| (8) a telecommunications service paid for by the insertion
of tokens, credit or debit card into a coin-operated telephone located
in Texas;
(9) subject to subsection (e) of this section, the
lease, rental, or other charges for telecommunication equipment including
separately stated installation charges. Separately stated charges
for labor to install wiring will not be taxable if the wiring is installed
in new structures or residences in such manner as to become a part
of the realty. Separately stated charges for labor to install wiring
in existing nonresidential real property are taxable. See §3.291
and §3.357 of this title (relating to Contractors; Nonresidential
Real Property Repair, Remodeling, and Restoration; Real Property Maintenance)
for additional information. If charges for the installation of wiring
and charges for the equipment are not separated, the total charge
will be treated as a sale and installation of tangible personal property.
Equipment sold by a telecommunications service provider is subject
to sales or use tax and is not taxed as part of the telecommunications
service if the service provider separately invoices the sale of the
equipment. The sale of equipment is not separately invoiced if it
is identified on the same bill, receipt or invoice as the sale of
the telecommunications service, even if it is identified as a separate
line item on the same bill, receipt, or invoice;
(10) installation of telecommunications services, including
service connection fees;
(11) private communication services. Taxable receipts
include the channel termination charge imposed at each channel termination
point within this state, the total channel mileage charges imposed
between channel termination points or relay points within this state,
and an apportionment of the interoffice channel mileage charge that
crosses the state border. An apportionment on the basis of the ratio
of the miles between the last channel termination point in Texas and
the state border to the total miles between that channel termination
point and the next channel termination point in the route will be
accepted. If there is a single charge for a private communication
service in which the customer has channel termination points both
inside and outside of Texas, the apportionment can also be determined
by dividing the number of customer channel termination points in Texas
by the total number of customer channel termination points to establish
the percentage of the charge subject to state sales tax for Texas.
Other apportionment methods may be used by the seller if first approved
in writing by the comptroller;
(12) charges that are passed through to a purchaser
for federal, state, or local taxes or fees that are imposed on the
seller of the telecommunications service rather than on the purchaser.
Such charges are a cost or expense of the seller and are included
in the total price subject to sales tax; and
(13) prepaid wireless telecommunications services as
defined by subsection (a)(9) of this section when the purchase is
made in person at a Texas business or is made by telephone or the
Internet and the purchaser's primary business address or residential
address is in Texas.
(c) Nontaxable or exempt charges. Sales tax is not
due on charges for:
(1) interstate long-distance telecommunications services
that are not both originated from, and billed to, a telephone number
or billing or service address within Texas. Records must clearly distinguish
between taxable and exempt long-distance services;
(2) broadcasts by commercial radio or television stations
licensed or regulated by the FCC. See §3.313 of this title (relating
to Cable Television Service and Bundle Cable Service) for the tax
status of cable television services;
(3) telecommunications services purchased for resale;
(4) telegraph services that are not both originated
from and billed to a person within Texas;
(5) mobile telecommunications services for which the
place of primary use is located outside of Texas;
(6) charges for federal, state, or local taxes or fees
that are imposed on the purchaser rather than on the seller of the
telecommunications service. For example, no sales tax is due on a
separately stated charge for federal excise tax or for 9-1-1 Emergency
Service Fee and 9-1-1 Equalization Surcharge because these taxes or
fees are imposed on the purchaser and are not a cost of doing business
of the seller; and
(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;
(B) grass;
(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 Cont'd... |
