How were community-antenna television systems and subscriber charges taxed?

Plain-English summary

The CATV company was the consumer of all wire, poles, and other equipment used to install its community-antenna television system. Sales tax applied to the sale of those materials and equipment to the company.

There was no resale because the company retained ownership and sold no equipment to subscribers.

The one-time subscriber installation fee and monthly charge for providing television signals were not taxable under the stated facts because they were not charges for tangible personal property and were not treated as rentals.

Common questions

Did the company resell equipment to subscribers?

No. It retained all system equipment.

What purchases were taxable?

The wires, poles, and other materials and equipment used to install the system.

Were subscriber installation fees taxable?

No, under the facts stated in the letter.

Were monthly signal charges rentals?

No.

Citations and references

• California Revenue and Taxation Code section 6016.5 — communication-line classification and prospective history discussed in the letter
• Former California Sales and Use Tax Ruling 11, identified by the source as now Regulation 1521 — contractor-consumer treatment applied; identified as enclosed, but the separate copy is not reproduced in the official PDF
• July 29, 1966 request letter — company ownership of the system, subscriber installation fees, and monthly signal-service charges described; not reproduced in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/190-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/190-1380.pdf

Original ruling text

190.1380

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 23, 1966
Mr. W--- J. A--Attorney at law
C--- & A--XXX West XXth Street
---, CA XXXXX

G--- --- C--- Corp.
Community Antenna Television

Dear Mr. A---:
Your letter of July 29, 1966, to our district office, has been referred to this office for reply. It appears from the facts set forth that your client, G--- --- C--- Corporation, is properly regarded as the consumer under sales and use tax ruling 11 [now see Reg. 1521], copy enclosed, of all of the wire, poles, and other equipment with which it installs a community antenna television system. Thus, sales tax would apply to the sale of such materials and equipment to your client. There is no resale in view of your statement that all of the equipment remains the property of the company, no equipment being sold to the subscriber. The one-time fee charged to the subscriber for installation, and the monthly service charge of providing television signals, is not taxable as it does not represent, as we understand it, a charge for tangible personal property. We would not regard this as in the nature of a rental. As far as we are aware, the foregoing represents the basic application of the tax that has been followed, at least since September 17, 1965, the effective date of § 6016.5 of the Sales and Use Tax Law. This section changed the status of telephone and telegraph lines, which has been interpreted to include lines for the transmission of other types of communication, from personal property to real property for purposes of the Sales and Use Tax Law. See the history note following the section regarding its prospective application. Very truly yours,

E. H. Stetson
Tax Counsel
EHS:fb
Enclosure
cc:

Sacramento – District Administrator