Is revenue from a repeater service that is not connected to the public switched telephone network subject to Texas sales tax, and is it also subject to the Telecommunications Infrastructure Fund assessment?

Plain-English summary

A reseller of pagers and pager service ("COMPANY A") also operated a repeater service that did not connect to the public telephone system. The company billed pager charges and pager air-time charges on the same invoice, and asked the Comptroller how each revenue stream should be taxed.

The Comptroller drew a clear line between the two lines of business:

• Pager sales and pager service revenue is subject to Texas sales tax and to the Telecommunications Infrastructure Fund (TIF) assessment.
• Repeater service revenue, where the repeater is not interconnected to the public switched network, is also subject to sales tax, but is not subject to the TIF assessment.

The Comptroller enclosed Rule 3.1102 for the company's reference and noted, as is standard, that the answer is based on the facts submitted and that different facts could produce a different result.

What this means for you

Pager resellers and companies billing multiple telecom charges on one invoice

Even though pager charges and pager air-time charges were combined on a single invoice here, the Comptroller still analyzed each revenue stream on its own terms. Billing convenience doesn't merge the tax treatment of distinct services — you still need to track pager/pager-service revenue separately from other services (like non-interconnected repeater service) for TIF assessment purposes.

Two-way radio and repeater service operators

If your repeater service is not connected to the public switched telephone network, expect to charge sales tax on it, but you should not also be assessing the Telecommunications Infrastructure Fund fee on that revenue — that fee tracked to services connected to the public network in this letter.

Accountants and tax professionals

This letter is a useful data point on how the Comptroller separates ordinary Texas sales tax exposure from the additional TIF assessment for telecommunications providers, and shows that interconnection to the public switched network (not just the coin/token mechanism of billing or invoicing) is the dividing line for the TIF assessment specifically.

Common questions

Q: Is revenue from pager sales and pager service subject to Texas sales tax?
A: Yes. It is subject to both sales tax and the Telecommunications Infrastructure Fund assessment.

Q: Is revenue from a repeater service subject to sales tax?
A: Yes, if the repeater is not interconnected to the public switched network, that revenue is still subject to sales tax.

Q: Is that same repeater service revenue subject to the Telecommunications Infrastructure Fund assessment?
A: No. The letter states that revenue from repeater service where the repeater is not interconnected to the public switched network is not subject to the TIF assessment.

Q: Does billing pager and pager air-time charges on the same invoice change the tax treatment?
A: The letter doesn't say it does — it addresses the two revenue types (pager/pager service vs. non-interconnected repeater service) separately regardless of the combined invoice.

Q: Can this company rely on this letter for other similar facts?
A: The letter says the opinion is rendered based on the facts submitted, and that other facts, though similar, may yield different results. It was addressed to a specific taxpayer.

Q: What rule did the Comptroller point to for more detail?
A: The Comptroller enclosed Rule 3.1102 for the taxpayer's reference.

Citations and references

• Rule 3.1102 (enclosed by the Comptroller for reference; not otherwise discussed in the body of the letter)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9606001L

Original ruling text

Note: This document is also indexed as a TIF document at STAR 9606L1418A10.

June 6, 1996

Dear ***:

This is to follow-up our telephone conversation of June 6, 1996 with a

written response.

You said that COMPANY A is a reseller of pagers and pager service

and also operates a repeater service which does not provide connection to

the public telephone system. Your charges for pagers and pager air time

are on the same invoice.

Your revenue from sales of pagers and pager service is subject to sales

tax and also to the Telecommunications Infrastructure Fund assessment. Your

revenue from the sale of repeater service where the repeater is not

interconnected to the public switched network is also subject to sales

tax, but is not subject to the Telecommunications Infrastructure Fund

assessment.

I am enclosing Rule 3.1102 for your reference.

This opinion is rendered based on the facts you submitted. Other facts,

though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line

is 512/463-4680. You may also write to Tax Administration, Comptroller

of Public Accounts.

Sincerely,

Al Van Allen

Tax Administration Division