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