Ezel / Tax Rulings / TX
TX 8902L0921F14 Sales and/or Use Tax (State,Local,MTA) 1989-02-01

Was the federal excise tax collected from telecommunications customers included in the Texas sales-tax base?

Short answer: No. Texas excluded the customer-paid federal excise tax from the sales-tax base for telecommunications services and said the treatment applied retroactively.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The Comptroller said the federal excise tax on telecommunications services was not part of the amount used to compute Texas sales tax. The stated reason was that this federal tax was imposed on and collected from the ratepayer, rather than imposed on the producer of the goods or service.

The letter also said this treatment would be applied retroactively. It did not state a refund procedure or time limit.

Common questions

Was the federal excise tax itself included in the Texas sales-tax base? No.

Why did Texas exclude it? Because the letter characterized the federal tax as directed at and collected from the ratepayer.

Was the treatment prospective only? No. The letter expressly said it would be applied retroactively.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 1, 1989

Dear *****:

This will confirm our conversation on the taxability of Federal
Excise Tax on telecommunications services.

Unlike other Federal Excise Taxes, the FET on telecommunications
services is directed at and collected from the ratepayer rather
than the producer of the goods or service. For this reason, we
will not consider Federal Excise Tax to be part of the tax base
when computing sales tax on telecommunications services. This
will be applied retroactively.

I would appreciate it if you would share this information with
your members.

Please feel free to call or write me any time. You can reach me
toll free at 800-531-5441 or FAX (512) 475-0900.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division

Get today's answer for your situation

You just read a 1989 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.