Were fees a cable company paid a utility for permission to attach cable lines to utility poles subject to Texas sales tax?

Plain-English summary

A cable television company paid utilities for access to their poles so it could attach cable lines. It described the charge as a type of easement and received a bill that added state, city, and federal tax to the pole-rental fees for its Plainview system.

The Comptroller said the utility's charges allowing the cable company to attach its lines to the poles were not subject to state or local sales taxes. The letter expressly declined to comment on the federal tax charge.

What this means for you

Under this 1991 letter, the described pole-access charge was not a taxable state or local sales-tax transaction. The holding was limited to those taxes and did not resolve any federal charge appearing on the bill.

Common questions

Were state sales taxes due on the pole fees? No.

Were local sales taxes due? No.

Did the Comptroller decide the federal tax issue? No.

Citations and references

• No statute or administrative rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9106L1114B10

Original ruling text

June 10, 1991

Dear **:

Thank you for your recent letter which is restated in part with
response below.

Facts: Our company is in the cable TV business and must pay a
fee to the utility companies located in the areas we serve in
order to attach our cable lines to the utility poles. This fee
is paid as a type of easement to allow us access to the poles.
We have received a bill from Southwestern Bell Telephone which is
charging us state, city and federal tax on the amount of pole
rental fees which our Plainview, TX cable system owes. We are
requesting that you confirm that we do not owe this tax.

Response: Charges to your firm by a utility company which allow
your firm to attach your lines to their poles are not subject to
either state or local sales taxes. I cannot comment on the
federal tax charges.

This opinion is based on the facts presented. Other facts
though similar may provide a different result.

If you have other questions or need more information please
call or write. You may reach me by calling toll free number,
(800) 531-5441. My direct Line number is (512) 463-4680. The
number for FAX transmissions is (512) 475-0900. You may write
to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division