When a cable TV company adds new cable lines to utility poles, is that remodeling or new construction — and does it matter whose poles the lines are being attached to?

Subject

Cable TV Company Adding Lines To Its Own Poles Vs. Poles Belonging To A Utility Company — Remodeling Vs. New Construction

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9306L1247D02

Plain-English Summary

This is not a taxpayer-facing letter ruling — it is an internal June 1993 memo from Wanda Hutcheson (Tax Administration) to Robert Cohan (Austin Audit), addressing an audit question about how to classify a cable TV company's work of putting new cable lines on utility poles.

The background: a prior ruling, TR. 1168 (Fiche 1018C04), states that adding cable to existing poles is "remodeling." The question raised was whether that prior ruling was setting policy for poles belonging to the cable company itself, or also for poles belonging to some other entity (such as a utility company).

The memo's answer draws a clear line based on pole ownership and prior presence on the pole:

• When a cable company adds lines to poles it already owns, that activity is remodeling.
• When a cable company installs lines on poles belonging to a different entity (e.g., a utility company) where the cable company has never before had lines on that pole, that activity is new construction, not remodeling.

The memo also cross-references another prior ruling, Fiche 881F13, for related guidance, and notes that this document was previously assigned Accession Number 9308019L.1 and/or 9308019L.

What This Means For You

If you are a cable TV company doing pole work

Whether your line-installation work is taxed as remodeling or as new construction depends on whose pole you're attaching to and whether you already have lines there. Adding new lines to poles your company already owns and already has lines on is remodeling. Running new lines onto a utility company's (or other outside entity's) poles where your company has never had lines before is new construction.

If you are an auditor classifying cable/utility pole work

This memo gives auditors a concrete rule to apply the "remodeling" holding of TR. 1168 correctly: the remodeling characterization applies specifically to a cable company working on its own poles, not to a cable company's first-time installation on someone else's poles, which is new construction instead.

If you are relying on TR. 1168 or Fiche 881F13

This memo clarifies the scope of TR. 1168 (Fiche 1018C04) — it does not automatically extend "remodeling" treatment to work performed on poles owned by a different entity. Fiche 881F13 is cited as additional related guidance on the same topic.

Q&A

Q: Is adding a new cable line to a pole always considered remodeling?
A: No. According to this memo, it's remodeling only when the cable company adds lines to poles it already owns. Installing lines on another entity's poles for the first time is new construction.

Q: What if a utility company owns the pole and the cable company has never run lines on it before?
A: That is treated as new construction, not remodeling, per this memo.

Q: What prior ruling addressed cable lines on existing poles?
A: TR. 1168 (Fiche 1018C04), which states that adding cable to existing poles is remodeling. This memo clarifies that TR. 1168 refers specifically to poles owned by the cable company.

Q: Is there other related guidance mentioned?
A: Yes, the memo says "Also see Fiche 881F13" for additional related guidance.

Q: Who wrote this memo and who was it sent to?
A: It was sent from Wanda Hutcheson (Tax Administration) to Robert Cohan (Austin Audit), dated June 21, 1993.

Q: Is this an official letter ruling a taxpayer can rely on?
A: No. It is an internal Comptroller staff memo answering an audit policy question, not a taxpayer-specific letter ruling, so it does not carry letter-ruling reliance protection under 34 Tex. Admin. Code Rules 3.1 and 3.10.

Original ruling text

DATE: June 21, 1993

TO: Robert Cohan, Austin Audit

FROM: Wanda Hutcheson, Tax Administration

SUBJECT: Cable TV - putting lines on poles

You have the situation of a cable company putting new lines on poles
belonging to a utility company. TR. 1168, Fiche 1018C04, states that
adding cable to existing poles is remodeling.

Question: When the TR states that adding lines to existing poles is
remodeling, is the TR setting policy on poles belonging to the cable
company or poles belonging to an entity other than the cable company?

Response: The TR is stating policy when the cable company adds lines to
cable company poles. When a cable company adds lines to cable company
poles, the activity is remodeling. When a cable company installs lines on
poles belonging to an entity other than the cable company where the cable
company has never before had lines, this is new construction.

Also see Fiche 881F13.

NOTE: Previous Accession Number 9308019L.1 and/or 9308019L