Could a telephone company collect and remit Dial 976 sales tax for its information-provider sponsors under its own permit?

Plain-English summary

TELEPHONE CO. proposed billing and collecting Dial 976 sales tax and remitting it under the company's own state permit instead of passing the tax to each information-provider sponsor for separate remittance.

The June 29 letter agreed subject to qualifications: sponsors would keep permits and file returns, remain liable for unreported or unremitted 976 tax the company failed to handle, provide a sponsor-and-permit list, and ensure the company's records allowed audit verification.

After Audit Headquarters reviewed the records, the July 16 letter found them sufficient and approved the proposal if sponsors understood and agreed to the company's responsibility. It also said sponsors holding permits only to remit Dial 976 tax could return those permits for cancellation after October 1987.

What this means for you

The historical arrangement shifted collection and remittance mechanics to the telephone company but required sponsor consent and verifiable records. The two letters should be read together because the later response followed the audit review and changed the stated permit outcome for sponsors whose only reason for a permit was 976 tax.

Common questions

Could TELEPHONE CO. remit the Dial 976 tax? Yes, under the approved arrangement.

What did the later approval require? Sponsor understanding and agreement plus records an auditor could verify.

Could every sponsor cancel its permit? The July letter addressed sponsors whose only permit reason was remitting Dial 976 tax.

When could those permits be returned? After October 1987.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8707L0920A14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller July 16, 1987

Dear ***:

Ms. Mary Hawkins from Audit Headquarters has discussed TELEPHONE CO.'s
records with *** concerning the Dial 976 service and is
satisfied
the records are such that an auditor could verify tax collections and tax
reporting by TELEPHONE CO.

If you can get the sponsors to understand and agree to TELEPHONE CO.'s
assuming responsibility for the tax on the charge for the Dial 976
service,
the Comptroller's office is agreeable to the proposal outlined in your
June 18, 1987 letter. If remitting sales tax on the Dial 976 service is
the
only reason sponsors are holding sales tax permits, the permits may be
returned for cancellation after October 1987.

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4633.

Sincerely,
(Mrs.) Wanda Hutcheson
Tax Policy Division

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller June 29, 1987

Dear ***:

Thank you for your letter of June 18, 1987 regarding your company's
collection
of sales tax on the information service provided by various information
providers. Because of local tax applying to these charges in October of
this
year, you proposed the following procedure for dealing with reporting
problems:

TELEPHONE CO. will obtain approval from each of its Dial 976
sponsors to remit the sales taxes applicable to their message charges
directly to the state rather than paying the charges to the sponsors who
in turn remit the money to the state. The taxes TELEPHONE CO. remits
for Dial 976 messages will be included in and become a part of the sales
taxes reported under the TELEPHONE CO. state tax return/permit. The
individual sponsors will no longer report sales taxes collected on their
976 service by TELEPHONE CO. directly to the state. TELEPHONE CO. will
be responsible only for the payment of the 976 sales taxes that
it bills and collects and will in no way be responsible for payment of
any other sales taxes due from 976 sponsors. As with its other services,
TELEPHONE CO. will have the documentation available for all 976 taxes
billed and collected by the company in Texas. This backup material will
be broken down by taxing entity. TELEPHONE CO. will not, however,
have any information available which gives a breakdown of the taxes
collected or remitted on behalf on an individual sponsor.

We agree with your proposal with the following qualifications. Each
sponsor
must continue to hold a sales tax permit. Each sponsor must continue to
file
sales tax returns. If they have no other sales to report, there will
only be
one "zero" return yearly. Each sponsor needs to understand they will be
liable for any unreported or unremitted tax TELEPHONE CO. fails to
collect
or report on the 976 service. We will need a list of sponsors and their
sales
tax permit numbers. And finally, TELEPHONE CO.'s records must be such
that the information TELEPHONE CO.is reporting on behalf of the sponsors
can be verified, when necessary, by an auditor.

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4633.

Sincerely,
(Mrs.) Wanda Hutcheson
Tax Administration Division