Were an affiliate marketer's charges for reselling automated prerecorded-message telemarketing subject to Florida sales or communications taxes?

Subject

Telemarketing Services

Plain-English summary

The affiliate marketer's customer charges for resold prerecorded-message telemarketing were not taxable. Customers ordered through the marketer, the affiliated operating company placed the calls, and the marketer billed for the service without a separate long-distance or communications charge.

No recordings or other tangible property were delivered. Customer recordings were used to perform the calls and destroyed afterward. The charges were therefore not sales of tangible personal property, telecommunications, or communications services and were not subject to sales, gross receipts, state communications, or local communications tax.

What this means for you

Reselling a service performed through telephone networks did not convert the marketer into a communications provider when the customer bought only the completed telemarketing service.

Common questions

Q: Were the marketer's customer charges taxable? No.

Q: Did customers receive the recordings? No.

Q: Did the ruling cover separate phone service or tangible property? No.

Citations and references

• Fla. Stat. §§ 203.01 and 203.012 — gross receipts tax and telecommunications
• Fla. Stat. § 212.05(1)(a)1.a. and (1)(e)1.a. — property and telecommunications sales tax
• Fla. Stat. § 212.08(7)(v)1. — professional and personal services
• Fla. Stat. §§ 202.11, 202.12, and 202.19 — state and local communications services tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-048

Original ruling text

SUMMARY

QUESTION: Are charges for placing telephone calls and
delivering prerecorded messages subject to Florida sales
tax and gross receipts tax?

ANSWER - Based on Facts Below: Sub-subparagraph
212.05(1)(e)1.a., F.S., imposes sales tax at a rate of 7
percent on telecommunications services, as defined or
described in Chapter 203, F.S., and any discretionary sales
surtax. See ss. 212.054 and 212.055, F.S. Beginning October
1, 2001, Chapter 202, F.S., imposes a Florida
communications services tax comprised of the rate of 6.8
percent for the state portion of the tax, and the rate of
2.37 percent for the state gross receipts tax portion of
the tax. See ss. 202.11 and 202.12, F.S. Charges for
communications services are also subject to local
communications services tax. See subsections 202.19(3) and
(5), F.S. Taxpayer does not charge customers for any long
distance charges or any other telecommunication services
(or communications services). Instead, taxpayer is in the
business of reselling telemarketing services. Charges for
telemarketing services are not charges for toll telephone
service or any other service defined or described in
Chapter 203 (or Chapter 202), F.S., as a "telecommunication
service" (or "communications service"). Such charges are
not subject to the gross receipts tax, nor are they subject
to sales tax as a telecommunication service. Such charges
are also not subject to Florida communications services tax
or local communications services tax.

Section 212.05(1)(a)1.a., F.S., imposes sales tax at the
rate of 6 percent on the sale of tangible personal
property. The sale of professional and personal services is
not subject to sales tax. See subparagraph 212.08(7)(v)1.,
F.S. The sale of a professional or personal service in
connection with the sale of tangible personal property,
unless the tangible personal property is an inconsequential
element of the transaction as a whole, is subject to sales
tax. See section 212.08(7)(v)1., F.S. Charges for placing
telephone calls and delivering prerecorded messages are

charges for a service. Because Taxpayer is not providing
tangible personal property in connection with its
telemarketing services, Taxpayer's charges for the
telemarketing services are not subject to sales or use tax.
However, Taxpayer should pay sales tax when purchasing
tangible personal property to use in providing its
telemarketing services.

This advisement only addresses the specific service of
providing telemarketing service by Taxpayer. It does not
contemplate a scenario where Taxpayer provides
telecommunications services (or communications services) or
tangible personal property.

Aug 13, 2001

Re: Technical Assistance Advisement 01A-048
XXX. (Taxpayer)
Sales and Use Tax - Telemarketing Services
Sections: 212.05(1)(a)1.a., 212.05(1)(e)1.a., and
212.08(7)(v)1., F.S.
Gross Receipts Tax
Sections: 203.01 and 203.012, F.S.

Dear :

This is a response to your letters dated March 28, 2001 and
April 24, 2001, in which you requested a technical assistance
advisement concerning the applicability of sales and use tax and
gross receipts tax on telemarketing services.

FACTS

In your letter dated March 28, 2001, you stated, in part:

... [XXX (Company)] is one of a group of commonly owned
companies providing telemarketing services[,] primarily
through voice mail broadcasting, to its affiliate

companies.... [Company and its affiliate companies] are
organized pursuant to the laws of the State of Florida....

The primary service provided by [Company] is a service
[that is] marketed under the name [of] XXX [(XX)]. The XXX
[(Affiliate)] and [Taxpayer] are the exclusive marketers of
the [XX] service provided by [Company]. As a result of the
foregoing, virtually all of the sales of the [XX] service
are to [Company's] affiliates, [Affiliate] and [Taxpayer].
The two separate marketing entities ([Affiliate] and
[Taxpayer]) were organized specifically for the purposes of
creating name brand recognition within distinctly different
market segments[,] which are being targeted by each of the
companies.

[XX] is a computerized message delivery service capable of
placing a personalized pre-recorded message (in its
entirety) on the target customer's answering machine or
voice mail service. The target customer in this case is the
customer of the business buying the direct marketing
services from either [Affiliate] or [Taxpayer]. The intent
of the service is to create the impression that each call
is made personally and individually to the buyer's targeted
customers or prospects. The [XX] technology includes the
ability to automatically detect when the phone is answered
by an automated answer machine or voice mail system.

With a letter dated July 5, 2001, you provided a description of
the services provided. This description states, in part:

... [XX] is basically an automated telemarketing service
that utilizes prerecorded voice messages. [Company's]
customers use the [XX] service to place high volumes of
telephone calls and deliver prerecorded messages[,] when
the telephone is answered.

Customers wishing to use the [XX] service craft a message
that will be delivered to their calling list. The message
is [ ] 1) recorded by the customer and sent to [Company] on
tape[;] 2) recorded over the telephone[;] or 3) recorded at
[Company's] offices.

[Company] owns dozens of telephone dialing-calling
computers that are capable of placing calls and playing
digitized voice messages over the telephone. Each dialingcalling computer is connected to multiple telephone lines,
allowing each computer to place approximately one hundred
simultaneous telephone calls. [Company] directly controls
all the dialing-calling computers making the calls. The
customer who utilizes the telemarketing service has no
access to or control over [Company's] dialing-calling
computers.

Upon further clarification, you stated that Taxpayer resells
Company's services. A customer places an order with Taxpayer or
Affiliate, which contacts Company with the order. You stated
that Taxpayer does not provide tangible personal property when
reselling the computerized message delivery service. You stated
that tapes are only involved when a customer supplies a
recording to Company, which is digitized to a file that is used
by Company's computer. The message recordings are not provided
to customers on a tape as part of Company's services, but are
solely used to execute Company's services. Once the services are
performed, the recordings are destroyed. Company bills
[Affiliate and Taxpayer] on a per call basis and for set up
fees, and [Affiliate and Taxpayer], in turn, bill the customer.

QUESTION

Whether the service provided by Taxpayer to its customers is
subject to sales tax or gross receipts tax in Florida?

LAW

The following statutory authority is relevant to the issue under
advisement:

Section 203.01, F.S., dealing with tax on gross receipts for
utility services, provides, in part:

(1)(a) Every person that receives payment for any utility
service shall report by the last day of each month to the

Department of Revenue, under oath of the secretary or some
other officer of such person, the total amount of gross
receipts derived from business done within this state, or
between points within this state, for the preceding month
and, at the same time, shall pay into the State Treasury an
amount equal to a percentage of such gross receipts at the
rate set forth in paragraph (b)....

(b) Beginning July 1, 1992, and thereafter, the rate shall
be 2.5 percent.

Section 203.012, F.S., provides, in part:

(2)(a) Gross receipts from telecommunication services
include the gross receipts for all telecommunication
services of whatever nature, including, but not limited to,
access charges and charges for right of access; residential
and business 1-party, 2-party, and 4-party rotary charges;
centrex charges; directory assistance charges; public
telephone charges; touch-tone charges; emergency number
charges; private branch exchange message charges; public
announcement service charges; dial-it charges; local area
data transport charges; key lines charges; private branch
exchange trunk-flat rate charges; and directory listing
charges other than yellow-page classified listing charges.

(5) The term "telecommunication service" means:

(a) Local telephone service, toll telephone service,
telegram or telegraph service, teletypewriter service, or
private communication service; or

(b) Cellular mobile telephone or telecommunication service;
or specialized mobile radio, and pagers and paging,
service, including but not limited to "beepers" and any
other form of mobile and portable one-way or two-way
communication; but does not include services or equipment
incidental to telecommunication services enumerated in this
paragraph such as maintenance of customer premises

equipment, whether owned by the customer or not, or
equipment sales or rental for which charges are separately
stated, itemized, or described on the bill, invoice, or
other tangible evidence of the provision of such service.

The term "telecommunication service" does not include any
Internet access service, electronic mail service,
electronic bulletin board service, or similar on-line
computer service.

(7) The term "toll telephone service" means:

(a) A telephonic-quality communication for which there is a
toll charge which varies in amount with the distance and
elapsed transmission time of each individual communication;
or

(b) A service which entitles the subscriber or user, upon
the payment of a periodic charge which is determined as a
flat amount or upon the basis of total elapsed transmission
time, to the privilege of an unlimited number of telephonic
communications to or from all or a substantial portion of
the persons having telephone or radio telephone stations in
a specified area which is outside the local telephone
system area in which the station provided with this service
is located.

The term "toll telephone service" includes interstate and
intrastate wide-area telephone service charges.

(9) The term "utility service" means electricity for light,
heat, or power; natural or manufactured gas for light,
heat, or power; or telecommunication services.

Paragraph 212.02(15)(a), F.S., defines sale as:

Any transfer of title or possession, or both,... license,
lease, or rental, conditional or otherwise, in any manner
or by any means whatsoever, of tangible personal property
for a consideration.

Section 212.05, F.S., provides in part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within this state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state....

(e)1. At the rate of 6 percent on charges for:

a. All telegraph messages and long-distance telephone calls
beginning and terminating in this state, telecommunication
service as defined in s. 203.012, and those services
described in s. 203.012(2)(a), except that the tax rate for
charges for telecommunication service is 7 percent....

Paragraph 212.08(7)(v), F.S., provides an exemption from sales
and use tax on the sale of certain services. This paragraph
states, in pertinent part:

1. ... exempted are professional, insurance, or personal
   service transactions that involve sales as inconsequential
   elements for which no separate charges are made.

2. The personal service transactions exempted pursuant to
   subparagraph 1. do not exempt the sale of information
   services involving the furnishing of printed, mimeographed,
   or multigraphed matter, or matter duplicating written or

printed matter in any other manner, other than professional
services and services of employees, agents, or other
persons acting in a representative or fiduciary capacity or
information services furnished to newspapers and radio and
television stations. As used in this subparagraph, the term
"information services" includes the services of collecting,
compiling, or analyzing information of any kind or nature
and furnishing reports thereof to other persons.

RESPONSE

Chapter 203, F.S., imposes a tax on the gross receipts received
by a utility provider for any utility service, including
telecommunication services. See ss. 203.01(1)(a) and 203.012(9),
F.S. Sub-subparagraph 212.05(1)(e)1.a., F.S., imposes sales tax
at a rate of 7 percent on telecommunication service, as defined
or described in Chapter 203, F.S., and any discretionary surtax.
See ss. 212.054 and 212.055, F.S.

Beginning October 1, 2001, Chapter 202, F.S., imposes a Florida
communications services tax comprised of the rate of 6.8 percent
for the state portion of the tax, and the rate of 2.37 percent
for the state gross receipts tax portion of the tax. See ss.
202.11 and 202.12, F.S. Charges for communications services are
also subject to local communications services tax. See
subsections 202.19(3) and (5), F.S.

Sub-subparagraph 212.05(1)(a)1.a., F.S., imposes sales tax at
the rate of 6 percent on the sale of tangible personal property.
The sale of professional and personal services is not subject to
sales tax. See subparagraph 212.08(7)(v)1., F.S. The sale of a
professional or personal service in connection with the sale of
tangible personal property, unless the tangible personal
property is an inconsequential element of the transaction as a
whole, is subject to sales tax. See subparagraph 212.08(7)(v)1.,
F.S.

Your letter, the description of Company's service that Taxpayer
resells to customers, invoices and contracts provided illustrate
that Taxpayer does not charge customers for any long distance

charges or any other telecommunication services (or
communications services). Based upon the information provided in
your request, Taxpayer is in the business of reselling
telemarketing services. Charges for telemarketing services are
not charges for toll telephone service or any other service
defined or described in Chapter 203 (or Chapter 202), F.S., as a
"telecommunication service" (or communications services"). Such
charges are not subject to the gross receipts tax, nor are they
subject to sales tax as a telecommunication service. Such
charges are also not subject to Florida communications services
tax or local communications services tax.

You stated that Taxpayer does not provide tangible personal
property when reselling the telemarketing service. You stated
that "[t]he message is 1) recorded by the customer and sent to
Company on tape[;] 2) recorded over the telephone[;] or 3)
recorded at Company's offices." The message recordings are not
provided to customers on tape as part of Company's services, but
are solely used to execute Company's services. Once the services
are performed, the recordings are destroyed. Specifically, you
stated, and the invoices provided illustrate, that Company only
charges Taxpayer for its telemarketing services on a per call
basis, and for set up fees.

Charges for placing telephone calls and delivering prerecorded
messages are charges for a service. Because Taxpayer is not
providing tangible personal property in connection with its
telemarketing services, Taxpayer's charges to customers for the
telemarketing services are not subject to sales or use tax.

This advisement only addresses the specific service of providing
telemarketing service by Taxpayer. It does not contemplate a
scenario where Taxpayer provides telecommunication services (or
communications services) or tangible personal property to
customers.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the department
only under the facts and circumstances described in the request
for this advice, as specified in Section 213.22, F.S. Our
response is predicated upon those facts and the specific

situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

If I may be of further assistance, please do not hesitate to
contact me.

Sincerely,

Isabel Nogues
Attorney
Technical Assistance and
Dispute Resolution
(850) 488-9669
Control # 45269