Which telephone companies have to pay the Texas PURA gross receipts assessment, and do long-distance carriers owe it on the access charges they pay local phone companies?

Texas AG Opinion JM-1280: Who Pays the PURA Gross Receipts Assessment on Telephone Service?

Plain-English summary

The Public Utility Regulatory Act funded the Texas Public Utility Commission partly through a small "gross receipts assessment" on utilities: section 78 of article 1446c required each public utility within the commission's jurisdiction to pay one-sixth of one percent of the gross receipts it collected from rates charged to "ultimate consumers." Comptroller Bob Bullock, who collected the fee, sent the Attorney General nine questions about how it applied to the telephone industry after the court-ordered breakup of AT&T split the business into local exchange companies (LECs) and long-distance interexchange carriers (IXCs).

The first question was which telephone companies owe the fee: only the carriers the commission actually sets rates for, or every carrier over which the commission has any kind of jurisdiction. The Attorney General concluded it reaches all of them. A 1987 law (Senate Bill 229) added the phrase "including interexchange telecommunications carriers" to section 78 and brought IXCs other than AT&T under the commission's jurisdiction for the first time, even if only in a limited way. Once a carrier is under that jurisdiction, the assessment applies; the commission does not have to exercise ratemaking power over it.

The second question was the money question: are "local access charges" subject to the fee? Access charges come in two directions. The charge a local phone company bills its own residential and business subscribers is a rate charged to the ultimate consumer, so it counts. But the charge a long-distance carrier pays a local company for connecting to its network is different. The Attorney General concluded the interexchange carrier is not the "ultimate consumer" of that service. Reading the words plainly, the ultimate consumer is the last person in the chain, the residential or business subscriber who places the long-distance call. The long-distance carrier buys network access and then effectively resells it as part of the rate it charges its own customers. Taxing the carrier on that access charge, and then taxing the carrier again on the receipts it collects from customers to recoup the same charge, would count the same money twice, and nothing suggested the Legislature wanted that.

Because the answer to question two disposed of the access-charge issue, the Attorney General did not reach questions three through seven (which asked about calls crossing LATA, state, and national lines). He declined question eight, which asked what formula a valid interstate assessment should use, because the Comptroller had submitted no specific proposed rules and the office does not answer hypothetical questions. On question nine, billing and collection services that local companies perform for long-distance companies fit the statute's broad definition of "service" and thus of "rate," but for the same reason as question two, the answer was no when those charges are passed through to the carrier's subscribers.

Currency note

This opinion was issued in 1990. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Note in particular that the Public Utility Regulatory Act was later recodified into the Utilities Code, and the structure of telecommunications regulation and the funding of the Public Utility Commission have changed substantially since 1990.

Who this opinion affected (as of 1990)

The Comptroller of Public Accounts: The opinion told the Comptroller, who administered and collected the assessment, that it reached every telephone company under the commission's jurisdiction, including all long-distance carriers, but that the interexchange access charges those carriers paid local companies were not themselves assessable when passed through to subscribers.

Long-distance (interexchange) carriers: These carriers were subject to the assessment on the gross receipts they collected from their own subscribers. They were not treated as "ultimate consumers" of the local access services they bought, so the access charges they paid local companies did not generate a separate assessment against them.

Local exchange companies: The access charges these companies billed directly to their residential and business subscribers were "rates charged the ultimate consumer" and counted toward the assessment. Billing and collection services they performed for long-distance companies did not, when the cost was passed through to the long-distance carrier's subscribers.

Common questions

Which telephone companies had to pay the PURA section 78 assessment?
All public utilities within the Public Utility Commission's jurisdiction. After Senate Bill 229 in 1987 added "including interexchange telecommunications carriers" to section 78 and brought long-distance carriers under the commission's jurisdiction, the assessment reached every local exchange carrier and every interexchange carrier operating in Texas, not just carriers the commission set rates for.

Did a long-distance carrier owe the fee on the access charges it paid a local phone company?
No. The Attorney General concluded that a long-distance carrier paying an access charge to a local exchange company is not the "ultimate consumer" of that service. The ultimate consumer is the residential or business subscriber who places the call. The carrier resells the access as part of the rate it charges its own customers, so taxing the access charge separately would tax the same money twice.

Were access charges billed to ordinary phone customers subject to the fee?
Yes. End-user access charges that a local exchange company or a long-distance carrier billed to its residential and business subscribers were "rates charged to the ultimate consumer" and counted toward the assessment.

Why didn't the opinion answer all nine questions?
The answer to question two made questions three through seven (about interstate and international calls) unnecessary. The Attorney General declined question eight because it asked about a hypothetical rate formula and no specific proposed rules had been submitted, and this office does not answer hypothetical questions in the opinion process.

What about billing and collection services?
Those services fell within the act's broad definition of "service," and therefore of "rate." But the assessment applied only to rates charged to ultimate consumers, and because the charges were assumed to be passed through to the long-distance carrier's subscribers, the Attorney General answered question nine in the negative for the same reason as question two.

Background and statutory framework

Sections 78 through 82 of article 1446c, V.T.C.S., the Public Utility Regulatory Act (PURA), imposed a regulatory fee on each public utility within the Public Utility Commission's jurisdiction to defray the commission's costs. Section 78 set the fee at one-sixth of one percent of a utility's gross receipts from rates charged to ultimate consumers.

Attorney General Opinion H-811 (1976) had already read the "commission's jurisdiction" language in section 78 as unqualified, so the commission did not need to exercise any particular form of jurisdiction over a utility in order to assess it. In 1987, Senate Bill 229 (Acts 1987, 70th Leg., ch. 414, § 3, at 1950) added the phrase "including interexchange telecommunications carriers" to section 78 and amended subsections 3(c) and 18(c) and (d) so that interexchange carriers other than AT&T became "public utilities" subject to the commission's limited jurisdiction. Reading the amendment together with its bill analysis, the opinion concluded the Legislature intended to confer jurisdiction, however limited, over all interexchange carriers, so the section 78 assessment reached all local exchange carriers and all interexchange carriers operating in Texas.

On the access-charge question, section 3(d) of PURA defined "rate" broadly to include every charge collected by a public utility for a service, and end-user access charges plainly fit. The dispositive term, "ultimate consumer," was undefined. The opinion gave it its plain meaning, citing Big H Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756 (Tex. 1984), and Taylor v. Firemen's & Policemen's Civil Service Comm., 616 S.W.2d 187 (Tex. 1981): the ultimate consumer is the last party in the chain of sale or use, here the subscriber who places the call. Describing the three components of a long-distance call, the opinion relied on National Ass'n of Reg. Util. Comm'rs v. F.C.C., 737 F.2d 1095 (D.C. Cir.), cert. denied, 469 U.S. 1227 (1984), and noted that before divestiture the commission itself had held, in Docket 2054, that analogous access charges were not imposed on the ultimate consumer. Two reasons supported keeping that result after divestiture: the plain meaning of "ultimate consumer," and the fact that treating the carrier as an ultimate consumer would count the access charge twice in the total industry assessment. The opinion drew support from the Tax Code's treatment of the same relationship: section 151.323, added by H.B. 1949 in 1985, exempted a regulated provider's access to a local network from the sales and use tax, reflecting a legislative understanding that access is a resold service to the subscriber.

The opinion declined question eight (a hypothetical rate formula under Goldberg v. Sweet, 488 U.S. 252 (1989)) because no specific proposed rules had been submitted, and answered question nine (billing and collection services under the broad "service" definition of section 3(6)) in the negative because those pass-through charges, like the access charges in question two, were not rates charged to an ultimate consumer.

Citations

Statutory authorities:

• Article 1446c, V.T.C.S., the Public Utility Regulatory Act, §§ 78 through 82 (regulatory assessment); § 78 (one-sixth of one percent of gross receipts from rates charged the ultimate consumer)
• PURA § 3(c)(2)(B) ("dominant carrier" definition); § 3(d) (definition of "rate"); § 3(6) (definition of "service")
• PURA §§ 100(b), 100(f) (dominant-carrier and petition provisions); §§ 18(c), (d) (commission jurisdiction over interexchange carriers)
• Tax Code § 151.323 (sales/use tax exemption for access to a local exchange network)
• Alco. Bev. Code §§ 16.01, 16.05, 64.01; Nat. Res. Code § 113.081(a)(4) ("ultimate consumer" usage examples)
• S.B. 229, Acts 1987, 70th Leg., ch. 414, § 3, at 1950 (added "including interexchange telecommunications carriers")
• H.B. 1949, 69th Leg. (1985) (added Tax Code § 151.323)

Cases:

• Big H Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756 (Tex. 1984) (words given plain meaning)
• Taylor v. Firemen's & Policemen's Civil Service Comm., 616 S.W.2d 187 (Tex. 1981) (same)
• National Ass'n of Reg. Util. Comm'rs v. F.C.C., 737 F.2d 1095 (D.C. Cir.), cert. denied, 469 U.S. 1227 (1984) (components of a long-distance call)
• Goldberg v. Sweet, 488 U.S. 252, 109 S. Ct. 582, 112 L.Ed.2d 607 (1989) (constitutionality of a state excise tax on interstate telecommunications)

Administrative authority:

• Docket 2054, 23 P.U.C. Bull. vol. IV, No. 23, 2074 (1979) (pre-divestiture holding that analogous access charges were not charges to the ultimate consumer)
• Attorney General Opinion H-811 (1976)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1280
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1990/jm1280.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

December 31, 1990

Honorable Bob Bullock
Comptroller of Public Accounts
L.B.J. Office Building
Austin, Texas 78774

Opinion No. JM-1280

Re: Gross receipts assessment for telephone companies under sections 78 through 82 of article 1446c, V.T.C.S., the Public Utility Regulatory Act (RQ-2090)

Dear Mr. Bullock:

Sections 78 through 82 of article 1446c, V.T.C.S., the Public Utility Regulatory Act [hereinafter PURA], impose a regulatory fee on each public utility falling within the Public Utility Commission's [hereinafter PUC] jurisdiction for the purpose of defraying the costs and expenses incurred by the commission in the administration of PURA. The fee is calculated as a percentage of the gross receipts from rates charged by public utilities to ultimate consumers.

You ask a series of nine questions regarding the application of the gross receipts fee to telecommunications carriers operating in Texas. Specifically, you ask whether and under what circumstances the fee may be imposed upon certain telecommunications carriers, in light of the divestiture by American Telephone & Telegraph Company [hereinafter AT&T] of Bell operating companies imposed in an antitrust consent decree entered by order of the federal courts. Essentially, you wish to know which carriers are subject to the jurisdiction of the PUC and who is an "ultimate consumer" under certain circumstances for purposes of section 78 of PURA.

Section 78 of PURA imposes an assessment upon each "public utility" subject to the PUC's jurisdiction that is based upon the "rates" charged to the "ultimate consumers." Section 78 of PURA provides:

An assessment is hereby imposed upon each public utility within the commission's jurisdiction, including interexchange telecommunications carriers, serving the ultimate consumer equal to one-sixth of one percent of its gross receipts from rates charged the ultimate consumers in Texas for the purpose of defraying the costs and expenses incurred in the administration of this Act; . . . Thereafter the commission shall, subject to the approval of the Legislature, adjust this assessment to provide a level of income sufficient to fund the commission and the office of public utility counsel. . . . Any interexchange telecommunications carrier found dominant as to any service market under Section 100(b) or filing a petition under Section 100(f) of this Act shall be required to reimburse the Office of Public Utility Counsel for the costs of participation before the commission on behalf of residential ratepayers in any of the proceedings under Section 100 of this Act to the extent found reasonable by the commission. Recovery of costs under this section by the Office of Public Utility Counsel shall not exceed $175,000 per annum. Nothing in this Act or any other provision of law shall prohibit interexchange telecommunications carriers who do not provide local exchange telephone service from collecting the fee imposed under this Act as an additional item separately stated on the customer bill as 'Utility Gross Receipts Assessment'.

(Emphasis added.)

You first ask:

What telephone companies should be paying this assessment -- does it apply to all telephone companies which may be subject to any facet of the PUC's jurisdiction, whether for rate making purposes or for more limited purposes?

You inform us that you have advised all "long distance telephone companies" that they fall within the reach of section 78 and are thereby subject to the assessment, but that several carriers disagree with your construction. We assume that there is no question that local exchange carriers (known as LECs) who provide local services to residential and business subscribers fall within the ambit of the act. We assume that, with the phrase "long distance telephone companies," you refer to interexchange carriers (known as IXCs) that offer either interLATA or intraLATA long distance service. You state that the PUC has failed to take any consistent position on whether the assessment applies to all carriers subject to any facet of its jurisdiction or just to "dominant carriers" as defined in section 3(c)(2)(B) of PURA. It is suggested that section 78 reaches only those carriers over which the PUC has ratemaking authority. We disagree.

In Attorney General Opinion H-811 (1976), this office was asked, inter alia, whether section 78 reached only those utilities over which the PUC had ratemaking authority or whether it extended to any utility over which it exercised any type of jurisdiction. The opinion concluded:

The quoted language of section 78 is unqualified. Consequently, the Commission need not exercise any particular form of jurisdiction over a utility in order to assess the utility. In our view, the term 'Commission's jurisdiction' may best be defined by reference to article III of the Act, entitled 'Jurisdiction.' Therein the Commission is given jurisdiction over various utilities.

The relevant language of section 78 has not been amended since the issuance of Attorney General Opinion H-811, except for the addition of the phrase "including interexchange carriers."

Any doubt as to whether section 78 now reaches all interexchange carriers is resolved by examining the legislative history for Senate Bill No. 229, which was enacted in 1987. Prior to the enactment of that bill, section 78 provided that the assessment was "imposed upon each public utility within the commission's jurisdiction serving the ultimate consumer." The bill added the phrase "including interexchange telecommunications carriers." Acts 1987, 70th Leg., ch. 414, § 3 at 1950. Moreover, the bill amended subsections 3(c) and 18(c) and (d) of PURA, which had effectively provided that IXCs other than AT&T were not "public utilities" for purposes of section 3 and not subject to the PUC's jurisdiction under section 18. Subsequent to the enactment of Senate Bill 229, IXCs other than AT&T became "public utilities" for purposes of conferring limited jurisdiction over them on the PUC.

The "Background" section of the bill analysis for the bill provides:

Current Texas law requires a public utility to submit to the jurisdiction of the Public Utility Commission (commission). There are now at least 70 interexchange telecommunications carriers operating in the state that do not fall under the definition of a public utility because they do not provide local exchange telephone service. Because they do not fall in the category of a public utility, they are not subject to regulations that carriers who provide local telephone service are subject to. For example, carriers who provide local exchange telephone service must pay one-sixth of one percent of the gross receipts from rates charged consumers to the PUC, which is used to defray the expense incurred in running the commission. (Emphasis added.)

Bill Analysis, S.B. 229, 70th Leg. (1987).

The "Purpose" section of the bill analysis stated:

As proposed, S.B. 229 amends the Public Utility Regulatory Act by making interexchange telecommunications carriers public utilities, thereby placing them under the jurisdiction of the Public Utility Commission. S.B. 229 also requires that the long distance rates be averaged statewide and that long distance carriers not discontinue service to any area of the state without permission of the PUC.

And finally, the "Section by Section Analysis" portion of the bill analysis described the bill in the following way:

SECTION 1. Amends Section 3(c), Public Utility Regulatory Act (PURA), Art. 1446c, V.T.C.S., to define a public utility as it affects telecommunications. Provides for the term 'interexchange telecommunications carriers' to be substituted for the terms 'specialized communications common carriers' and 'resellers of communications and other common carriers.' Provides that the commission's jurisdiction over those interexchange telecommunications carriers who do not provide local exchange telephone service will be limited to the extent defined in PURA. Strikes from the amendment to the definition of a public utility any reference to the term 'dominant carrier' as defined in Section 3(c)(2)(b).

SECTION 2. Amends Sections 18(c) and (d), PURA, Art. 1446c. Subsection (c) provides specific jurisdiction of the commission over 'interexchange telecommunications carriers who do not provide local exchange telephone service.' Removes the reference to 'dominant carriers.' Provides for the commission to conduct investigations regarding competition in the industry. (c)(4) Requires the commission to maintain statewide average rates or prices of message telecommunications service. (c)(5) Authorizes the commission to require that interexchange telecommunications carriers may not abandon or discontinue message telecommunications service in or to a local exchange area unless the commission specifically so orders. (d) Provides that an interexchange telecommunications carrier must maintain its tariffs or service lists on file with the commission.

SECTION 3. Amends Section 78, PURA, Article 1446c, V.T.C.S., to require that interexchange telecommunications carriers be included among those public utilities that must support the Public Utility Commission through an assessment of one-sixth of one percent of their gross receipts. (Emphasis added.)

We conclude that, with the enactment of Senate Bill 229 in 1987, the legislature clearly intended to confer jurisdiction, however limited, to the PUC over all interexchange common carriers. Therefore, we conclude that the section 78 assessment reaches all local exchange carriers and all interexchange carriers operating in Texas.

Your second question asks:

Are local access charges subject to the assessment?

Section 78 imposes an assessment that is calculated on the basis of the "rates charged the ultimate consumer." The phrase "ultimate consumer" is not defined anywhere in PURA, but the term "rate" is. Subsection (d) of section 3 of PURA defines "rate" and provides:

The term 'rate,' when used in this Act, means and includes every compensation, tariff, charge, fare, toll, rental, and classification, or any of them demanded, observed, charged, or collected whether directly or indirectly by any public utility for any service, product, or commodity described in Subdivision (c) of this section, and any rules, regulations, practices, or contracts affecting any such compensation, tariff, charge, fare, toll, rental, or classification.

End user access charges exacted upon residential and business subscribers by an LEC or IXC are "rates charged to the ultimate consumer" for purposes of the regulatory assessment imposed by section 78 of PURA. You ask whether interexchange carrier access charges received by an LEC from an IXC are "rates charged to the ultimate consumer." That they fall within the definition of "rate" is clear. The issue is whether the interexchange carrier, in paying an access charge to a local exchange carrier, is an "ultimate consumer."

Prior to the divestiture, charges analogous to those about which you ask were held by the PUC not to fall within the section 78 assessment. In Docket 2054, 23 P.U.C. Bull. vol. IV, No. 23, 2074 (1979), the PUC held that charges imposed upon telegraph companies for access services provided by local telephone exchange companies were not charges imposed upon the "ultimate consumer." See also Attorney General Opinion H-811.

You suggest that that administrative holding is no longer controlling because of the court-ordered divestiture. You suggest that, because the Bell operating companies are restricted primarily to providing local exchange services and access to their local systems to interexchange carriers, while interexchange carriers are prohibited from providing local exchange service, an interexchange carrier is an "ultimate consumer" of the services provided to them in the identical way that residential and business subscribers are ultimate consumers of the services provided to them. For two reasons, we disagree.

First, words ordinarily are given their plain meaning, unless the statute clearly shows that they were used in some other sense. Big H Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756 (Tex. 1984); Taylor v. Firemen's & Policemen's Civil Service Comm., 616 S.W.2d 187 (Tex. 1981). The ordinary meaning of the phrase "ultimate consumer" refers to someone who is last in the chain of sale or use. See, e.g., Alco. Bev. Code §§ 16.01, 16.05, 64.01; Nat. Res. Code § 113.081(a)(4). The final consumer in the chain created when someone makes a long distance telephone call is the residential or business subscriber who initiates the call.

There are three essential components of any long distance telephone call. First, the calling party places a call through the facilities of an LEC serving his area. Second, the originating LEC connects the call to an IXC that transports the call to its destination. Third, the IXC accesses the local network of the destination LEC to complete transmission of the call to its destination. See National Ass'n of Reg. Util. Comm'rs v. F.C.C., 737 F.2d 1095 (D.C. Cir.), cert. denied, 469 U.S. 1227 (1984). The interexchange access charge is imposed upon the interexchange carrier by both local exchange companies. These charges comprise part of the rate that interexchange carriers impose upon their customers. In effect, the access is "resold," as it were, by the interexchange carrier to its customer. That the legislature understood that access by an IXC to local exchange companies is a resold service to the residential or business subscriber is evidenced by the legislative history of the statute that added section 151.323 of the Tax Code.[Footnote 1] This provision exempts telecommunications services from the reach of the sales and use tax. See Bill Analysis, H.B. 1949, 69th Leg. (1985).

Second, the section 78 assessment is imposed upon the interexchange carriers' gross receipts from its subscribers, which includes the charges passed through to their customers to recoup the access charges paid to local exchange carriers. If we were to conclude that interexchange carriers were "ultimate consumers" for purposes of the imposition of the interexchange carrier access charge, that charge would be included twice in the total assessment imposed upon the telecommunications industry. There is no indication that the legislature intended such a result.

Your third, fourth, fifth, sixth, and seventh questions are as follows:

If Question Two is answered 'yes', are local access charges subject to the assessment on calls from:

(3) a point in Texas to another point in Texas in a different LATA;
(4) a point in Texas to another state;
(5) a point in another state to a point in Texas;
(6) a point in Texas to another country; and
(7) a point in another country to a point in Texas?

Because of our answer to your second question, we need not address your third through seventh questions.

Your eighth question asks:

Under the Supreme Court case of Goldberg v. Sweet, 488 U.S. 252, 109 S. Ct. 582, 112 L.Ed.2d 607 (1989), it is clear that Texas could constitutionally impose this assessment on the long distance portion of a call that originates in or is received in Texas so long as the call is billed to a Texas address. Should the assessment on long distance calls be based on the formula approved by the court in Goldberg v. Sweet or, if not, what formula should be used?

In Goldberg v. Sweet, 488 U.S. 252 (1989), the United States Supreme Court held that the Illinois Excise Tax, which imposed an excise tax on interstate calls that separated local exchange costs from the costs associated with the actual use of the interstate interexchange carrier's line, did not violate the commerce clause of the United States Constitution. The Illinois statute imposed a five percent tax on the gross charge of interstate telecommunications originated or terminated in Illinois and charged to an Illinois service address regardless of where the telephone call is billed or paid. The statute imposed an identical five percent tax on intrastate telecommunications. In order to prevent actual multi-state taxation that would be violative of the commerce clause of the United States Constitution, the statute provided a credit to any taxpayer that has paid a tax in another state on the same telephone call that triggered the Illinois tax.

We do not understand you to ask whether you may promulgate administrative rules that would permit you to administer the section 78 assessment charge in a way that comports with the holding of Goldberg. We understand you to ask whether any rules so drafted would be constitutional. You have not submitted to us any specific proposed rules; therefore, any discussion by this office of any hypothetical formula would be speculative. This office does not answer hypothetical questions in the opinion process. Therefore, we decline to answer your eighth question.

Your ninth question asks:

Does the assessment apply to activities such as 'billing and collection services' performed by local exchange companies on behalf of, and billed to, long distance telephone companies?

The definition of "rate" set forth in section 3 of PURA includes "services." Subsection (6) of section 3 of PURA defines "service" and provides:

'Service' is used in this Act in its broadest and most inclusive sense, and includes any and all acts done, rendered, or performed and any and all things furnished or supplied, and any and all facilities used, furnished, or supplied by public utilities in the performance of their duties under this Act to their patrons, employees, other public utilities, and the public, as well as the interchange of facilities between two or more of them. Service shall not include the printing, distribution, or sale of advertising in telephone directories.

Billing and collection services clearly fall within the definition of "services" and "services" falls within the definition of "rate." However, the section 78 regulatory fee may be imposed only on those "rates" charged to "ultimate consumers." We assume that these service charges are passed through to the IXC's subscribers. Because of our answer to your second question, we answer your ninth question in the negative.

SUMMARY

The assessment imposed by section 78 of article 1446c, V.T.C.S., the Public Utility Regulatory Act, reaches all public utilities subject to the jurisdiction of the act. Interexchange carriers are not "ultimate consumers" for purposes of section 78, if the local access charges are passed through to their subscribers.

Very truly yours,

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jim Moellinger
Assistant Attorney General

Footnote 1: Section 151.323 of the Tax Code provides in part:

There are exempted from the taxes imposed by this chapter the receipts from the sale, use, or other consumption in this state of: . . . (3) access to a local exchange telephone company's network by a regulated provider of telecommunications services. . . .