Did an aggregator reselling discounted 800-number long-distance usage have to collect Texas state and local sales tax?

Plain-English summary

The aggregator bought discounted 800-number usage and charged customers a share of the discount. The Comptroller treated it as selling long-distance telecommunications service.

It had to collect Texas sales tax on calls originating in Texas and billed to a Texas telephone number, billing address, or service address.

What this means for you

Charging a percentage of a volume discount did not change the underlying telecommunications sale.

Common questions

What did the aggregator sell? Long-distance telecommunications service.

Which calls triggered collection? Texas-origin calls billed to a Texas number, billing address, or service address.

Citations and references

• 34 Tex. Admin. Code Rule 3.344

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9204L1163B12

Original ruling text

April 7, 1992

Dear **:

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

Facts: The Aggregator is an independent company that purchases
a block of "800" long-distance usage from **.
** gives the company a volume usage discount on their
service. ** bills the customer and provides a copy of
the billing to the Aggregator. The Aggregator then bills the customer
a fee which is a per cent of the discount the customer receives from
** which is a portion of the Aggregator's volume usage
discount.

Question: What tax collecting responsibilities, if any, for any
state and local tax in Texas does the Aggregator have?

Response: Your client is selling long distance telecommunications
service and is responsible for collecting Texas sales tax on calls
that originate in and are billed to a Texas telephone number or
billing or service address. I am enclosing copies of Rule 3.344
and Sales Tax on Telecommunications Services which includes a list
of taxing jurisdictions imposing local tax on telecommunications
services for your reference.

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 or
write. You may reach me by calling toll free, 1 (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