Ezel / Tax Rulings / TX
TX 8811L0917D01 Sales and/or Use Tax (State,Local,MTA) 1988-11-30

Was a separately stated $1 city programming and access fee passed through on cable subscribers' bills subject to sales tax?

Short answer: Yes. Texas treated the separately stated pass-through fee as part of the cable-television sales price under Rule 3.313(b).

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This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Under a city franchise agreement, the cable company collected a separate $1 “City Program Fee” from every subscriber. The agreement characterized it as a pass-through access and governmental-programming charge rather than payment for basic service.

The Comptroller nevertheless treated the fee as part of the cable-television service's sales price and required sales tax under Rule 3.313(b).

Common questions

Was the $1 fee taxable? Yes.

Did separate statement make it nontaxable? No.

Did its pass-through label control? No. Texas included it in the service's sales price.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller November 30, 1988

Dear ***:

Thank you for your letter and the additional information regarding
the taxability of the $1.00 fee collected from your customers on
behalf of the City of Fort Worth.

As part of the franchise agreement with the City of Fort Worth,
*** will collect a payment of $1.00 from each subscriber to
the cable television service. The charge is a separate line item
(City Program Fee) on the subscriber's bill and shall not be
deemed a payment for basic service, but a pass-through of an
access and government programming fee.

The City Program Fee is a part of the sales price of the cable
television service and is subject to sales tax. Please refer to
the enclosed Rule 3.313(b).

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

If you have any questions or need more information, please call
our toll-free number 1-800-252-5555 or the regular number 512/463-
4666. My extension is 3-4666. You may write to Tax Correspon-
dence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence

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