Were charges for web-based meetings, webinars, and training subject to Illinois Telecommunications Excise Tax when users supplied their own connectivity?

Plain-English summary

A provider sold web-based services for online group meetings, webinars, and training. Organizers and participants could add voice or video at no additional charge, but they had to obtain their own internet or telecommunications access. Toll-free conferencing came separately from a third party or affiliate and was not included in the web-service charge.

IDOR said the described web-based services were generally not subject to Illinois Telecommunications Excise Tax. The provider did not sell the basic telephone or internet access used by participants and treated itself as the ultimate consumer of telecommunications purchased from unrelated carriers to provide its service.

The GIL also stated the general bundling rule: excluded value-added processing must be disaggregated and separately stated from taxable telecommunications charges, or the entire charge can be taxed as telecommunications.

Common questions

Did optional voice or video make the web service taxable telecommunications? Not on the described facts, where customers supplied their own access and toll-free service was separate.

Who paid tax on connectivity bought to operate the platform? The web-service provider treated itself as the consumer and paid Telecommunications Excise Tax when purchasing those services.

Citations and references

• 35 ILCS 630/2, 3, and 4
• 35 ILCS 636/5-10 and 5-15
• 86 Ill. Adm. Code 495.100(c)
• 2 Ill. Adm. Code 1200.110(a)(4)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2013.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2013/st-13-0048.pdf

Original ruling text

ST 13-0048-GIL 09/11/2013 TELECOMMUNICATIONS EXCISE TAX
The Telecommunications Excise Tax is imposed upon the act or privilege of originating
or receiving intrastate or interstate telecommunications in Illinois at the rate of 7% of the
gross charges for such telecommunications purchased at retail from retailers. See 35
ILCS 630/1 et seq. (This is a GIL.)

September 11, 2013

Dear Xxxxx:
This letter is in response to your letter dated April 29, 2013, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”)
are issued by the Department in response to specific taxpayer inquiries concerning the
application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only to
the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must
comply with the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code
1200.110. The purpose of a General Information Letter (“GIL”) is to direct taxpayers to
Department regulations or other sources of information regarding the topic about which they
have inquired. A GIL is not a statement of Department policy and is not binding on the
Department.
See 2 Ill. Adm. Code 1200.120.
You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant
to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
On behalf of our client, (“Taxpayer”) we are requesting a Private Letter Ruling
(‘PLR’) pertaining to the Illinois Telecommunications Excise Tax (‘TET’)
implications of the Taxpayer’s services as explained in more detail herein. An
executed Power of Attorney form authorizing FIRM to represent Taxpayer in this
matter is enclosed. To the best of the knowledge of Taxpayer and FIRM: (1) the
Illinois Department of Revenue (‘Department’) has not previously ruled on the
same or similar issue for Taxpayer or a predecessor; (2) the same or similar issue
was not previously submitted and withdrawn by Taxpayer prior to the
Department’s issuance of a PLR; and (3) Taxpayer is not under audit by or
involved in litigation with the Department.
As noted above, this is a request for a PLR. We understand the Department has
discretion regarding whether to issue a PLR upon a taxpayer’s request. If the
Department tentatively determines it intends not to issue a PLR, we respectfully
request, prior to preparing a written response to this request, a telephone

conference to discuss the matter further and to see if the Department needs
additional information to proceed with the issuance of a PLR.
FACTS
Taxpayer provides web-based services which enable customers to organize and
conduct online group meetings, webinars, and training sessions. The services are
described in detail below.
Customers can organize online group meetings through Taxpayer’s SERVICE A
or online webinars through Taxpayer’s SERVICE B. An online meeting or
webinar organized using these services allows multiple individuals with Internet
access (using their own computers located anywhere) to view materials presented
on the computer screen of the presenter/facilitator (the ‘Organizer’). Online
screen sharing makes it easy for the Organizer to present information in a secure,
online environment. Customers purchasing these services are able to have an
unlimited number of Internet meetings for a flat monthly or annual fee and invite
anyone (up to # meeting applicants) to attend and view the meeting material
displayed during the meeting. The services enable individuals and organizations
to easily, securely, and cost-effectively share screen information online to a
broader audience.
Taxpayer’s customers can also facilitate online training sessions by purchasing
Taxpayer’s SERVICE C. This service enables customers to conduct online
training sessions with their respective invited attendees. By using this service,
customers can distribute course materials, administer online tests and
assessments, publish upcoming courses to an online catalog, and maintain a
reusable online content library for the training courses.
Taxpayer’s SERVICE A, SERVICE B, and SERVICE C are hereinafter referred
collectively as SERVICES.
The Organizer of a particular SERVICE session will generally e-mail each of the
participants a link to a website address to enable them to connect to the meeting
and view the materials on the Organizer’s computer screen. There is no charge to
the participants and they do not have to be registered users or Customers. They
are only required to click on the link and enter an access code provided by the
Organizer. The online presentation is viewed by the participant from the
participant’s computer, but the content and application (such as Microsoft
PowerPoint) used to display the content are owned and controlled by the
Organizer and remain resident on the Organizer’s computer at all times.
Applications on a participant’s computer are not used to view the material
presented by the Organizer.
As part of SERVICES, the Organizer and participants have an option (for no
additional charge from the Taxpayer) to add voice or video communication

features (the ‘Communication Features’) to an online meeting, webinar, or
training. Video is available over the participants’ own Internet connections if a
participant has a webcam connected to his or her computer.
Voice
communication can take place either via a participant’s Internet connection (using
a microphone and speakers connected to his or her computer) or via a toll-based
phone conferencing service or both. Use of the no-cost Communication Features
requires the participants to obtain access to their own telecommunications
services (Internet and/or long distance telephone service) and (presumably) pay a
third-party telecommunications provider for those services. An Organizer can
alternatively opt to use toll-free voice conferencing services either from a third
party or from an affiliate of the Taxpayer. Toll-free voice service is not included
as part of the SERVICES or the charges therefor. Taxpayer does not provide
basic telephone or Internet access service required to access the Communication
Features.
The Communication Features are only available during and as part of an active
online services SESSION and are not otherwise accessible to participants or the
Organizer at any time outside the session; in other words, an Organizer or
participant could not use the Communication Features of the SERVICES in lieu
of personal telephone services.
In order to provide the SERVICES, Taxpayer purchases telecommunications
services from unrelated third-party telecommunications providers. Taxpayer
treats itself as the ultimate consumer of such telecommunications services and
pays TET or other state telecommunications taxes (depending on the proper
sourcing of the services) on such services at the time of purchase. Taxpayer is not
registered with the Department as a retailer of telecommunications services and
does not claim a resale exemption with regard to any telecommunications services
that it uses to provide services to its customers. Taxpayer makes no separate
charge (apart from the core charge for the SERVICES) to its customers for the
optional use of the Communications Features (and indeed the market likely would
not support a separate charge for PC-to-PC voice and video conferencing, which
is provided free of charge by companies such as Skype, Yahoo!, and Google).
There is no requirement that the participants use the Communications Features
during a SERVICES session, and Taxpayer is aware that customers and the other
participants sometimes use alternative services (such as fixed phone lines, mobile
phone lines, conference bridging services, and other VOIP services, which are
acquired directly by the customers from third-party providers) to communicate
during online meetings. Taxpayer does not have a mechanism in place to
determine whether or when customers are actually using the Communications
Features.
In summary, Taxpayer’s SERVICES consist principally of an online screen- and
data-sharing service. To the extent that Taxpayer provides voice and video
Communications Features, (i) Taxpayer makes no separate charge for those

features and (ii) Taxpayer does not transmit voice or video from the Organizer or
participant to Taxpayer’s servers – instead that transmission takes place over the
Organizer’s or participant’s own, separately-purchased telephone or Internet
connection.
ADDITIONAL DOCUMENTATION
A copy of the SERVICES Agreement is enclosed.
RULINGS REQUESTED
1.

Taxpayer’s charges for SERVICES which include the Communications
Features, are not subject to TET.

2.

Taxpayer is a consumer of the telecommunications component of the
SERVICES and it is appropriate for Taxpayer to pay TET to the
telecommunications provider for the telecommunications services it
consumer in providing the SERVICES.
AUTHORITY

ILCS Chapter 35 § 630/2 provides in part:
(a) ‘Gross charge’ means the amount paid for the act or privilege
of originating or receiving telecommunications in this State and for
all services and equipment provided in connection therewith by a
retailer, valued in money whether paid in money or otherwise,
including cash, credits, services and property of every kind or
nature, and shall be determined without any deduction on account
of the cost of such telecommunications, the cost of materials used,
labor or service costs or any other expense whatsoever....
(c) ‘Telecommunications’, in addition to the meaning ordinarily
and popularly ascribed to it, includes, without limitation, messages
or information transmitted through use of local, toll and wide area
telephone service; private line services; channel services; telegraph
services; teletypewriter; computer exchange services; cellular
mobile telecommunications service; specialized mobile radio;
stationary two way radio; paging service; or any other form of
mobile and portable one-way or two-way communications; or any
other transmission of messages or information by electronic or
similar means, between or among points by wire, cable, fiberoptics, laser, microwave, radio, satellite or similar facilities....
ILCS Chapter 35 § 630/3 provides in part:

... Beginning January 1, 1998, a tax is imposed upon the act or
privilege of originating in this State or receiving in this State
intrastate telecommunications by a person in this State at the rate
of 7% of the gross charge for such telecommunications purchased
at retail from a retailer by such person....
ILCS Chapter 35 § 630/4 provides in part:
... Beginning January 1, 1998, a tax is imposed upon the act or
privilege of originating in this State or receiving in this State
interstate telecommunications by a person in this State at the rate
of 7% of the gross charge for such telecommunications purchased
at retail from a retailer by such person....
ILCS Chapter 35 § 630/8 provides in part:
If a person who originates or receives telecommunications in this
State claims to be a reseller of such telecommunications, such
person shall apply to the Department for a resale number. Such
applicant shall state facts which will show the Department why
such applicant is not liable for tax under this Article on any of his
purchases and shall furnish such additional information as the
Department may reasonably require....
Except as provided hereinabove in this Section, the act or privilege
of originating or receiving telecommunications in this State shall
not be made tax-free on the ground of being a sale for resale unless
the person has an active resale number from the Department and
furnishes that number to the retailer in connection with certifying
to the retailer that any sale to such person is nontaxable because of
being a sale for resale....
Illinois Dept. of Rev. General Information Letter ST 05-0008-GIL, 01/12/2005,
provides in part:
In general, Voice Over Internet Protocol (‘VOIP’) is
telecommunications subject to tax within the meaning of
‘Telecommunications’ and “Gross Charges’ pursuant to The
Telecommunications Excise Tax, 35 ILCS 630/2.
Illinois Dept. of Rev. General Information Letter ST 12-0041-GIL, 07/27/2012,
provides in part:
Telematic services that allow only voice and data communications
between a customer vehicle and a call center and do not permit the
customer to make calls to, or receive calls from, the public

switched telephone network are considered information services
and are not subject to Telecommunications Excise Tax. In those
situations, the telematics service provider would be liable for
Telecommunications Excise Tax on telecommunications services
purchased from vendors and used by it to provide telematic
services.
Illinois Dept. of Rev. Private Letter Ruling ST 10-0005-PLR, 08/09/2010,
provides in part:
TAXPAYER provides a wireless VoIP air-to-ground telephone service to
airlines using a Wi-Fi signal (hereinafter, the “TAXPAYER Service”).
The service permits airline employees to make telephone calls to airline
ground facilities from handsets provided by TAXPAYER that are capable
of making and receiving calls using VoIP technology. The handsets are
preprogrammed with the telephone numbers of specific ground facilities
owned or operated by the airline that are located in Illinois and in other
states. The handsets are assigned telephone numbers that begin with an
area code and prefix that are “associated” with TAXPAYER’s CITY Data
Center. Calls made by airline employees from the aircraft are transmitted
from the handsets using TAXPAYER computer equipment on board the
aircraft to the nearest cellular tower on the ground. Regardless of the
aircrafts’ locations, calls are routed from the cellular tower over
telecommunications facilities owned by third parties to the CITY Data
Center. The calls are then routed from the CITY Data Center to the public
switched telephone network and transmitted to the preprogrammed
locations that were dialed. The airlines are charged a flat monthly access
fee and a per-minute fee for all calls. Telephone calls may also be made
from the ground to an aircraft by dialing the number assigned to the
handset on the aircraft.
The retailer must collect the tax from the taxpayer by adding the tax to the
gross charge for the act or privilege of originating or receiving
telecommunications by the person in this State. In this case, the airline
purchasing the TAXPAYER Service is the person originating or receiving
intrastate or interstate telecommunications, or the taxpayer, for purposes
of the Act, not TAXPAYER.
If TAXPAYER does not register and collect Telecommunications Excise
Tax on calls made by customers originating or terminating in Illinois and
which are billed to an Illinois address, TAXPAYER is responsible for
paying Telecommunications Excise Tax on the telecommunications
services it purchases to provide the TAXPAYER Service. It cannot give
resale certificates to telecommunications companies that it purchases
telecommunications services from to provide the TAXPAYER Service. If
TAXPAYER collects Telecommunications Excise Tax on calls made by

customers originating or terminating in Illinois and billed to an Illinois
address, it may provide resale certificates to its suppliers if it registers with
the Department as a reseller.

ST 02-0037-GIL, provides in part:
Teleconferencing represents an especially difficult application of
the term ‘service address’. We have discovered that taxpayers are
using three methods of calculating tax. The first is that some
taxpayers calculate the Telecommunications Excise Tax based
upon the location of the bridging equipment. The second is that
some calculate the Telecommunications Excise Tax based upon the
customer’s billing address. The third is that some consider the
teleconference provider to be a user of telecommunications and
pay tax to their telecom suppliers.
ST 11-0007-PLR, provides in part:
COMPANY provides conferencing services.
Specifically,
COMPANY provides web-based and audio conferencing services
using Voice over Internet Protocol (‘VoIP’) and open source
software. COMPANY obtains VoIP and Internet access services
from third party providers to connect its conference bridge
software to the public switched telephone network (‘PSTN’) and
the Internet. COMPANY has not provided a resale exemption
certificate to the third party providers. The Company offers its
customers the option of connecting to the bridge via a ten-digit
telephone number, which is not a toll-free number, or via the
Internet. During any particular conference call, participants could
be connected via the telephone number or the Internet, and
individual participants can change their method of connection
during a single session.
COMPANY does not provide the telecommunications service or
Internet access service used by its customers to access the
conference bridge. Rather, the customer must obtain and pay for
the services of their local exchange carrier or other access provider
in order to make the call/connection. In sum, COMPANY does
not provide telephone or broadband transmission services, but
rather allows customers that purchase those services from other
companies to access its conferencing service. COMPANY’s
bridge permits users to communicate with each other by
transforming the protocols (PSTN and Internet) so that participants
using disparate protocols can listen to and interact with each other.
The service also allows for recording and playing back the

meeting. Participants can be muted]unmuted from the computer
screen, and can electronically ‘raise their hand’ online. They can
submit questions via a chat window to be answered by chat, audio
or video. They can upload and review documents, and create
collaborative notes that other participants can see.
In sum, COMPANY’s service combines voice, video, data and
chat into an integrated service – acting on the form, content and
protocol of the customer’s information by translating it between
different protocols. However, COMPANY does not transmit that
information between the customer and the conference bridge.
Instead, the customer uses transmission service provided by third
parties such as local exchange carriers, ISPs, and others that
provide telephone and Internet access services.
Department’s Response (in relevant part)
‘Telecommunications’ do not include “value added services in
which computer processing applications are used to act on the
form, content, code and protocol of the information for purposes
other than transmission.” See 35 ILCS 630/2(a) and 2(c). If
telecommunications retailers provide these services, the charges
for each service must be disaggregated and separately stated from
telecommunications charges in the books and records of the
retailers. If these charges are not thus disaggregated, the entire
charge is taxable as a sale of telecommunications.

Based on the description of the web-based and audio conferencing
service in your letter, it is the Department’s position that the
service is a value added service and is not subject to
Telecommunications Excise Tax.
CONTRARY AUTHORITY
During its review of relevant authority, Taxpayer did not find authority contrary
to the rulings requested.
ANALYSIS
Telecommunications services are taxed under the Telecommunications Excise
Tax Act. 1 The tax is imposed on the act or privilege of: 1) originating; or 2)
receiving intrastate or interstate communications by persons in Illinois. 2 Taxable
1
2

ILCS Chapter 35 §630/1.
ILCS Chapter 35 §630/2 – 4.

‘telecommunications’ includes, without limitation, messages or information
transmitted through use of local, toll, and wide area telephone service; private line
services; channel services; telegraph services; teletypewriter; computer exchange
services; cellular mobile telecommunications service; specialized mobile radio;
stationary two way radio; paging service; or any other form of mobile and
portable one-way or two-way communications; or any other transmission of
messages or information by electronic or similar means, between or among points
by wire, cable, fiber-optics, laser, microwave, radio, satellite or similar facilities.
‘Telecommunications’ also includes the provision of VOIP services. 3
‘Telecommunications’ does not include ‘value added services in which computer
processing applications are used to act on the form, content, code and protocol of
the information for purposes other than transmission.’ 4 The Communication
Features component of the broader SERVICES offerings, when viewed in
isolation resembles a teleconferencing system, albeit such component is limited to
being provided in conjunction with a SERVICE session.
The Department has issued limited guidance on the appropriate tax treatment for
teleconferencing services. In a General Information Letter, the Department
advised:
Teleconferencing represents an especially difficult application of
the term ‘service address.’ We have discovered that taxpayers are
using three methods of calculating tax. The first is that some
taxpayers calculate the Telecommunications Excise Tax based
upon the location of the bridging equipment. The second is that
some calculate the Telecommunications Excise Tax based upon the
customer’s billing address. The third is that some consider the
teleconference provider to be a user of telecommunications and
pay tax to their telecom suppliers. 5
It is clear that there is a telecommunications component within teleconferencing
services. In fact, teleconferencing services, depending on the format, often
overlay upon or work in conjunction with a customer’s or user’s own local
telephone service or internet access service. However, due to the complications
surrounding the appropriate sourcing of teleconferencing services, the Department
points to multiple sourcing alternatives used by taxpayers, which further suggests
the Department considers the teleconferencing provider to have alternatives for
ensuring the TET is paid on the underlying telecommunications services, i.e.,
either (1) as a retailer/reseller that collects TET on teleconferencing charges, or
(2) (as the third method above indicates) as a consumer who pays TET to its

3

See, for example, Illinois Dept. of Rev. General Information Letter ST 05-0008-GIL, 01/12/2005.
See 35 ILCS 630/2 (a) and 2(c).
5
ST 02-0037-GIL. See also ST 07-0050-GIL and ST 02-0054-GIL, which suggest the Department will promulgate
a rule in the future after further consideration on teleconferencing services, give prospective treatment to the rule,
and encourage taxpayers to use reasonable methods to pay TET.
4

telecommunications carrier or other supplier on the telecommunications it
consumes to provide teleconferencing services to its customers.
Taxpayer’s facts and circumstances relating to its SERVICES and the
Communication Features provide more support that Taxpayer should be viewed
as a consumer of telecommunications SERVICES and should pay TET to its
suppliers (rather than collect TET from its service customers) due to (1) the
Communication Features being an optional component of the broader
SERVICES, which are value added SERVICES and represent the true object
sought by customers; and (2) the Communication Features are limited to the
SERVICE sessions and such limited communication function does not rise to the
level of a retail telecommunications service subject to TET.
(1) The Communications Features being an optional component of
the broader SERVICES, which are value added services and
represent the true object sought by customers.
As noted above, SERVICE customers’ use of the Communication Features during
SERVICE sessions is optional and the customer does not get charged for any use
of the Communication Features. It is clear customers subscribe to the SERVICES
because of the interactive Internet platforms provided to host various meetings
and presentations, the true object of the services. Any use of the optional
Communication Features, which is restricted to SERVICES sessions, is secondary
to the true object of the value added SERVICES. The Communication Features
of SERVICES are very similar to the services provided by the taxpayer
(‘COMPANY’) in ST 11-0007-PLR. In that Private Letter Ruling, the
COMPANY’s overall service offering also appeared to have some features similar
to the core SERVICE features:
Participants [in COMPANY’s services] can be muted]unmated
from the computer screen, and can electronically ‘raise their hand’
online. They can submit questions via a chat window to be
answered by chat, audio or video. They can upload and review
documents, and create collaborative notes that other participants
can see.
Taxpayer, like COMPANY, treats itself as a consumer of telecommunications, is
not registered for TET, does not claim resale with regard to TET charged by
telecommunications service providers and pays TET to such providers with regard
to any telecommunications consumed in the provision of its services.
The Department concluded COMPANY’s web-based and audio conferencing
service was a value added service not subject to TET. Because the use of
telecommunications in the provision of core services by Taxpayer and
COMPANY is substantially similar and both taxpayers are providing value added
services as that term is defined, the Department should conclude, as it did in

COMPANY’s ruling, that the Taxpayer’s charges for SERVICES are not subject
to TET and Taxpayer is a consumer of telecommunications services, which
requires payment of TET to the telecommunications providers.
(2) The Communication Features are limited to the SERVICES
sessions and such limited communication function does not rise to
the level of a retail telecommunications service subject to TET.
The Department has found that certain communications that utilize
telecommunications services to transmit voice and data on a limited basis are not
telecommunications services. For example, telematic services that allow only
voice and data communications between a customer vehicle and a call center and
do not permit the customer to make calls to, or receive calls from, the public
switched telephone network are considered information services and are not
subject to TET. In those situations, the telematics service provider would be
liable for TET as a consumer on telecommunications services purchased from
vendors and used by it to provide its services. 6
Taxpayer’s Communication Features, which are incorporated into its SERVICES,
allows only voice and video communications between its customer and its
network and does not otherwise permit customers to make calls to, or receive calls
from, the public switched telephone network. In other words, the customer does
not have the ability to make outbound calls or receive inbound calls as part of the
Communication Features. To that end, the Taxpayer’s Communication Features,
which are further limited to the duration of the SERVICE sessions, are similar to
telematic services, and are not telecommunications services subject to TET.
We respectfully request that the Department issue a PLR, specifically the two
rulings requested above, confirming (1) Taxpayer’s charges for SERVICES are
not subject to TET, and (2) Taxpayer is a consumer of the telecommunications
used in providing its services and should continue paying TET to its
telecommunications providers. We understand the Department has discretion
whether to issue a private letter ruling in response to this request. If the
Department tentatively (or otherwise) determines it will not issue a private letter
ruling in response to taxpayer’s request, please contact me in lieu of issuing a
General Information Letter or other written response. Should you have any
questions or need any additional information, please contact me.

DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization”
provides that “[w]hether to issue a private letter ruling in response to a letter ruling request is
within the discretion of the Department. The Department will respond to all requests for private
letter rulings either by issuance of a ruling or by a letter explaining that the request for ruling will
6

ST 12-0041-GIL

not be honored.” 2 Ill. Adm. Code 1200.110(a)(4). The Department declines to issue a Private
Letter Ruling. Although we are not providing you with a Private Letter Ruling, we hope the
following general information will be of assistance.
The Illinois Telecommunications Excise Tax Act imposes a tax on the act or privilege of
originating or receiving intrastate or interstate telecommunications by persons in Illinois at the
rate of 7% of the gross charges for such telecommunications purchased at retail from retailers by
such persons. 35 ILCS 630/3 and 4. The Simplified Municipal Telecommunications Tax Act
allows municipalities to impose a tax on the act or privilege of originating in such municipality
or receiving in such municipality intrastate or interstate telecommunications by persons in
Illinois at a rate not to exceed 6% for municipalities with a population of less than 500,000, and
at a rate not to exceed 7% for municipalities with a population of 500,000 or more, of the gross
charges for such telecommunications purchased at retail from retailers by such persons. 35 ILCS
636/5-10 and 5-15.
“Telecommunications,” in addition to the meaning ordinarily and popularly ascribed to it,
includes, without limitation, messages or information transmitted through use of local, toll and
wide area telephone service; private line services; channel services; telegraph services;
teletypewriter; computer exchange services; cellular mobile telecommunications service;
specialized mobile radio; stationary two way radio; paging service; or any other form of mobile
and portable one-way or two way communications; or any other transmission of messages or
information by electronic or similar means, between or among points by wire, cable, fiber-optics,
laser, microwave, radio, satellite or similar facilities. “Telecommunications” do not include
“value added services in which computer processing applications are used to act on the form,
content, code and protocol of the information for purposes other than transmission.” See 35 ILCS
630/2(a) and 2(c). If telecommunications retailers provide these services, the charges for each
service must be disaggregated and separately stated from telecommunications charges in the
books and records of the retailers. If these charges are not thus disaggregated, the entire charge
is taxable as a sale of telecommunications.
“Gross charges” means the amount paid for the act or privilege of originating or receiving
telecommunications in this State and for all services and equipment provided in connection
therewith by a retailer, valued in money whether paid in money or otherwise, including cash,
credits, services and property of every kind or nature, and shall be determined without any
deduction on account of the cost of such telecommunications, the cost of materials used, labor or
service costs or any other expense whatsoever. “Gross charges” do not include “charges for the
storage of data or information for subsequent retrieval or the processing of data or information
intended to change its form or content.” See 86 Ill. Adm. Code 495.100(c).
In your letter you state that the Taxpayer provides web-based services which enable
customers to organize and conduct online group meetings, webinars, and training sessions. The
Organizer and participants have an option (for no additional charge from the Taxpayer) to add
voice or video communication features to an online meeting, webinar, or training. Taxpayer
does not provide telephone or Internet access service required to access the communication
features. Voice communication takes place either via a participant’s Internet connection or via a
toll-based phone conferencing service or both. Use of the communication features requires the

participants to obtain access to their own telecommunications services. An Organizer can
alternatively opt to use toll-free voice conferencing services either from a third party or from an
affiliate of the Taxpayer. Toll-free voice service is not included as part of the web-based
services or the charges for those services.
You also state in your letter that Taxpayer does not provide basic telephone or Internet
access service required to access the communication features. In order to provide the web-based
services, Taxpayer purchases telecommunications services from unrelated third-party
telecommunications providers. Taxpayer treats itself as the ultimate consumer of such
telecommunications services and pays Telecommunications Excise Tax on such services at the
time of purchase.
Generally, the web-based services you describe are not subject to Telecommunications
Excise Tax, and a person providing the web-based services is the consumer of any
telecommunications services it purchases and uses to provide the web-based services.
I hope this information is helpful. If you require additional information, please visit our
website at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at
(217) 782-3336.
Very truly yours,

Richard S. Wolters
Associate Counsel
RSW:msk