Is television programming delivered through an 18-inch satellite receiving antenna treated as tax-exempt cable television service, or as taxable telephony/telegraphy?

Subject

Issue raised by Petitioner, Falls Earth Station, is whether its television services delivered via an 18" satellite receiving antenna are subject to sales tax.

What this means for you

Falls Earth Station delivers television programming to subscribers via an 18-inch satellite receiving dish, charging for a long list of items: basic, premium, and a-la-carte programming tiers, individual channels (Disney, Playboy, the broadcast networks), pay-per-view, and various administrative fees (late fees, card-replacement fees, order-ahead PPV, returned-check charges, reactivation/change-of-service charges, duplicate billing statements, an extra-receiver authorization fee, overnight delivery, and new-account activation).

New York's telephony/telegraphy tax specifically excludes "cable television service" -- defined as receiving and amplifying broadcast (or company-originated) programs and distributing them to subscribers by wire, cable, microwave, "or other similar means." The Department found that satellite-delivered programming through Petitioner's 18-inch dish fits this definition just as much as wired cable, so nearly the entire fee list (items "A" through "V" -- every programming tier, channel, pay-per-view charge, and administrative fee) is exempt cable television service, not taxable telephony. The one exception: to the extent the remaining item ("W") represents an installation charge for the initial hook-up, that stays taxable -- consistent with the Department's existing published guidance that cable hook-up/installation charges (unlike the recurring service charge itself, and unlike separately-stated equipment like converter boxes or remote controls) are taxable.

Q&A

Q: We deliver TV programming via satellite dish rather than a physical cable line -- does the cable-television sales tax exclusion still apply to us?
A: Per this opinion, yes -- the Department read "cable television service" broadly enough to cover satellite delivery ("or other similar means" of distribution), not just wired cable.

Q: Are our administrative fees (late fees, reactivation charges, duplicate statements, etc.) exempt along with the core programming charges?
A: In this opinion, yes -- all the listed programming and administrative fee items (A through V) were found exempt as part of the overall cable/satellite television service.

Q: Is there any charge in a bundle like this that stays taxable?
A: Yes -- an installation charge for the initial hook-up to the service remains subject to sales tax, per the Department's existing TSB-M-80(6)S and TSB-M-94(2)S guidance on cable television companies, even though the recurring service charge and separately-stated equipment (converter boxes, remote controls, connection equipment) stay exempt.

Citations

• 20 NYCRR § 527.2(d)(3)(i) -- excludes "cable television service" from the telephony/telegraphy tax; defines it as receiving/amplifying and distributing broadcast programs to subscribers by wire, cable, microwave, or similar means.
• New York State Cable Television Association v. State Tax Commission, 59 A.D.2d 81 -- cited authority for the cable-television exclusion.
• TSB-M-80(6)S, Taxability of Purchases and Sales by Cable Television and Other Transmission Service Companies -- confirms cable/master-antenna/community-antenna/music service charges are untaxed, while installation and cable-repair/replacement charges and film sales/rentals are taxable.
• TSB-M-94(2)S, Equipment Furnished in Conjunction with Cable Television Service -- confirms separately-stated charges for converter boxes, remote controls, and connection equipment remain part of the exempt recurring service charge, while installation charges stay taxable.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_50s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (50)S
Sales Tax
November 23, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940708A

On July 8,1994 a Petition for Advisory Opinion was received from Falls Earth Station, Inc.,
Route 20, PO Box 236, Madison, New York 13402.
The issue raised by Petitioner, Falls Earth Station, is whether its television services delivered
via an 18" satellite receiving antenna are subject to sales tax.
The following is a list of charges by Petitioner to its customers associated with providing
subscriptions to various television programming. Item "A" to "L" represent programming items and
items "M" to "X" represent other services.
Basic

Premium
Ala Carte Basic

Pay Per View
Other Fees

A
B
C
D
E
F
G
H
I
J
K
L
M
N
0
P
Q
R
S
T
U
V
W

=

=

=

=

=

=

=

=

=

=

=

=

Personal Choice
Economy Basic with Networks
Economy Basic without Networks
Networks (as a package)
PPV Access plus Blumberg Direct
The Disney Channel
Playboy Channel
ABC
NBC
CBS
FOX
Pay Per View (movies and events)
Administrative (Late) Fee
Access Card Replacement Fee
OPPV (Order-ahead Pay Per View) Charge
Returned Check Charge
Service Reactivation Charge - Collection
Change of Service Charge
Duplicate Billing Statement Charge
Authorize Additional DSS Receiver Fee
Overnight Delivered Charge
Service Reactivation Charge - Seasonal
Service Activation - New Account

Section 527.2(d)(3)(i) of the Sales and Use Tax Regulations excludes cable television service
from the imposition of sales tax. The section provides that:
(3) The term telephony and telegraphy, as used in this Subchapter, does not include:
(i) cable television service, which is the service of receiving and amplifying programs
broadcast by television or radio stations or any other programs originated by a cable
television company or by any other party, and by distributing such programs

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TSB-A-94 (50)S
Sales Tax
November 23, 1994
by wire, cable microwave or other similar means, whether such means are owned or leased, to
persons who subscribe to such service. See New York State Cable Television Association v. State
Tax Commission, 59 A.D.2d 81.
TSB-M-80(6)S, TAXABILITY OF PURCHASES AND SALES BY CABLE TELEVISION
AND OTHER TRANSMISSION SERVICE COMPANIES, provides in part:
Charges for the following services ­
1.

Cable television

2.

Master antenna

3.

Community antenna

4.

Music service (Muzak, etc.)

offered by cable television and other transmission service companies are not subject
to New York State and local tax.
Also deposits on tangible personal property rented, leased or loaned are not deemed
to be taxable receipts, but are collateral security for return of the property. However,
upon the return of the rented, leased or borrowed property, any amounts not refunded
to the customer constitute taxable receipts.
The following charges by cable television and other transmission services companies
are subject to New York State and local tax.
1.

Installation charge for initial hook-up to cable
television and other transmission systems.

2.

Charges for repairing and replacing damaged cable.

3.

Sales and rentals of films.

TSB-M-94(2)S, EQUIPMENT FURNISHED IN CONJUNCTION WITH CABLE
TELEVISION SERVICE, provides in part:
The Federal Cable Act of 1992 requires cable television transmission
service providers to establish rates for all the tangible personal
property supplied with their services. They must separately state
charges for these items on their customers' bills. These components
include, but are not limited to:
1.

remote control units (hand held devices);

2.

converter boxes (for basic service and other cable programming
services, e.g., pay per channel or pay per view programming); and

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TSB-A-94 (50)S
Sales Tax
November 23, 1994
3.

equipment used for making connections for additional television
receivers.

Charges for tangible personal property required to be separately stated
represent elements of the total charge for the cable television
transmission and are incidental to the primary service being provided.
Therefore, the total recurring charge to subscribers for cable
television transmission service, including separately stated charges
for converter boxes, control units or additional connections, continue
to be exempt from New York State and local sales and use taxes.
*

*

*

Charges to a customer for installation of cable service remain subject
to tax.
Petitioner's television services delivered via an 18" satellite receiving antenna constitutes a
cable television service in accordance with the meaning and intent of Section 527.2(d)(3)(i) of the
Sales and Use Tax Regulations.
Therefore, in accordance with Section 527.2(d)(3)(i) of the Sales and Use Tax Regulations
and TSB-M-80(6)S and TSB-M-94(2)S, charges by Petitioner to its subscribers for service items "A"
through "V" above are not subject to the imposition of sales tax.
However, item "W", to the extent it constitutes a charge for the installation of cable television
service, is subject to sales tax.

DATED: November 23, 1994

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.