Were charges for customers to use a provider's radio relay transmitter or repeater taxable even though no tangible property was furnished?

Plain-English summary

Utah Private Letter Ruling 92-042 addressed charges allowing customers to use a radio relay transmitter, also called a repeater.

The requester said customers owned their own equipment and received no tangible personal property from the repeater provider.

The Commission nevertheless treated the service as taxable telephone service.

Classification as telephone service

The Auditing Division concluded that the radio repeater service fell within the definition of “telephone service” in Utah Admin. Rule R865-19-90S.

Because of that classification, customer charges were taxable under Utah Code section 59-12-102(1)(b)(ii), as cited in the response.

No tangible-property transfer

The requester believed the absence of furnished tangible property might make the charge nontaxable.

The Commission's response did not base taxability on a property transfer. It based taxability on the service's classification as telephone service.

Holding

Under the stated facts:

• Customer use of the radio relay repeater was telephone service.
• Charges for that use were taxable.
• The result applied even though the provider furnished no tangible personal property to customers.

What this means for you

Radio and telecommunications providers

Do not assume that a charge is exempt merely because customers receive no equipment. The service itself may fall within a taxable telecommunications category.

Accountants and tax professionals

Check today's statutory definitions and sourcing rules before applying this short 1992 classification to modern communications services.

Common questions

Q: Were radio repeater use charges taxable?

A: Yes.

Q: How did the Commission classify the service?

A: As telephone service.

Q: Did the provider transfer equipment to the customer?

A: No, but that did not change the result.

Q: Which rule did the Commission cite?

A: Utah Admin. Rule R865-19-90S.

Key source language

• Classification: “the service falls within the definition of ‘telephone service.’”
• Result: “Such charges would, therefore, be subject to the tax.”

Citations and references

• Utah Code Ann. § 59-12-102(1)(b)(ii)
• Utah Admin. Rule R865-19-90S

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 92-042
• Scope note: the requester described customer-owned radio equipment and a separate charge for access to the provider's repeater.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

Response
November 20, 1992

Letter

November
20, 1992

XXXXX

Re:
Advisory Opinion - Radio Relay Transmitter

Dear
XXXXX:

Your
request for an advisory opinion as to whether your charges for customer use of a radio relay transmitter (repeater) are subject to sales tax was referred to the Auditing Division for their analysis.

It
is the division's staff recommendation that the service falls within the definition of "telephone service" as outlined in Utah State Tax Commission Administrative Rule R865-19-90S (copy enclosed). Such charges would, therefore, be subject to the tax under Utah Code Annotated Section 59-12-102(1)(b)(ii).

In
contacting the Tax Commission, if special accommodations are needed in accordance with the Americans with Disabilities Act, please call (801) 530-6920, (801) 530-6077 or TDD (801) 530-6269 allowing three working days notice.

For
the Commission,

Joe
B. Pacheco

Commissioner

Utah
State Sales Tax Commission

Utah
State Auditing Division

Heber
M. Wells Building

160
E. 300 So.

Salt
Lake City, Utah 84134

November
3, 1992

Reference:
Advisory Opinion Requested:

Dear
XXXXX,

Are
charges for customer use of a radio relay repeater subject to sales tax? We do not furnish any tangible property to customer. (Equipment is owned by customers and sales tax is of course collected when the equipment is sold to the customer).

Our
question for tax determination is:

Are
charges for customer use of radio relay transmitter subject to sales tax? Preliminary information from the Tax Commission by telephone indicates that since there is no tangible personal property involved that such charges are not subject to sales tax.

If
you have any questions please direct any inquiries to the attention of XXXXX at: XXXXX.

We
appreciate your help in clarifying this tax matter for us.

Sincerely

XXXXX