Ezel / Tax Rulings / TX
TX 9402L1286F05 Sales and/or Use Tax (State,Local,MTA) 1994-02-16

Is a cable TV company's hourly service call charge (for problems that aren't the operator's responsibility) subject to Texas sales tax?

Short answer: Yes — service charges billed in connection with providing cable television service are subject to Texas sales tax. This includes the hourly-rate charge a cable operator bills for a service call that turns out not to be the operator's responsibility.

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This page answers the general question as of 1994. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1994
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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.

Subject

Service Or Repair Charges In Connection With Cable Tv Services (Cable Act Of 1992) Are Taxable

Source

Plain-English Summary

A cable television operator asked the Comptroller about a billing practice that was starting up as a result of the Cable Act of 1992: charging customers an hourly rate for certain service calls. Under the operator's process, when a customer calls in a complaint, the operator investigates it. If the problem turns out to be the operator's responsibility, there is no charge. But if the service call is for something else, the operator bills the customer at a specified hourly rate.

The Comptroller's answer was short and direct: yes, these hourly-rate service charges are subject to Texas sales tax, because they are charges made in connection with the provision of cable television service.

What This Means For You

If you are a cable TV operator: Hourly service call charges you bill to customers — for calls that are not your responsibility to fix for free — are taxable in Texas. You should charge sales tax on these amounts just as you would on other charges connected to your cable service.

If you are a cable TV subscriber: Don't be surprised to see sales tax added to a service call bill when the technician determines the issue wasn't the operator's fault (for example, a problem inside your own equipment or wiring). The Comptroller has confirmed that charge is taxable.

Scope of this ruling: The letter is a direct answer to a narrow, specific question and doesn't elaborate on the reasoning beyond stating that "service charges in connection with the provision of cable television service are subject to sales tax." It's based on the facts submitted by this particular taxpayer, and the Comptroller notes other facts, though similar, may yield different results.

Q&A

Q: Does a cable company have to charge sales tax on a service call that's billed at an hourly rate?
A: Yes. The Comptroller confirmed that service charges connected to providing cable television service — including hourly-rate charges for service calls — are subject to Texas sales tax.

Q: What if the cable operator determines the problem was its own responsibility and doesn't charge the customer?
A: The ruling only addresses charges that are actually billed. If no charge is made (because the problem is the operator's responsibility), there is nothing to tax in that scenario.

Q: Does this ruling apply broadly to all cable-related charges, or just this specific situation?
A: The ruling responds to the specific facts submitted about hourly-rate service calls arising after the Cable Act of 1992. The Comptroller notes that "other facts, though similar, may yield different results," so this letter shouldn't be read as covering every possible cable service charge scenario.

Original ruling text

February 16, 1994

Dear **:

Thank you for your recent letter to Ms. Aguirre. I have been asked
to respond. Portions of your letter are restated with response below.

As a result of the Cable Act of 92, some operators will begin charging
for service calls at a specified hourly rate. Upon receiving a service
call, the cable operator will investigate the complaint and if it is a
service problem that is the operators responsibility, no charge will be
made. Any other service call will be charged at a specified hourly rate.
Is the service call based on the hourly rate subject to sales tax?

Response: Yes, service charges in connection with the provision of
cable television service are subject to sales tax.

This opinion is rendered based on the facts you submitted. 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, (800) 5315441 (ext. 34680). 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

NOTE: Previous Accession Number 9402060L

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