How did Texas tax paging service, pagers furnished with service, pager rentals, and outright pager sales after October 1, 1985?

Plain-English summary

Effective October 1, 1985, a radio common carrier could buy pagers tax-free with a resale certificate when it furnished them to customers as part of taxable paging service. The pagers supplied with that service were taxed at the state rate only, even if the carrier separately stated a pager “rental charge.”

An outright pager sale was taxed based on the carrier's place of business and included applicable city and MTA tax. The letter also says equipment supplied in the same manner when telecommunications service had been nontaxable before October 1 became subject to a 4 1/8% tax as of that date.

STAR adds a later alert stating that, as of January 15, 2015, a place of business meant an established seller-operated outlet, office, or location used to sell taxable items to people other than employees, independent contractors, and affiliated individuals.

Common questions

Could a carrier buy pagers for taxable paging service with a resale certificate? Yes, effective October 1, 1985.

Did separately stating a pager rental change the state-only treatment? No.

How were outright pager sales taxed? At the applicable rate based on the carrier's place of business, including city and MTA tax where applicable.

Citations and references

• Tex. Tax Code Ann. § 151.054(b) — property transferred as part of a taxable service.
• 34 Tex. Admin. Code § 3.344 — telecommunications services and the radio-common-carrier definition referenced in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8510L0668B09

Original ruling text

Alert: As of 01/15/2015, a place of business is defined as "an established outlet, office, or location operated by a seller for the purpose of selling taxable items to those other than employees, independent contractors, and individual persons affiliated with the seller."

October 24, 1985

Dear ***:

Thank you for your letter of October 18, 1985 concerning the imposition of sales tax on telecommunications services.

Tangible personal property which is transferred to a customer as part of a taxable service may be purchased tax free under a resale certificate. Tex. Tax Code Ann. Sec. 151.054(b).

The term "radio common carrier" (RCC) for limited sales and use tax purposes is limited to providers of mobile telephone and telephone paging services which were addressed under 34 T.A.C. Sec. 3.344 (December 21, 1976).

An RCC may purchase pagers which it provides to its customers tax free by issuing a resale certificate effective October 1, 1985. The pagers which are provided as part of the taxable telecommunications services are taxed at the state rate only, even if the RCC separately states the "rental charge" for the pager. An RCC which sells a pager is required to collect sales tax at the appropriate rate based on the location of the RCC's place of business, including applicable city and MTA sales tax.

Equipment provided by an RCC in the same manner when the telecommunications services were nontaxable services before October 1, 1985, are subject to 4 1/8% tax as of that date. An RCC was required to charge sales tax on sales of pagers before October 1, 1985; on or after that date, an RCC is required to collect the state and any applicable city and MTA sales tax on equipment sold.

If you have any questions or need more information, please call us at 1-800-252-5555 toll free from anywhere in Texas. You may write us at the Tax Administration Division.

Sincerely,

Tax Administration Division