Were charges taxable when telegrams were transcribed outside Florida, faxed to Florida couriers, and delivered to Florida recipients?

Plain-English summary

Florida required the telegram provider to collect 7% sales tax and pay 2.5% gross receipts tax on telegram charges for messages delivered into Florida.

The provider transcribed messages outside Florida and had no Florida transmission lines or facilities. For a Florida delivery, it faxed the message to an independent courier, which physically delivered the telegram in the state.

The Department concluded that the telegram service terminated in Florida when the courier delivered the message. Because telegram service was included in the statutory definition of telecommunications service, charges billed to a Florida customer, telephone number, or device were taxable despite the out-of-state transcription and facsimile transmission.

What this means for you

Messaging and telecommunications providers

The place where staff transcribe or enter a message was not decisive. Florida focused on where the service terminated and where the charge was billed.

Courier-supported service businesses

Using an independent local courier did not prevent the underlying telegram service from terminating in Florida. The courier's physical delivery completed the service described by the ruling.

Accountants and tax professionals

The ruling imposed two separate obligations on the provider for the covered charges: collecting the 7% sales tax and paying the 2.5% gross receipts tax.

Common questions

Q: Did the provider have Florida transmission lines or facilities?
A: No.

Q: Where were the messages transcribed?
A: Outside Florida.

Q: Why did Florida treat an inbound telegram as terminating in the state?
A: An independent courier physically delivered the faxed message to the Florida recipient.

Q: What sales-tax rate did the ruling apply?
A: 7% on covered telegram charges billed to a Florida customer, telephone number, or device.

Q: Was gross receipts tax also due?
A: Yes, at 2.5% under the law quoted in the advisement.

Q: Can another messaging provider rely on this TAA?
A: Not automatically. The advisement states that it binds the Department only under the facts and circumstances described in the request, and later legal changes or judicial interpretations may produce a different result.

Citations and references

• Fla. Stat. § 212.05(1)(e)1. — telecommunications sales tax
• Fla. Stat. §§ 203.01 and 203.012(5)(a) — gross receipts tax and telegram service
• Fla. Admin. Code r. 12A-1.046(1), (3) — taxable telecommunications services that originate or terminate in Florida and are billed in Florida
• Goldberg v. Sweet, 488 U.S. 263 (1989) — interstate telecommunications nexus cited by the Department
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-057

Original ruling text

Nov 26, 1996

Re: Technical Assistance Advisement 96A-057
Sales and Use Tax - Telegram Service by Facsimile
Sections: 212.05, 203.01, 203.012, F.S.
Rule: 12A-1.046, F.A.C.
Petitioner: XXXX (herein "Taxpayer")
FEI: XXXX

Dear :

This is a response to your petition received August 27,
1996, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your petition has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.

Discussion of Facts

The Taxpayer provides telegram services to customers both
within and without the State of Florida. The messages are
always transcribed outside the State of Florida and placed
into the Taxpayer's system outside of Florida. The Taxpayer
does not have any Florida lines or facilities. The Taxpayer
has a tariff on file with the FCC that specifically lists
the Taxpayer as a Domestic Resale Common Carrier.

You stated that if a person in Florida requested that a
telegram be sent to a person in New York, the person in
Florida would make a long distance call to request the
telegram. The message would then be transcribed outside of
Florida and subsequently sent to the recipient in New York.
Additionally, you stated if the person in Florida requested
that a telegram be sent to another person in Florida, the
person in Florida would make a long distance call to

request the telegram. Again, the message would be
transcribed outside of Florida. The message would then be
sent via facsimile to independent contractors who
subsequently delivery the facsimile in Florida. You stated
that the independent contractors are couriers and the
relationship between the Taxpayer and the couriers is
"casual". You stated that the Taxpayer contacts the
couriers for price quotes and usually retains the courier
who offers the lowest price but yet is still reliable. You
further stated that the Taxpayer does have a few agents in
Florida.

You stated that the Taxpayer does place some charges on
local telephone bills through a clearinghouse. You further
stated that all taxes are collected and remitted by the
local exchange carrier on these charges. Lastly, you
stated that the only charge made by the Taxpayer is for the
telegram itself. You stated that most of the time the
Taxpayer's customers use a 1-800 number to request the
telegram, but if the customer makes a long distance call to
request the telegram, the Taxpayer does not make any
charges for long distance calls.

Requested Advisement

Are any of the Taxpayer's charges for its telegram service
as described above subject to tax?

Discussion, Analysis, and Conclusion of Law

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

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who...
furnishes any of the things or services taxable under this
chapter....

(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:
...

(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....

Section 203.01, F.S., provides in pertinent 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). Such collections shall be
certified by the Comptroller upon the request of the State
Board of Education.

(b) For the period July 1, 1990, through June 30, 1991, the
rate shall be 2 percent; for the period July 1, 1991,
through June 30, 1992, the rate shall be 2.25 percent;
beginning July 1, 1992, and thereafter, the rate shall be
2.5 percent.

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

(5) The term "telecommunication service" means:

(a) [T]elegram or telegraph service....

Rule 12A-1.046, F.A.C., provides in pertinent part:

(1)(a) Charges for all telecommunication services, as
defined in s. 203.012, F.S., and for those services
described in s. 203.012(2)(a), F.S., are taxable unless
expressly exempt.

(b) The term telecommunication service as used in s.
203.012, F.S., includes, but is not limited to, services
described or defined therein as... telegram or telegraph
service....

(3) Telecommunication services which originate or terminate
in this state and are billed to a customer, telephone
number, or device located within this state are subject to
sales tax....

In Goldberg v. Sweet, 488 U.S. 263, 109 S.Ct. 589-590
(1989), the court held that a State in which an interstate
telephone call originates or terminates has the requisite
Commerce Clause nexus to tax a customer's purchase of that call
as long as the call is billed or charged to a service address,
or paid by an addressee within the taxing State.

Section 212.05(1)(e), F.S., provides that all dealers are
responsible for collecting and remitting tax at the rate of 7
percent on all charges for telecommunication services, as
defined in Section 203.012, F.S., which originate or terminate
in Florida and are billed to a customer, telephone number, or
device located within Florida. Section 203.012, F.S., defines
the term telecommunication services to include telegram or
telegraph services. Furthermore, Section 203.01, F.S., provides
that every person that receives payment for any
telecommunication service is responsible for gross receipts tax
at the rate of 2.5 percent.

From the information provided, a telegram service does
terminate in Florida when the courier delivers the telegram in
Florida. The charge for the telegram service is billed to a
customer, telephone number, or device located within Florida.
Consequently, the Taxpayer is responsible for collecting sales
tax at the rate of 7 percent on all charges for telegrams
delivered into Florida. The Taxpayer would also be responsible
for paying gross receipts tax on such charges.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details that might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or this response.

Sincerely,

Leigh L. Ceci
Tax Law Specialist

Enclosure
Control #26353