When were hotel charges for sending or receiving fax transmissions taxable in Texas?

Plain-English summary

Hotel and motel charges for sending or receiving a fax were taxable only when the underlying fax transmission was taxable under Rule 3.344. For long-distance service, the letter required the transmission both to originate from and be billed to a Texas telephone number or billing or service address.

Local city, county, MTA, and CTD tax was allocated to the fax's point of origin. If the origin could not be determined, local tax followed the address to which the call was billed.

The examples applied 1989 state and local rates to in-state transmissions and found no tax when a collect fax originated in New York and was billed to a Texas recipient. Those rates and local-option choices are historical illustrations, not current-rate statements.

Common questions

Was every fee for receiving a fax taxable? No. The underlying transmission itself had to be taxable.

Where was local tax sourced? To the point of origin, or to the billing address if the origin could not be determined.

Was a New York-origin collect fax billed in Texas taxable? No, because it did not originate from a Texas number or service address.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8905L0934A11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

May 12, 1989

Dear ****:

This letter is in response to some of the issues raised in the telephone
conversation we had earlier this week regarding the taxability of fax
transmissions.

One point you brought out is that hotels or motels usually charge a fee
for receiving a fax transmission. Because fax transmissions are taxable as
telecommunications services, the fee charged for receiving a fax transmission
will only be taxable if the fax transmission is taxable as explained in
sections (b)(4) and (c)(1) of Rule 3.344.

Section (h) of the rule states that local (city, county, Metropolitan
Transit Authority [MTA], and city transit department [CTD]) tax on
telecommunications services is allocated to the location from which the
telecommunications service originates. If the point of origin cannot be
determined, the local tax is allocated to the address to which the call is
billed.

The sections of Rule 3.344 referenced above are used in determining the
taxability of the fax transmissions provided by hotels or motels to customers
(senders and recipients) in the following examples:

Example 1. XYZ Hotel in Dallas transmits a fax to ABC Hotel in Austin.
XYZ Hotel charges the sender $9.00 for sending the document and ABC Hotel
charges the recipient $5.00 for receiving the document.

Tax Due: XYZ Hotel is required to collect 8% (6% state, 1% Dallas city,
and 1% Dallas MTA) sales tax from the sender. ABC Hotel is also required to
collect 8% (6% state, 1% Dallas city, and 1% Dallas MTA) sales tax from the
recipient. See section (h) of Rule 3.344.

Example 2: QRS Motel in San Antonio transmits a fax to UVW Motel
in Corpus Christi. QRS Motel sends the transmission collect to the recipient
at the UVW Motel which charges the recipient $12.00 for receiving the document.

Tax Due: UVW is required to collect 7% (6% state and 1% San Antonio city)
sales tax from the recipient. (The San Antonio MTA sales tax is not collected
because the authority does not impose sales tax on telecommunications
services.)

Example 4. KLM Hotel in New York City transmits a document collect
to NOP Hotel in Houston. NOP Hotel charges the recipient $18.00 for receiving
the transmission.

Tax Due: No tax is due because the long-distance transmission did not
originate from a telephone number or service address within Texas. The service
was billed to an address (NOP Hotel) in Texas. (Note: long-distance
transmissions are taxable only when they are both originated from, and are
billed to, a telephone number or billing service within Texas.)

Example 5. NOP Hotel in Houston sends a document to KLM Hotel in New York
and charges the sender $18.00.

Tax Due: NOP Hotel collects 7% (6% state and 1% Houston city) sales tax
from the sender because the transmission originates from a telephone or service
address within Texas and is billed to an address within Texas. (The Houston MTA
sales tax is not collected because the authority does not impose sales tax on
telecommunications services.)

While these examples may not cover all of the situations that may occur
in the area of fax transmissions, they should provide basic guidelines for your
members.

If you or any of your members have any questions or need more
information, you may call me toll-free 1-800-252-5555. The regular number is
512/463-4600. Correspondence may be addressed to Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence