Is a newspaper's charge for a caller voice mailbox — where people can call in and respond to a classified/advertisement — subject to Texas sales tax?

Plain-English summary

A newspaper asked the Texas Comptroller's Tax Administration Division whether a "caller mail box" it provided to its advertisers is subject to sales tax. The mailbox let parties call in and respond directly to an advertisement — essentially a voice-mail response line tied to a classified or display ad.

The Comptroller ruled that the charge for the caller mail box is taxable as a telecommunications service under 34 Tex. Admin. Code Rule 3.344. Because the newspaper apparently billed advertisers one combined charge covering both the advertising space and the mailbox feature, the letter directs that sales tax be collected only on the difference between the total charge and the (nontaxable) charge for the advertising itself — in other words, tax applies to the portion of the fee attributable to the mailbox service.

The ruling notes it is based on the facts presented and could change if the facts differ.

What this means for you

Newspapers and other publishers offering caller/voice-mail response services

If you offer advertisers an add-on caller voice mailbox (or similar call-in response feature) tied to their ad, the charge for that feature is taxable as a telecommunications service, separate from the nontaxable charge for the advertising space itself.

Billing and invoicing

Where the mailbox fee is bundled into a single charge with the advertising fee, sales tax should be collected on the difference between the total amount billed and the amount attributable to the advertising alone — so separately identifying (or being able to substantiate) the advertising-only charge matters for calculating the correct tax base.

Accountants and tax professionals

This letter is a narrow, facts-specific application of Rule 3.344 to a bundled newspaper advertising/telecommunications charge; it illustrates the general approach of taxing the telecommunications component while leaving the advertising component untaxed.

Common questions

Q: Is a newspaper's caller voice mailbox for advertisers subject to Texas sales tax?
A: Yes. The Comptroller held the charge for the caller mail box is taxable as telecommunications under Rule 3.344.

Q: If the newspaper charges advertisers one combined fee for the ad and the mailbox, how much is taxable?
A: Sales tax should be collected on the difference between the total charge and the charge for the advertising alone — that is, on the mailbox portion of the fee.

Q: Is the advertising space itself taxable?
A: The letter treats the advertising charge as distinct from, and not part of, the taxable telecommunications charge — only the mailbox portion is identified as taxable.

Citations and references

Regulations:

• 34 Tex. Admin. Code Rule 3.344 (telecommunications services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9504L1350F06

Original ruling text

April 19,1995

Dear **:

In your letter, you asked if a caller mail box provided by a newspaper
to its advertisers is subject to sales tax. Parties can call the mail
box and respond to an advertisement.

The charge for the caller mail box is taxable as telecommunications
[Rule 3.344]. Sales tax should be collect on the difference between
the charge for the advertising and the total charge.

This opinion is based upon the facts presented. If there are
additional or different facts, the opinion may change.

You may call me toll free at 1-800-531-5441 extension 50892. The
direct line is 512/475-0892. You may also write to Tax Administration
Division, Comptroller of Public Accounts.

Sincerely,

John J. Fitzgibbons
Tax Administration Division

NOTE: Previous Accession Number 9504136L