Free Pub 62, Utah Sales Tax Info for Telecom Providers - Utah

tax.utah.gov

Publication 62
Revised 12/08

This publication is provided for general guidance only. It does not contain all sales or use tax laws or rules.

Sales Tax Information for Telecommunications Service Providers
Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah 84134 801-297-2200 1-800-662-4335 www.tax.utah.gov If you need an accommodation under the Americans with Disabilities Act, contact the Tax Commission at 801-297-3811, or TDD 801-297-2020. Please allow three working days for a response.

Introduction
This publication provides sales tax information for telecommunications (telecom) service providers. It includes Utah law and Tax Commission rules, but is not all-inclusive. Future law or rule changes may change this publication. Find general sales and use tax information in Publication 25.

2. 800 service 3. 900 service 4. Fixed wireless service 5. Mobile wireless service 6. Postpaid calling service 7. Prepaid calling service 8. Prepaid wireless calling service 9. Private, two-way communications service that gives exclusive or priority use of one or more channels (for example, a two-way radio).

What is Taxable
Telecom services that originate and terminate within the boundaries of Utah, including landline, mobile and ancillary (secondary) services.

Definitions
Delivery Location
For telecom service, the place of primary use. This is usually the buyer's residential or business address. Use the delivery location to determine the correct taxing jurisdiction and tax rate. The Tax Commission provides an online database (ZIP+4 Boundaries for Telecom Tax Rates) that ties ZIP+4 addresses to taxing jurisdictions. You can download this database at tax.utah.gov/telecom and use it to calculate taxes and fees for each of your delivery locations. Telecom providers report sales and use tax on form TC-62M with Schedule A. Each jurisdiction where you deliver service appears as a separate outlet on Schedule A. Use the same delivery locations on your electronically-filed Emergency Services Telephone Fee Return and your Municipal Telecommunications License Tax Return.

Telecom service does not include:
1. Advertising, including directory advertising 2. Ancillary (secondary) service, including conference bridging service, communications billing service, directory assistance, vertical service (used to identify callers and manage multiple calls) and voicemail service 3. Third-party billing and collection service 4. Data processing and information service, including valueadded data service 5. Installing or servicing equipment or wiring at a customer's premises 6. Internet access service 7. Paging service 8. Products transferred electronically (music, reading material, ring tones, software, video, etc.) 9. Radio and television service 10. Any tangible personal property

Telecom Service
The electronic transfer or routing of audio, video or data signals. See Utah Code §59-12-102.

Ancillary (Secondary) Service
Services associated with telecom service. This includes conference bridging service, detailed communications billing service, directory assistance, vertical service (used to identify callers and manage multiple calls) and voicemail service.

Telecom service includes:
1. Electronically enabling, routing or sending communications. This includes VoIP (voice over Internet protocol) and enhanced or value-added service.

Fixed Wireless Service
Service that provides radio communication between fixed points.

Mobile Wireless Service
Service that provides telecommunication between two points if the origination point, the termination point, or both are not fixed.

Emergency Services Telephone Charge
An E-911 and a Poison Control Center emergency services fee are levied on each landline, cellular line and other service line, such as VoIP. Any service provider who must pay one fee must also pay the other. You must file an Emergency Telephone Services Fee Return electronically and pay the combined fee on payment coupon TC-29. The return and the payment coupon are both due at the same time as your Sales and Use Tax Return. We will send you a booklet of TC-29 payment coupons. The file records are variable length, text format, with each field separated by a comma. You can submit file records using FTP Client to ftp.tax.utah.gov, or send them to ftp://ftp.tax.utah.gov/prv/(Tax Commission-issued subdirectory). Each account is assigned a unique subdirectory. To have a subdirectory assigned to you, or for more information, contact the Miscellaneous Tax Group at 801-297-3540. Find filing format information (form TC-29Qi) online at tax.utah.gov/telecom. When you file, you must identify each city or town where phone service is supplied, based on the ZIP+4 service addresses of your customers. When you supply service to multiple locations within a county, DO NOT report all lines and fees at the county level or at just one city or town within the county. The Tax Commission provides a downloadable database of rates and boundaries that ties ZIP+4 addresses to taxing jurisdictions. You can download this database at tax.utah.gov/telecom.

Postpaid Calling Service
Telecom service paid on a call-by-call basis, using a bank card, travel card, credit card or debit card, or by dialing an access number through which service is charged after it occurs. An example of postpaid calling service is a telephone calling card used to pay for calls after they are made according to a billing cycle. This includes calls charged to a home phone. Sales of post-paid calling service are sourced to the place of primary use. In jurisdictions that impose the municipal telecommunication license tax, these transactions qualify as telecom service taxable to the service provider. These transactions are also subject to sales and use tax.

Prepaid Calling Service (Not Including a Telephone Line)
Telecom services that are paid for in advance and used by entering an access number or authorization code. Prepaid calling service is sold in units of minutes or dollars that decline with use. A 60-minute phone card for sale at a grocery store is an example of prepaid calling service. Prepaid calling service may include a disposable phone and a temporary phone line, if they are all sold together. Amounts paid for prepaid calling service are subject to sales and use tax and are sourced to the sale location. No additional sales and use tax is charged when the service is actually used.

Prepaid Wireless Calling Service
The right to use mobile wireless service, including nontelecom services (such as downloading products transferred electronically, content services or secondary services). Prepaid calling services are paid for in advance and sold in units of minutes or dollars that decline with use. They are used by entering an access number or authorization code. Amounts paid for prepaid wireless calling service are subject to sales and use tax and are sourced to the sale location.

E-911 Fee
The monthly E-911 fee is 69 cents per service line (8 cents state-imposed and 61 cents local). You may keep 1.5 percent of the E-911 fees toward the cost of billing, collecting and paying the fee.

Poison Control Center Fee
Utah levies an additional statewide fee of 7 cents per month for each service line to support the statewide Poison Control Center at the University of Utah. You may not keep any portion of this fee for any reason.

Private Communication Service
Service that entitles a customer to exclusive or priority use of one or more channels between or among termination points. Private communications service includes an extension line, a station, and switching capacity.

Municipal Telecommunications License Tax (MTLT)
Utah cities and towns may impose a tax of up to 3.5 percent on the value of telecom service provided within their boundaries. You may pass this tax on to your customers. If you do, this amount is part of the service sales price for sales tax purposes. You must file the Municipal Telecommunications License Tax Return electronically and pay the tax on payment coupon TC-34. The return and the payment are both due at the same time as your Sales and Use Tax Return. We will send you a booklet of TC-34 payment coupons. Find the jurisdictions that impose this tax and the rates online at tax.utah.gov/sales/rates.html. The file records are variable length, text format, with each field separated by a comma. You can submit file records using FTP Client to ftp.tax.utah.gov, or send them to ftp://ftp.tax.utah.gov/prv/(Tax Commission-issued subdirectory). Each account is assigned a unique subdirectory. To have a subdirectory assigned to you, or for more information, contact the Miscellaneous Tax Group at 801-297-3540. Find filing format information (form TC-34Qi) online at tax.utah.gov/telecom. When you file, you must identify each city or town where page 2

Mobile Telecommunications Sourcing Act
Local governments may impose taxes or fees on telecom service to buyers whose places of primary use are within their jurisdictions. The service is subject to these taxes and fees regardless of where the mobile telecom services originate, terminate or pass through. The Mobile Telecommunications Sourcing Act (U.S. Code, Title 4, Chapter 4) defines the location of a wireless telephone call, for taxing purposes, as the customer's place of primary use. See Delivery Locations in this publication.

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telecom service is provided, based on ZIP+4 service addresses of your customers. Since the unincorporated portion of the county cannot impose this tax, DO NOT report any service at the county level. The Tax Commission provides a downloadable database of rates and boundaries that ties ZIP+4 addresses to taxing jurisdictions. You can download this database at tax.utah.gov/telecom.

and address changes on form TC-69C, Notice of Change for a Tax Account. Use form TC-62Q, Utah Sales Tax Sourcing Schedule, to add or delete a location.

Penalties for Incorrect Filing and Non-Filing
We may impose a penalty of the greater of $20 or 10 percent of the tax due if you submit incorrect or late return information. This includes: · An incomplete return · An electronic return in the wrong format · Payment without a return

Changes to Accounts
You must report account changes, and any changes to telecom delivery locations, immediately to the Tax Commission. Report company name changes, ownership changes

Utah Telecom Taxes & Fees
Taxes and fees imposed on the customer are not included in the taxable base. However, taxes and fees imposed on the company that are listed on the customer's bill are included in the sales tax base. The chart below is a summary of taxes and fees on telecom service in Utah. The chart may not be all-inclusive.
Tax Federal Excise Tax Explanation Federal tax imposed on a buyer of local and toll telephone service (3%). Sales tax imposed by Utah on a buyer of telephone service (4.7%). Sales tax imposed on a buyer of telephone service -- must have the same base as the state sales tax (rate varies). Imposed by a municipality on the value of telecom service provided within its boundaries. Imposed by Utah on the purchaser of access lines to fund emergency 911 telecom services ($0.08). Imposed by a county/city to supplement the funding of emergency 911 telecom services ($0.61). Imposed by the FCC on interstate telecom services to offset the high cost of telephone service in rural areas, help with the purchase of telecom services by schools and hospitals, and provide telephone assistance to low income individuals. This portion of the FUSF is applicable to private lines. This fee appears on DSL customer bills. The rate is the same as the standard FUSF. Imposed by the Utah Public Utility Commission on intrastate telephone service to help keep the cost of telecom services low in high-cost areas. Imposed by Utah to fund the relay centers that help hearing and speech-impaired customers make and receive calls ($0.10 per access line). Imposed by Utah to fund the University of Utah Poison Control Center ($0.07 per access line). Allowed by the FCC to recover part of the cost of connecting a customer's long distance carrier to the local network. X2 X1 Imposed On Company Customer X Included in Tax Base No

State Sales Tax

X

No

Local Option Sales Taxes

X

No

Recovery of Municipal Telecommunications Tax State 911

Yes

X

No

Local 911

X

No

Federal Universal Service Fund (FUSF)

No

FUSF ­ Private Line

X2

No

Utah Universal Service Fund

X

No

Telecommunications Relay Service Fund

X

No

Utah Poison Control Center Surcharge Federal Access Charge
1

X

No

X

No

Taxes that are imposed on the company and passed through to the customer constitute a reimbursement to the company for an expense. This becomes revenue to the company and part of the cost of the service to the customer. Therefore, it is subject to the various sales taxes. See Utah Code §59-12-102 (82)(b)(ii)(G). If a tax is imposed directly on the customer, it is not included in the sales tax base. See Utah Code §59-12-102 (82)(c)(ii)(E). The service that this fee is associated with is not subject to the various sales taxes. Thus this fee is not part of the taxable base.

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Telecom Taxability Chart
The range of services a provider offers and the combination of services a customer buys are usually unique. Some services may be subject to emergency services fees alone, some may be subject to municipal telecom tax alone, and some may be subject to both. The chart below is a summary of services that may be provided to telecom customers. The chart may not be all-inclusive. Use the chart to find if a service is taxable. Then find if a locality imposes the fee or tax by checking the rate chart at tax.utah.gov/sales/rates.html.
Taxes and Fees Telecom Service 800 Service ­ toll-free calling (800, 855, 866, 877, 888) 900 Service ­ inbound toll telecommunications Ancillary (Secondary) Telephone Services (call waiting, caller ID, call forwarding, etc.) Answering Service ­ human operator Cable or Satellite TV ­ considered user fees Cable or Satellite TV ­ NOT considered user fees Cellular Phone Line Charges to fund special services (E-911, TDD, service for lowincome customers) Contributions to aid construction projects Equipment Repair ­ equipment belongs to customer and remains tangible personal property Emergency Services 1 No No No Municipal Telecom No No Yes Sales and Use No No Yes Reference 2 UC 59-12-102(1) UC 59-12-102(2)

No No No Yes No

No No No Yes No

No No No Yes No

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No No

No No

No Yes UC 59-12-104(62) Exemptions for telecom companies

Equipment Repair ­ real property Fiber Optic Cable ­ dark (unlit) ­ treated as lease of real property Fiber Optic Cable ­ lit or activated ­ used for telephone service Internet Access ­ purchased, used or sold by a provider

No No Yes No

No No Yes No

No No Yes No PLR 07-009 PLR 07-009 PL 110-108 (PLR 08-005) PL 110-108 (PLR 08-005)

Internet Service Provider

No

No

No

Long Distance ­ interstate Long Distance ­ intrastate Municipal Telecom Fee recovered from from customer Pager Post-Paid Calling Service Prepaid Service ­ including a phone line (disposable phone, temporary phone line, etc.) Prepaid Service ­ not including a phone line Public Coin Telephone Service Radio ­ commercial mobile service

No No No No No Yes

No Yes No No Yes Yes

No Yes Yes No Yes Yes Pub 62

No No Yes

Yes Yes Yes

Yes Yes Yes

Pub 62 UC 69-2-5 (3)(b) UC 69-2-5 (3)(a)(iii)

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Taxes Telecom Service Radio ­ Private mobile service Radio Communications Access Line Refundable Deposits, Interest, Penalties, etc. Sales and Use Tax Service Fees ­ connection, disconnect, changes, etc. Subscriber Access Fees Switched Access Line (landline) VoIP (voice over Internet protocol)
1 2

Emergency Services 1 No Yes No No No No Yes Yes

Municipal Telecom Yes Yes No No Yes Yes Yes Yes

Sales and Use Yes Yes No No Yes Yes Yes Yes

Reference 2

UC 69-2-5 (3)(a)(ii)

UC 69-2-5 (3)(a)(iii)

Emergency Services includes E-911 and Poison Control UC = Utah Code PL = Public Law (federal) PLR = Private Letter Ruling (Utah Tax Commission)

_ __________________ _ Sales tax publications provide general guidance only. They do not contain all sales or use tax laws or rules. If you need more information, call 801-297-7705 or 1-800-662-4335, ext. 7705 (outside the Salt Lake area), or email [email protected].

Find information about E-911, Poison Control and Municipal Telecom online, including detailed filing instructions and formats.

tax.utah.gov/telecom

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