective October 21, 2010, 35 TexReg 9329; amended to be effective January 10, 2016, 41 TexReg 486