When did an 800-number parts-locator hotline fee become taxable?

Plain-English summary

The monthly parts-locator hotline fee was not taxable when the letter was issued, but the entire charge would become taxable October 1. The operator could use resale certificates for rented phone lines and property transferred to members as part of the service.

Common questions

Was the fee immediately taxable? No. What changed October 1? The entire member charge became taxable. Could the operator use resale certificates? Yes, for the described inputs.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8507L0652A04

Original ruling text

July 16, 1985

Dear ***:

I wish to amend my letter of January 30, regarding *** in
light of recent legislation. Your facts are restated with response
below.

*** is a new company which will start operation April 1, 1984.
The income to the company will be a monthly fee of approximately $**
each for all customers. The customer will rent a telephone from ****
which can only be used for the hotline which is an 800 number.

The purpose of having the hotline is to buy and sell parts to other
subscribers. The company will pay the monthly telephone bill for the
service. If for any reason the member defaults on its agreement, the
company has the right to disconnect the member. The company will not
enter into any buy-sell transactions. The company will provide no
other service to its members.

All members can use their hotline to offer to buy or sell parts
during the business day. This is the only service provided.

Response: Effective October 1, we will begin charging sales tax on
certain intrastate telecommunications services. In the case of ***,
the entire charge would be taxable to the member. Your client may
give a resale certificate to his supplier in lieu of tax when renting
phone lines or when purchasing or renting tangible personal property
to be transferred to the member as part of the service.

At present the charge for this service is not taxable.

The opinion is based upon the facts you presented. If there are additional
or different facts, this opinion may change.

Please feel free to contact us if you have additional questions. You
may write us, call toll free 1-800-252-5555 from anywhere in Texas.

Sincerely,

Tax Policy Section
Tax Administration Division