Ezel / Tax Rulings / TX
TX 9008L1042D12 Sales and/or Use Tax (State,Local,MTA) 1990-08-24

Which long-distance telecommunications charges were taxable, and could cable-television companies buy taxable intrastate transmissions for resale?

Short answer: Interstate and international long-distance transmissions were exempt when they were not both originated from and billed to a Texas number or address. Services originating in Texas and billed to a Texas address were taxable. Cable-television companies could issue resale certificates for those intrastate transmissions because the telecommunications became an integral part of their taxable cable service.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Long-distance telecommunications were exempt when they were not both originated from and billed to a telephone number, billing address, or service address in Texas. The provider's interstate and international transmissions therefore appeared mostly exempt.

Telecommunications originating in Texas and billed to a Texas address were taxable.

Cable-television companies could give a resale certificate for taxable intrastate telecommunications that became an integral part of the companies' taxable cable-television service sold in the regular course of business.

Common questions

Were interstate and international transmissions exempt? Yes, when they did not meet both Texas origin and Texas billing conditions.

Were Texas-origin, Texas-billed services taxable? Yes.

Could a cable company issue a resale certificate? Yes, for intrastate telecommunications integral to its taxable cable service.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller

August 24, 1990

Dear **:

Thank you for your recent letter regarding the telecommunications
services provided by your firm.

The sales tax statute imposes tax on telecommunications services
but provides an exemption for long-distance telecommunications
services that are not both originated from and billed to a tele-
phone number or billing or service address within Texas.

Both the interstate and international transmissions your firm per-
forms are long-distance telecommunications services. So, it appears
that the majority of your charges are tax exempt. You will be
required to collect tax on telecommunications services that origi-
nate in and are billed to a Texas address.

Another provision of the sales statute allows a purchaser to give
a resale certificate for taxable items such as telecommunications
services if they become an integral part of another taxable ser-
vice which the purchaser performs in the regular course of business.
Since cable television services are taxable in Texas, this provision
should serve to exempt your intrastate sales of telecommunications
services to cable television companies.

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

If you have questions or need more information, please call our toll-
free number 1- 800- 531- 5441. My direct line number is 463- 4680
[FAX (512) 475- 0900). You may write to me in care of Taxability
Section.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division

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