Were charges taxable when a provider supplied a Texas number, received calls in Texas, and retransmitted them to Mexico, and did the billing address matter?

Plain-English summary

A billing address was where the customer received the bill; a service address was where the customer received telecommunications service.

When the provider supplied a Texas telephone number, received calls in Texas, and retransmitted them to Mexico, the service originated in Texas and had a Texas service address. Texas tax applied regardless of where the bill was sent.

If the telecommunications service originated entirely outside Texas—including no receipt or retransmission in Texas—the charge was not taxable solely because the bill went to a Texas address. The letter also confirmed that area code 915 was entirely within Texas, while leaving the taxpayer's proposed nonstandard direct-access numbers for further explanation.

Common questions

Did a Mexico destination prevent Texas tax? No, when the service originated in Texas.

Did billing address control? No.

Was wholly out-of-state service taxable because the bill went to Texas? No.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8912L1018A03

Original ruling text

December 21, 1989

Dear **:

Let me apologize for not making myself more clear in my earlier
correspondence.

• A billing address is a place where an individual receives their
  bill.

• A service address is a place were an individual receives
  telecommunications service.

When you provide your customer with a Texas telephone number to
receive calls and you then re-transmit those calls into Mexico,
you are providing a telecommunications service that originates in
Texas. In this case you are providing your customer with both a
Texas telephone number to which calls are billed and a service
address in Texas from which the telecommunication service is
provided. That means those transactions are subject to Texas tax.

You asked "What determines whether a telephone number is 'within'
Texas? Would area code 915 numbers be Texas numbers?" Telephone
numbers that provide basic local exchange service within Texas are
Texas telephone numbers. That is not an exhaustive answer, but I
hope it is helpful. To answer your second question, the 915 area
code is totally within Texas.

It follows then that if you provide a telecommunications service
that originates outside Texas (including not being received in or
re-transmitted from Texas) that your charge for telecommunications
services would not be taxable regardless of where you send the
bill. But, if you are providing telecommunications services that
originate in Texas and since your mode of operation indicates you
are providing a service address in Texas, Texas tax will be due
regardless of where you send the bill.

You mentioned that you will be using non-standard numbers when
using direct access lines to COMPANY A's switch. Would you please
explain what you mean?

I look forward to hearing from you.

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