Ezel / Tax Rulings / CT
CT Ruling 90-51 Sales and Use Taxes 1990-06-06

How did Connecticut historically tax cable-TV installation charges, separately billed cable FM audio service, and electricity used for video transmission?

Short answer: Cable-TV installation was included in taxable community-antenna-TV gross receipts. Separately charged, audio-only cable FM service unconnected to video was not taxable. Electricity used for video transmission or local broadcast origination could be exempt if limited to those functions and separately metered or clearly allocated at not less than 75% of total use. DRS marks the ruling not current and superseded in part by PS 94(3).

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1990
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1990 Connecticut Department of Revenue Services Ruling reflecting the cable-service and electricity-exemption rules then in effect. DRS expressly marks it 'not current' and says it was superseded in part by Policy Statement (PS) 94(3). Its classifications and prospective rules should not be assumed current, and another taxpayer should not assume they apply to different facts. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Note -- partly superseded historical guidance. DRS marks this ruling "not current" and states that it was superseded in part by Policy Statement (PS) 94(3). Confirm current treatment before relying on it.

Plain-English summary

This ruling gave three answers about cable television operators under Connecticut's 1990 rules:

  • A cable operator's charge to install or hook up community antenna television service was part of the service's taxable gross receipts, even when separately stated. The exclusion for labor installing property sold did not apply to installation that was part of providing a taxable service.
  • A separately charged cable FM service carrying audio only, with no connection to video programming, was not subject to sales and use tax because the statutory definition at the time covered one-way transmission of video programming.
  • Electricity used and consumed to transmit video programming or originate local broadcasts could be exempt to the extent cable operators performed those functions like broadcasters. The exemption did not cover business or other uses. The operator had to separately meter the qualifying functions or clearly allocate electricity to transmission, with the allocation at least 75% of total use.

The cable-FM and electricity rulings applied prospectively only. DRS later marked the ruling not current and partly superseded it through PS 94(3).

What this means for you

The historical ruling treated hookup as part of the taxable cable service, separated audio-only service from taxable video programming, and limited the electricity exemption to qualifying transmission or local-originating use. It expressly did not decide other cable-operator sales-and-use-tax liabilities or exemptions.

Common questions

Was a separately stated cable installation charge excluded as installation labor? No. DRS treated installation as part of the taxable community antenna television service.

Was separately billed cable FM audio service taxable? Not when it related only to audio transmission and was not connected to video programming.

Was all electricity used by a cable company exempt? No. The ruling limited the exemption to electricity used for transmission or local broadcast origination, with separate metering or the stated allocation requirement.

Citations and references

  • Conn. Gen. Stat. § 12-407(9).
  • Conn. Gen. Stat. § 12-412(3).
  • 1989 Conn. Pub. Acts 251.
  • Policy Statement (PS) 94(3) -- identified by DRS as partly superseding this ruling.

Source

Original ruling text

Ruling 90-51 Cable TV / Gross Receipts / Utility Exemption - Manufacturing

This information is not current and is being provided for reference purposes only

Ruling 90-51

Cable TV

Gross Receipts

Installation

Utility Exemption - Manufacturing

This Ruling has been superseded in part by   PS 94(3)

You have requested a ruling on the applicability of the Connecticut sales tax on various services offered by cable television operators. These services include installation of cable television service and cable FM service.

Further, you have asked for a ruling as to whether and under what circumstances cable television systems may purchase electricity exempt from sales and use tax.

Installation

Cable television companies charge customers for installing cable television service. The installation charge is normally separately identified on the customer's first bill.

As you are aware, effective January 1, 1990, the rendering of community antenna television service is subject to sales and use tax. The gross receipts of community antenna television service include those services which allow the subscriber to view video programming. As part of providing that service the cable operators must make an initial installation or hookup charge.

Section § 12-407(9) of the Connecticut General Statutes provides for an exclusion from gross receipts for sales tax for labor rendered on installing the property sold. Since this is an exclusion from tax, it must be narrowly construed. Accordingly, it is the conclusion of the Department of Revenue Services that the separately stated installation charge relates solely to sales of tangible property and not to services. Where installation is part of the services rendered it is properly part of the taxable gross receipts for taxable services.

Therefore, it is hereby ruled that the gross receipts for rendering community antenna television service includes installation of community antenna television service and thus these activities are subject to the sales tax.

Cable F.M. Service

Cable FM service provides audio broadcasts to certain cable television subscribers for a separate charge.

As defined by P.A. 89-251, community antenna television service means "the one-way transmission to subscribers of video programming." It is clear from this definition that the tax on community antenna television service relates to video programming.

Accordingly, where Cable FM service is provided to subscribers for a separately stated charge, and where those services relate solely to audio transmission and are not connected in any manner to video programming, those services are not subject to sales and use tax.

Sales Tax Exemption For Electricity

You have requested that Commissioner Bannon's October 25, 1989 ruling to the Connecticut Broadcasters Association be extended to electricity used by cable television operators to transit or produce video programming.

To the extent that local cable television operators originate local broadcasts and generally transmit video programming in a manner similar to broadcasters, the electricity used and consumed in said transmission or local broadcast origination is exempt from sales and use tax pursuant to § 12-412(3) as modified by P.A. 89-251. This exemption is conditioned upon the limitation to transmission and broadcast origination and not for business or other uses. This will require the cable television operators to separately meter those functions, or have a clear allocation of the electricity utilized for transmission which must be not less than 75% of the total used.

This ruling relates solely to the exemption for electricity and has no force and effect relating to other sales and use tax liability for cable operators pursuant to other exemptions.

The rulings relating to Cable FM service and electricity used by cable operators are prospective only.

James F. Meehan

Commissioner

June 6, 1990

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