96-057
Response
March 8, 1996
DATE:
January 18, 1996
RE:
XXXXX Telephone
This
audit was assigned to you on XXXXX. The
audit has not gone out Preliminary or Statutory yet as we are waiting for an
opinion from you. I realize that we
have not made not made connections for conditions for discussing this audit
previously.
Like
most telephone companies, XXXXX is charging their customers every month a $$$$$
charge for Federal Access Charge; a $$$$$ charge for Telephone Assistance Fund;
a $$$$$ charge for charge for Telecommunications Relay Service; and a $$$$$
charge for 911 Surcharge For Existing or Future Emergency Service. XXXXX has not been charging sales tax on any
of these charges. They want some
assurance that we have a basis for taxing these charges as they would have to
change their billings and system to tax these items. They would probably not appeal a Statutory Audit if they felt
that we had a basis to tax the charges.
Attached
is a copy of a XXXXX phone bill to the auditor's wife. It has the exact same charges on it. XXXXX, however, appears to be charging tax
on the $$$$$ charge but not on any of the other three charges. It would seem that all telephone charges
should be taxable.
We
would appreciate an opinion as soon as possible.
XXXXX
Auditing
Division
RE:
Advisory Opinion - Sales Tax on charges associated with telephone services
Dear
XXXXX
We
have received your request for an internal advisory opinion regarding the
taxability of certain charges billed by telephone companies to their
customers. Specifically, you provided
us with an example of a XXXXX bill which indicates that XXXXX is applying sales
tax to charges for basic and optional services, the Federal Access Charge and
charges for intrastate calls. The bill
also indicates that charges for the Telephone Assistance Fund, the
Telecommunications Relay Services and the 911 surcharge are not taxed. You asked for our opinion as to whether
these charges are exempt from taxation.
We find as follows:
Section
59-12-103 (1) (b) (ii) imposes sales tax on intrastate telephone service. Taxable telephone service includes
transmission of telephone signals, non-recurring charges, and subscriber line
charges. Utah Admin. R.
R865-19S-90. Non-recurring charges are
defined in rule, and the definition does not cover charges in question
here. The question, then is whether
charges for the telephone assistance fund, telecommunications relay services or
911 surcharge are subscriber line charges.
The term " subscriber line charges" is not clearly defined in
the rule, but we interpret it to mean line access charges.
The
911 Surcharge is levied on each basic local exchange access line for the
purpose of funding the 911 service. The
telecommunications relay service charge is levied on each subscriber to fund
special communications systems for the deaf.
The Telephone assistance fund is levied on each subscriber to fund
telephone service for low income subscribers.
These charges are unrelated to subscriber access charges. Therefore, they are not taxable.
For
the Commission,
Alice
Shearer
Commissioner