When did Texas begin taxing human-operated telephone answering services, and what amount and local jurisdiction were taxable?

Plain-English summary

This was a statewide special mailing to telephone-answering services rather than a response to one taxpayer. It said human-operated receipt and relay of telephone messages became a taxable service on October 1, 1991. Electronic answering services had already been taxable since October 1, 1985.

Tax applied to the total charge for telephone answering as defined by Tax Code Section 151.0102. Providers collected the 6.25% state rate plus applicable local tax based on the business location where the answering service was performed.

Providers without a Texas sales-and-use-tax permit were instructed to apply. Existing permit holders were to include answering-service receipts in taxable sales on returns covering periods beginning October 1, 1991.

What this means for you

The guidance treated both live and electronic answering as taxable, with different effective dates. It sourced local tax to the service provider's business location and required the entire answering-service charge to be reported.

Common questions

When did human answering become taxable? October 1, 1991. When did electronic answering become taxable? October 1, 1985. What state rate did the mailing state? 6.25%. Where was local tax based? The business location performing the service.

Citations and references

• Texas Tax Code Section 151.0101(a)(15)
• Texas Tax Code Section 151.0102

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1138F12

Original ruling text

DATE: November 14, 1991

TO: Distribution List

FROM: Tommy Champion

SUBJECT: Special Mailing to Telephone Answering Services

Attached is a copy of a letter that was mailed on November 14 to
telephone answering services across the state of Texas.

Thank you.

Distribution List:
Wayne Akridge, Account Maintenance
John Neel, Administrative Law Judges
Martin Cherry, Ass't General Counsel
Mark Ortosky, ASD
Harold Lee, Audit Division Hdqtrs.
Linda Pava, Central Administration
Greg Hartman, Communications
Sam Stewart, Data Services
Mary Buckley, Economic & Local Ass't
Jim Teaver, Enforcement
Jeff Wiginton, Executive Administration
Mike Shoemate, Field Operations
T.C. Malett, Fiscal Management
George Tamayo, Fund Accounting
Cril Payne, General Counsel
Alvin Miller, Internal Audit
Leo Aguirre, Internal Services
Mike Borkland, Legal Services
Tom Nilsen, Local Government
Nora Linares, Research & Intergov't. Services
Toni Lopez, Research
Robert Daniels, Revenue Accounting
Dovie Ellis, Revenue Administration
Jacob Salisbery, Revenue Processing
Tom Plaut, Revenue Estimating
Mike Doyle, Tax Administration
Wade Anderson, Tax Administration
Lucy Glover, Tax Administration
Barbara Chavis, Tax Administration
Loreto Espinoza, Tax Administration

Dear Taxpayer:

The Legislature recently decided that receiving and relaying telephone
messages by a human operator is a taxable service subject to limited
sales and use tax.

Electronic answering services have been taxable since October 1, 1985.
Effective October 1, 1991, tax must be collected on the total amount
charged for providing telephone answering services as defined in Texas
Tax Code, sec. 151.0102. The Legislature added telephone answering
services to the definition of taxable services in Texas Tax Code, sec.
151.0101(a)(15).

The state tax rate is 6.25 percent. In addition, you must collect the
applicable local tax based on the business location where you perform
the telephone answering service.

An application for a Texas Sales and Use Tax Permit is enclosed. If you
already have a permit, please disregard the application and include the
receipts from telephone answering services in taxable sales for returns
that cover periods beginning October 1, 1991.

If you have any questions, please call one of our tax specialists toll
free at 1-800-252-5555. Our Austin number is 512-463-4600. From a
Telecommunication Device for the Deaf (TDD) ONLY call 1-800-248-4099
toll free. Our Austin TDD number is 512-463-4621.

Sincerely,

Lucy Glover
Manager
Tax Administration Division