Was a Texas tax preparer's charge for electronically transmitting completed return data by telephone to the IRS taxable?

Plain-English summary

A tax-return preparation company planned to key completed return data into a computer and transmit it by telephone lines from Texas to the IRS in Ohio.

The Comptroller classified the transmission charge as taxable telecommunications service under Rule 3.344(a)(2) and (b)(4), as revised November 12, 1987. The letter said the interstate telecommunications exemption had changed.

The Comptroller apologized because the requester had previously received an outdated December 30, 1985 version of the rule.

What this means for you

This is a historical technology and rule-change ruling. It does not establish the present treatment of modern electronic filing or internet transmission.

Common questions

Was the electronic-filing transmission charge taxable? Yes.

What rule did the letter apply? Rule 3.344(a)(2) and (b)(4), revised November 12, 1987.

Had the requester received outdated guidance? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.344(a)(2) and (b)(4), revised November 12, 1987.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0864A11

Original ruling text

February 3, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay in answering
your question involving changes in the sales tax law. This isn't the way we normally
do business.

Our people were, and still are, swamped by a deluge of inquiries as they attempted to
interpret provisions of the new tax law and draft rules which would not adversely
impact businesses. In many instances, an answer to a question just wasn't available
when the question arrived.

In your letter you stated ** offices in Texas will be offering electronic
tax return filing as of January 1, 1988. This will be accomplished by keying the
completed tax return data into a computer for transmission by telephone lines to
the Internal Revenue Service in ****, Ohio.

This service falls within the definition of "telecommunication services." As you stated,
the exemption for interstate telecommunication services has been changed. The current
definition and taxability is found in Rule 3.344(a)(2) and (b)(4) revised November 12,
1987, which I have enclosed for your reference. Your charge, for this service, meets these
definitions and is taxable.

As we discussed in our recent telephone conversation, you were sent Rule 3.344 revised
December 30, 1985. Again, I apologize to you for the inconvenience this outdated rule caused.

This opinion is based on the facts presented. If there are additional or different facts,
the opinion may change.

You may write me at the Tax Policy Division.

Sincerely,

Tax Policy Division