How is Georgia sales tax applied to a cellular 'Shared Plan' that bundles taxable voice access with nontaxable data across multiple devices?

Plain-English summary

A telecom company sells cellular plans in Georgia, including a "Shared Plan" that puts multiple devices on one plan with unlimited voice and text and a shared pool of data, priced mainly on the amount of data (and the number of devices). In Georgia, most services aren't taxed, but cellular and local telephone service is taxable — while data is not. So a single Shared Plan price mixes a taxable component (voice access) with a nontaxable one (data). The company asked how to tax it, and whether it could use Georgia's bundled/unbundled rule even though the Shared Plan has no stand-alone "access-only" option and includes unlimited (not metered) voice.

The Department ruled:

• By default, the entire lump-sum Shared Plan charge is taxable when voice access and other components are sold for one price.
• But the company may "unbundle" and tax only the voice-access portion — and it can do so whether or not it offers an access-only plan — provided it keeps reasonable, verifiable books and records supporting the access allocation. The amount ascribed to access must be no less than the lowest monthly access charge it offers the general public for voice access to the network.
• Alternatively, if it separately states the data charge and each voice line, and those voice-line charges are reasonable and record-supported, only the separately stated voice-line charges are taxed.

In short, data isn't taxed, cellular voice access is, and a carrier can isolate the taxable voice piece either by unbundling (with a floor equal to its lowest public access price) or by separately stating the voice lines.

What this means for you

Wireless carriers and telecom providers

A single price covering taxable voice and nontaxable data is fully taxable unless you split it. You can unbundle the taxable voice-access portion even without selling an access-only plan, but you must support the allocation with verifiable business records, and you cannot ascribe less to access than the lowest access price you charge the public. Separately stating data and each voice line is the cleaner path — then only the voice lines are taxed.

Billing and tax departments

Keep the records that justify your access/voice allocation in the ordinary course of business. Under O.C.G.A. § 48-8-2(31)(G), if you can't identify the nontaxable portion by reasonable and verifiable standards, the whole bundled price can be taxed (and mixed-rate bundles default to the highest rate).

Accountants and tax professionals

The taxable item is cellular/local telephone service (Ga. Comp. R. & Regs. r. 560-12-2-.24); data is a nontaxable service. The unbundling mechanics come from Rule 560-12-2-.24(2)(a)(1), with a statutory floor: access ascribed must be at least the minimum monthly public access charge. Separately stated, record-supported voice-line charges become both the minimum and the actual taxable base.

Common questions

Q: Is a bundled cellular Shared Plan taxable in Georgia?
A: By default, yes — the entire single charge is taxable when it combines taxable voice access with other components sold for one price.

Q: Is the data portion taxable?
A: No. Data is a nontaxable service. The taxable component is the cellular voice/telephone access.

Q: Can the carrier tax only the voice-access part?
A: Yes, by unbundling, if it keeps reasonable and verifiable records supporting the allocation. It can do this even without offering an access-only plan.

Q: Is there a minimum amount that must be taxed as access?
A: Yes. The amount ascribed to access must be no less than the lowest monthly access charge the carrier offers the general public for voice access to the network.

Q: What if the carrier separately states the charges?
A: If it separately states the data and each voice line, and those voice-line charges are reasonable and supported by its records, only the separately stated voice-line charges are subject to tax.

Q: Can another carrier rely on this ruling?
A: No. It is binding on the Department only for the taxpayer and facts presented, and no other taxpayer may rely on it.

Citations and references

Statutes and rules:

• O.C.G.A. §§ 48-8-1, 48-8-30(a) (imposition of sales and use tax)
• O.C.G.A. § 48-8-2(31), (31)(A) (definition of retail sale; cellular and local telephone service taxable)
• O.C.G.A. § 48-8-2(31)(G) (allocation of a single price between taxable and nontaxable products)
• Ga. Comp. R. & Regs. r. 560-12-2-.24(1) (taxability of telephone and telecommunications services)
• Ga. Comp. R. & Regs. r. 560-12-2-.24(2)(a)(1) (bundled/unbundled cellular access charges)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2015-19

Original ruling text

Date Issued: November 25, 2015
Georgia Letter Ruling: LR SUT-2015-19
Topic: Sales Price
This letter is in response to your request for guidance on the application of sales and use tax to certain sales of
bundled telecommunications services.

Facts as Presented by Taxpayer
Taxpayer is in the business of providing various telecommunications, video, and other services to customers located
in Georgia. With respect to cellular telecommunications services, Taxpayer provides numerous product offerings,
including voice-only plans, voice and text plans, voice and data plans, and voice, text, and data plans. The lowest
price for any of Taxpayer’s cellular plans in Georgia that provide access to the cellular network is $xx.00 per month.
Taxpayer began offering a new cellular service product that allows multiple mobile devices (including cellular
phones, smart phones, tablets, etc.) to be included on one plan with unlimited voice and text and sharing of a certain
amount of data (collectively, the “Shared Plan”). Unlike the prices for Taxpayer’s other cellular plans, which are
based on the number of minutes used, the price for the Shared Plan is generally based on the amount of data to be
shared among the devices and increases based on the number of devices added to the plan.
Taxpayer represents that the Shared Plans do not include an access-only plan with access to the cellular network,
since the price for each Shared Plan is based principally on the amount of data that the customer purchases to share
among the devices on the plan and each device added to the plan receives unlimited voice calling. If a customer
wants access to the cellular network under a Shared Plan, the customer must purchase data.
Taxpayer currently includes a notation on all of its invoices to customers that purchase cellular plans other than
Shared Plans that the lowest available purchase price for a plan with access to Taxpayer’s cellular network is $xx.00
per month.
Issues
1.

Can the bundled/unbundled service rule in Ga. Comp. R. & Regs. 560-12-2-.24(2)(a)(1) apply to the Shared
Plans if
a.
b.
c.

the Shared Plans do not include an access-only plan,
all of the Shared Plans provide unlimited voice calling (as opposed to the “stated allowed airtime
usage” within the meaning of the regulation), and/or
the Shared Plans provide voice, data, and texting capabilities (i.e., the Shared Plans provide more
than “both access and a stated allowed airtime usage”)?

2.

Given that the lowest price for voice access to the cellular network under the Shared Plans in Georgia is $yy.00
(the lowest Shared Plan data package, currently $zz.00, plus one phone line, currently $qq.00 for one line), and
the lowest price for voice access to the cellular network under any of Taxpayer’s other cellular telephone plans
in Georgia that are not Shared Plans is $xx.00 , and assuming that the bundled/unbundled rule in Ga. Comp. R.
& Regs. 560-12-2-.24(2)(a)(1) applies and Taxpayer decides to separately state the charges for the data and
each phone line, what is the minimum amount of the telephone line charge that is subject to sales tax?

3.

If the bundled/unbundled service rule in Issue 1 above does not apply, is the entire amount charged to a
customer for the Shared Plan subject to tax?

Date Issued: November 25, 2015
Georgia Letter Ruling: LR SUT-2015-19
Topic: Sales Price
Page 2 of 3

Analysis
Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage,
use, or consumption of tangible personal property and on certain enumerated services. 1 “Retail sale” or “sale at
retail” means a sale of tangible personal property for any purpose other than for resale.2 Unlike sales of tangible
personal property, which are generally presumed taxable, sales of services are not subject to the tax unless
specifically designated as taxable.
For transactions that include both taxable and nontaxable products sold for one price, O.C.G.A. § 48-8-2-31(G)
provides as follows:
If the price is attributable to products that are taxable and products that are nontaxable, the
portion of the price attributable to the nontaxable products may be subject to tax unless the
provider can identify by reasonable and verifiable standards such portion from its books and
records that are kept in the regular course of business for other purposes, including, but not
limited to, nontax purposes. If the price is attributable to products that are subject to tax at
different tax rates, the total price may be treated as attributable to the products subject to tax at
the highest tax rate unless the provider can identify by reasonable and verifiable standards the
portion of the price attributable to the products subject to tax at the lower rate from the provider's
books and records that are kept in the regular course of business for other purposes, including, but
not limited to, nontax purposes[.]
Although most services are not subject to sales and use tax in Georgia, the sale of local telephone services and
cellular telephone services is taxable in Georgia.3 As a general rule, monthly charges for the right to access the
cellular system in the amount set forth on the cellular telephone provider's statement or bill to its customer or
subscriber are subject to sales tax.4 If the monthly charge includes both access and a stated allowed airtime usage in
a combined or bundled amount, tax is due on the entire combined or bundled amount, unless the charges are
separately stated on the customer's bill. 5 When unbundling the taxable amount, the minimum amount ascribed to
monthly access must be no less than the minimum monthly access charge made by the cellular telephone provider to
the general public for access to the cellular system (when no calls are placed by the customer and no airtime is
utilized by the customer) that is in effect during the billing period.6
If Taxpayer makes a single charge that includes both access and airtime usage, Taxpayer must collect tax on the
entire charge. However, if Taxpayer can reasonably identify the amount charged for the taxable voice service from
its books and records kept in the ordinary course of business, Taxpayer may “unbundle” the monthly charge to
determine the taxable component of the monthly charge. When unbundling the taxable amount, the minimum
ascribed to monthly access must be no less than the minimum monthly access charge made by Taxpayer to the
general public for access to the cellular system. In this case, that minimum amount is $xx.00 (the lowest price
available to any customer who wants voice access).
Rulings
1.

1

As a general rule, when Taxpayer charges a lump sum for a shared plan (i.e., a plan allowing multiple mobile
devices on one plan that included unlimited voice and texting and a certain shared amount of data), the entire
charge is subject to tax. However, Taxpayer may use the bundled/unbundled rule to determine the taxable
cellular system access charge on the customer’s invoice regardless of whether the Taxpayer offers an access-

O.C.G.A. §§ 48-3-1, -30(a).
O.C.G.A. § 48-8-2(31).
3
O.C.G.A. § 48-8-2(31)(A); Ga. Comp. R. & Regs. 560-12-2-.24(1).
4
Ga. Comp. R. & Regs. 560-12-2-.24(2)(a)(1).
5
Id.
6
Id.
2

Date Issued: November 25, 2015
Georgia Letter Ruling: LR SUT-2015-19
Topic: Sales Price
Page 3 of 3

only plan. Pursuant to Rule 560-12-2-.24(2)(a)(1), “[w]hen unbundling the taxable amount, the minimum
ascribed to monthly access must be no less than a minimum monthly access charge made by . . . [Taxpayer] to
the general public for access to the cellular system.” In the present case, that minimum amount is $xx.00 (the
lowest price available to any customer who wants voice access). Thus, Taxpayer may collect tax on the access
portion only of a single charge if Taxpayer maintains verifiable books and records to support the portion of the
charge that is attributable to access and such amount attributable to access is not less than $xx.00 .
2.

If Taxpayer separately states the charges (for data and each voice line), and the separately stated charges for the
voice lines are reasonable allocations and are supported by Taxpayer’s books and records, only the separately
stated charges for voice lines are subject to sales and use tax (i.e., the separately stated charge is the minimum
amount, and the actual amount, upon which tax should be charged).

3.

As discussed above in ruling 1, the bundled/unbundled rule is allowed for the Shared Plans.

The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances, and taxpayer in question. Should the circumstances regarding the
transactions change or differ materially from those represented, this ruling may become invalid. Subsequent
statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this ruling is
based may subject similar future transactions to different tax treatment than expressed in this ruling.