97-0148
Signed 2/17/97
____________________________________
PETITIONER, :
:
:
Petitioner, : ORDER
:
v. :
:
AUDITING
DIVISION OF THE : Appeal No. 97-0148
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Sales & Use Tax
_____________________________________
STATEMENT OF THE CASE
This
matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann.
§59-1-502.5, on August 25, 1997. Val
Oveson, Tax Commission Chair, heard the matter for and on behalf of the
Commission. Present and representing
Petitioner was PETITIONERS REP. of XXXXX, along with PETITIONERS REP. 2,
PETITIONERS REP. 3 and PETITIONERS REP. 4.
Present and representing Respondent was Brian Tarbet, Assistant Attorney
General, along with Gil Naisbitt and Ray Paulson of the Auditing Division.
FACTS
1. The tax in question is use tax.
2. The period in question is July 1, 1993 to
March 31, 1996.
3. Petitioner is in the business of providing
voice mailbox services. Petitioner has
developed its own software program for this purpose.
4. Petitioner buys 1-800 numbers from a long
distance carrier and provides them to its customers as part of its voice
messaging service. Petitioner pays
sales tax for the 1-800 numbers it purchases.
Petitioner is not itself a long distance provider.
5. Customers' messages are stored as data and
retrieved by customers using the 1-800 numbers. At any one time, Petitioner has 90 ports and 1,200 voice
mailboxes available to its customers.
6. Petitioner's customers pay a monthly fee of
$$$$$ to $$$$$ for access to a voice mailbox.
7. On November 5, 1993, Petitioner was advised
by David Christensen of the Auditing Division that its voice mailbox service
was not a taxable telephone service.
8. On December 24, 1996, Respondent issued a
statutory notice assessing sales tax on Petitioner's intrastate voice mailbox
services.
9. Petitioner filed a timely appeal protesting
the assessment. The only issue that
remains unresolved is the issue whether intrastate voice mailbox services are
subject to sales tax.
APPLICABLE LAW
Utah
Code Ann. §59-12-103(1)(1996) provided:
(1) There is levied a tax on the purchaser for the amount paid or
charged for the following:
(b) amount paid to common
carriers or to telephone or telegraph corporations...
for
(ii) intrastate
telephone service.
"Telephone
service" was defined in Utah Administrative Rule R865-19S-90(5)(1996) as:
"the transmission for hire of signs, signals, writings, images,
sounds, messages, data, or other information of any nature by wire, radio,
light waves, or other electromagnetic means..."
ANALYSIS
The
sole issue in this case is whether voice mailbox services are subject to sales
and use tax under Utah Code Ann. §59-12-103.
The answer to this question hinges on whether voice services are defined
as "telephone service." The
1996 tax rule, Utah Administrative Rule R865-19S-90(5)(1996) does not
specifically define voice mailbox service
as telephone service. However, the
Commission believes that voice mailbox service clearly falls under the broad
definition of "the transmission of...data or other information...by
wire...or other electromagnetic means."
The Tax Commission has attempted to clarify this interpretation in the
language of the 1997 version of the rule.
The rule now defines telephone service as "the transmission for
hire of signs, signals, writings, images, sounds, messages, data, or other
information of any nature by wire, cable, radio waves, microwaves, light waves,
satellite, fiber optics, or any other method now in existence or that may be
devised...." The 1997 rule
specifically includes charges for auxiliary telephone services, such as call
waiting, caller I.D., and call
forwarding, and it specifically excludes telephone answering services received
or relayed by a human operator (but does not specifically exclude answering
services received by an electronic operator).
The Commission believes that the 1997 rule should clear up any ambiguity
about the taxable nature of services such as voice mailbox services. But it believes that under either the 1996
rule or the 1997 rule, intrastate voice mailbox services are taxable telephone
services.
This
holding is in keeping with various advisory opinions issued to taxpayers in
1995 and 1996. The Commission has
issued at least three advisory opinions that state that charges for voice mail
services and paging services are taxable as telephone services within the
meaning of §59-12-103 and R865-19S-90.
We therefore hold that intrastate voice mailbox services are taxable
telephone services.
The
instant case is problematic, however, because Petitioner was incorrectly
advised by a member of the Auditing Division that their particular service was not
taxable. Petitioners understandably
relied on that advice. It would be
inequitable now to hold Petitioners liable for the tax, interest, or penalties
when Petitioners acted in good faith in reliance on the Auditing Division's
erroneous statement. For this reason,
the Tax Commission waives the tax, penalty, and interest for the period in
question and will only assess taxes for Petitioner's intrastate voice mail
services prospectively from the date of this opinion.
DECISION AND ORDER
Based
upon the foregoing, the Tax Commission finds that voice mail services are
taxable, but that Petitioner is only liable for sales tax on their intrastate
voice mail charges from this day forward.
This
decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become
the Final Decision and Order of the Commission unless any party to this case
files a written request within thirty (30) days of the date of this decision to
proceed with a Formal Hearing. Such a
request shall be mailed to the address listed below and must include the
Petitioner's name, address, and appeal number:
Utah State Tax Commission
Appeals Division
210 North 1950 West
Salt Lake City, Utah 84134
DATED
this 17 day of February, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Richard
B. McKeown
Chairman Commissioner
Joe B.
Pacheco Pam
Hendrickson
Commissioner Commissioner
^^