Ezel / Tax Rulings / TX
TX 8912L0970G02 Sales and/or Use Tax (State,Local,MTA) 1989-12-13

Was an answering service's charge for patching callers directly through to customers taxable, including labor and equipment portions?

Short answer: Yes. The total patching charge was taxable, including labor and equipment. If patching was bundled into the live-answering charge rather than separately stated, the entire combined charge was taxable.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 answering service used operators and sometimes specialized equipment to connect incoming callers directly with customers, then left the line after making the connection.

The entire patching charge was taxable, including both labor and equipment. If the patching fee was not separately stated from live answering service, the full combined answering-service charge was taxable.

Common questions

Was patching taxable? Yes.

Could separately stated labor be excluded? No.

What if patching was bundled with answering service? The entire charge was taxable.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

December 13, 1989

Dear ***:

Thank you for your recent letter to Ms. Whittemore. I have been
asked to respond.

Facts:
Our clients provide live answering services.
They provide a service called "patching" which connects
phone lines and allows callers to talk directly.
When the patch is complete, the operator leaves the line.
The answering service may use specialized equipment and
make separate charges for its use or charge a single fee.

Question: Please advise if the "patching" services described
above are telecommunication services which are taxable. Also,
please advise if the labor portion of the "patching" charge would
be taxable if it were clearly separated from the charge for use
of the "patching" equipment.

Answer: The total charge for patching calls is subject to tax.
That includes both labor and equipment. If the patching charge is
not separated from the charge for providing live answering
services, the total charge will be taxable.

This opinion is rendered based on the facts you presented. Other
facts, though similar, may yield different results.

Feel free to call or write me if you have questions. You can
reach me by calling toll free 800-531-5441 or FAX (512) 475-0900.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division

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