Ezel / Tax Rulings / TX
TX 9703460L Sales and/or Use Tax (State,Local,MTA) 1997-03-31

Is the labor charge for a contractor splicing a new section of fiber optic cable into an existing cable TV network taxable?

Short answer: Yes. When an outside contractor splices a newly constructed cable line into an existing cable TV network at a pedestal splice point -- detaching the old cable pairs and attaching a new group of cable pairs at that same point -- the splice point is considered remodeling. The contractor's charge for this splicing work is therefore subject to Texas sales tax.

Apply this to your situation

This page answers the general question as of 1997. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1997
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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.

Plain-English summary

A cable company described a specific construction scenario: a newly built section of cable line splices into the existing cable network at the same pedestal splice point where an older line had been detached, with the old cable pairs disconnected and a new group of cable pairs attached in their place -- a process the letter calls "splicing." The company asked whether an outside contractor's charge for doing this splicing work is subject to Texas sales tax. The Comptroller's answer: yes. The point of splicing fiber optic cable into the existing network is treated as remodeling, so the contractor's charge for the work is taxable.

What this means for you

Cable, fiber, and telecom infrastructure contractors

Splicing new cable sections into an existing network at a pedestal or similar splice point is treated as taxable remodeling work. Charge and collect sales tax on this labor rather than treating it as a nontaxable new-construction or maintenance activity.

Cable companies hiring outside splicing contractors

Expect to be charged Texas sales tax on contractor invoices for splicing new cable into your existing network infrastructure.

Common questions

Q: Is splicing a new fiber optic cable section into an existing cable TV network taxable?
A: Yes, per this letter -- the splice point is treated as remodeling, making the contractor's charge taxable.

Source

Original ruling text

March 31, 1997

Dear ***:

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

Please review the attached drawing. Newly constructed cable line (A) splices
into the existing cable network line (C) at the same splice point (the
pedestal) that cable line (B) did before it was detached to allow for cable
line (A) to be attached. This labor for detachment of cable pairs from line
(B) and attachment of a new group of cable pairs for line (A) process that
takes place at the pedestal is known as "Splicing". When an outside contractor
does this "splicing", is it sales taxable?

Response: The point of the splice (fiber optic into the existing cable) is
considered to be remodeling. Accordingly, the charge is subject to sales tax.

This opinion is rendered based on 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, ext. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. My Internet address is .

Sincerely,

Al Van Allen
Tax Policy Division

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