Which charges in a live-operator answering-service package were subject to Florida communications services tax or sales tax?

Plain-English summary

The live-operator answering-service charge was a nontaxable personal service, not a sale of communications services. That remained true when the package included an auto attendant, automated voicemail, toll-free-line usage, and fax or pager delivery of messages as components of the live service.

The provider was the consumer of the connectivity it bought to deliver its personal service. It therefore owed Florida and local communications services tax to its providers and could not issue a resale certificate for those purchases.

Separate pager transactions were different. Pager sales and leases were taxable tangible-personal-property transactions, and the pager-protection plan was a taxable service warranty because it paid for repair or replacement. The ruling did not address a separately sold voicemail service without an option to reach a live operator.

What this means for you

The dominant service and the invoice structure mattered. Integrated telecommunications features did not convert a live human answering service into taxable communications, but separately transferred equipment and warranties kept their own sales-tax treatment.

Common questions

Q: Were customer charges for live answering taxable as communications services? No.

Q: Did included voicemail, toll-free usage, fax, or pager delivery change that? No, as components of the described live-operator service.

Q: Who paid tax on the underlying communications services? The answering-service provider.

Q: Were pagers and pager protection taxable? Yes, as tangible property and a service warranty.

Citations and references

• Fla. Stat. §§ 202.11(3), (14)(a), 202.12, and 202.19 — communications services and state and local tax
• Fla. Stat. § 212.08(7)(v)1. — personal-service exemption cited
• Fla. Stat. § 212.05(1)(a)1.a., (1)(d) — sale and lease of pagers
• Fla. Stat. § 212.0506(2), (3) — service warranties
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-009

Original ruling text

SUMMARY

QUESTION: Are charges for answering services with live
operators that include, as part of the charge, automated
voice mail and an auto attendant feature, and separately
stated charges for the usage of a 1-800 line, the
transmission of messages by fax or pager, the sale or lease
of a pager and pager protection subject to communications
services tax?

ANSWER - Based on Facts Below: When the answering service
uses live operators to answer telephone lines, take
messages, and provide those messages to clients, the
charges to its Customers are not charges for communications
services, as defined in Chapter 202, F.S. Such charges are
personal service charges that are not subject to the taxes
imposed on communications services. Even though the
answering services with live operators may include an auto
attendant feature, automated voice mail, charges for usage
of the 1-800 lines and the transmission of messages by fax
or pager, such charges are a component of the personal
service charges provided by Taxpayer to its Customers, and
are not the sale of communications services. This
advisement addresses the specific service by Taxpayer of
providing answering services with live operators. It does
not contemplate a scenario where Taxpayer provides
separately stated voice mail services that do not include
the option of speaking with a live operator.

Taxpayer is consuming communications services when
providing its personal services to its clients. The
purchase of communications services by Taxpayer is subject
to Florida communications services tax and local
communications services tax. Therefore, Taxpayer should pay
the applicable Florida communications services tax and
local communications services tax on its purchases of
communications services from its providers. Because
Taxpayer is not purchasing communications services for
resale, Taxpayer may not issue resale certificates in lieu
of paying tax, when purchasing communications services from
its providers.

The sale or lease of a pager is a taxable sale or lease of
tangible personal property. Sales tax at the rate of 6
percent and any applicable discretionary sales surtax is
due on the total sales price charged to Customer for a
pager and on the total lease price paid by the Customer or
contracted or agreed to be paid by the Customer to Taxpayer
for the lease of the pager. See ss. 212.05(1)(a)1.a. and
212.05(1)(d), F.S.

Pursuant to subsections 212.0506(2) and (3), F.S., sales
tax at the rate of 6 percent is due on the total amount
received by a person for issuing a service warranty, an
agreement that indemnifies the holder of the agreement for
the cost of maintaining, repairing, or replacing tangible
personal property. Because the service warranty provision
in the Agreement covers the cost of repairing or replacing
tangible personal property, the charge for pager protection
is subject to sales tax.

Feb 21, 2002

Re: Technical Assistance Advisement 02A-009
XXX (Taxpayer)
XX (P)
Sales and Use Tax - Answering Services
Section 212.08(7)(v)1., F.S.
Communications Services Tax
Sections 202.11(3), 202.11(14)(a), 202.12, 202.19, F.S.

Dear :

This is a response to your letter dated December 4, 2001, in
which you requested a technical assistance advisement concerning
the applicability of communications services tax to answering
services provided by Taxpayer.

STATED FACTS

Your letter dated December 4, 2001, refers to a letter dated
August 13, 2001, in which you requested a letter of technical
advice on the taxability of Taxpayer's services. The letter
dated August 13, 2001, describes Taxpayer's services as follows:

[Taxpayer] provide[s] an answering service to [Customers].
To facilitate the service, [Taxpayer] assign[s] to each
Customer a separate 800 number and each Customer in turn
provides either the 800 number, or more typically, this
general business telephone number to their customers
("Callers") for their use in contacting or leaving messages
with the Customer. The 800 numbers are allocated to us
through [P], our telecommunications service provider, whom
we pay for monthly usage thereon. Customers and Callers are
located in Florida, as well as in other states. We are
located in XX, where we operate a call center at which
[Taxpayer] answer[s] calls to Customers and from which
[Taxpayer] forward[s] messages to [Taxpayer's] Customers.
Typically, [Taxpayer] deliver[s] the messages to [ ]
Customer's alpha-numeric pager, but [Taxpayer] can also
fax, [e]-mail, [and] send the messages to [Taxpayer's]
Customer's cell phone, or contact [] Customer on the phone
and verbally relay the messages.

To provide the answering service, [Taxpayer's] employee[s]
(referred to as a receptionist) answer[] telephone calls
that Callers make to either the 800 number or to the
Customer's general business number (which is call-forwarded
to the 800 number). The receptionist explains that Customer
is unavailable and asks Caller whether he or she would like
to leave a message for Customer. Caller then explains the
reason for the call. The receptionist does not transcribe
the message provided by Caller verbatim. Rather, the
receptionist distills the information into a relatively
short, condensed message and enters the message into a
computer. After confirming that the message conveys
Caller's intent and entering Caller's name and telephone
number, the receptionist transmits an alpha-numeric message
to Customer's pager unit along with the time and date of
the call. The messages are delivered to Florida Customers

via the transmission network of a third-party paging
carrier with whom we have contracted.

We can also relay Customer-specific information to a
Caller. In some instances, a Caller may ask questions
regarding Customer's hours of operation or when Customers
will be available or will call back. Sometimes[,] the
receptionist will simply explain that [C]aller is speaking
with Customer's answering service and that Customer will be
contacted immediately and will respond as quickly as
possible. In other cases, the receptionist may provide
general information such as office hours or may direct the
message to a specific individual other than the person
originally requested by Caller. In many cases[,] the
receptionist may refer to a computer information screen
that prompts questions intended to solicit the specific
information[,] which Customer may need in order to respond
appropriately to Caller. In certain emergency situations,
the receptionist or other employees may contact the
Customer directly by telephone or may transmit the message
to more than one individual until receipt of the message is
acknowledged. Customer may also retrieve messages by
calling in to speak with a receptionist or by requesting
written details.

Some of [Taxpayer's] Customers elect to pay for an
enhancement to [Taxpayer's] basic service[.] [I]t provides
[Taxpayer's] Callers an option to reach [Taxpayer] by voice
mail. When the Caller dials the Customer's phone number[,
the Caller] will be given two options: the first option is
to leave a voice mail for the Customer; the second option
will transfer the Caller to a receptionist in the call
center [who] will take a message and transmit the message
as described above. If a voice mail is left for the
Customer, the Customer will receive a message on [the
Customer's] alpha-numeric pager [stating] that [the
Customer] ha[s] a voice mail message waiting to be
retrieved.

[Taxpayer] typically invoice[s] Customers at a contracted
monthly flat rate[](i.e.[,] a single aggregate charge for a

specified monthly allowance of calls answered) and a
supplemental charge for each call [Taxpayer] answer[s]
beyond the monthly allowance. The billable call volume is
based upon the number of calls answered for a Customer,
rather than on the number of messages transmitted or the
distances of each incoming or outgoing call. All calls,
other than those that are clearly dialed to a wrong number,
are logged and counted. As a result, the billable call
count includes instances in which the Caller does not leave
a message. In some instances, our charges vary based upon
the time spent by our receptionists in taking messages. Our
invoices do not reflect the separate components of the
answering service, the use of the 800 number or the
transmission of messages to a Customer's pager[.]
[I]nstead[,] the invoices reflect the flat rate for the
contracted call plan.

Upon further clarification, you stated that a customer has three
answering service options. The first option is in the form of
answering services with live operators. The second option allows
the caller to hear an automated message and to speak with a live
operator. The third option is a combination of automated voice
mail and answering services with live operators (discussed
above). You stated that a customer may be paged through options
two and three, or through the Internet, if the caller knows the
customer's identification number. Customers, however, are not
charged for pages through the Internet. You stated that new
Customers will be placed on a new plan based on the number of
minutes instead of a flat fee based on the number of calls.

You also stated that a customer may purchase or rent a pager
from Taxpayer for the purpose of receiving messages from
Taxpayer's answering services. You stated that Taxpayer's charge
for the pager is separately stated on the invoice. If the
customer purchases a pager from Taxpayer, a one-time charge will
appear on the customer's invoice. If the customer leases a pager
from Taxpayer, a $10.00 monthly charge will appear on the
invoice. Customers are charged a $3.00 fee per month for pager
protection, which covers the pager. You stated that Taxpayer
pays a third party for paging transmission services and passes

the transmission cost to Customers as a component part of the
total flat monthly charge for answering services.

Taxpayer provided copies of several invoices. The invoice for
option two states, in part, "40 LIVE/BO AUTO CALL BASE." This
invoice includes separately stated charges for pager rental,
pager protection, roster service (involves calling a person from
a list of names), and a recoup charge for state and local
charges paid by Taxpayer for long distance charges. The invoice
for option three states, in part, "75 LIVE/150 MAILBOX CALL
BASE." This invoice includes separately stated charges for the
services previously stated, as well as painted screen service
(allows receptionist to ask specific questions of the caller).
Other invoices also include other charges, such as: 1. Charges
for fax service; 2. Charges for the personalized 800 number; 3.
Charges for calls made by Taxpayer to the Customer; 4. Excess
usage charges; 5. Escalation service charges (calls by Taxpayer
to Customer for confirmation of receipt of a page); 6. XX roam
access (roaming charges associated with the pager); and 7.
Pagemart Regional charges (charge to Customer for page received
by Customer through another carrier's paging network).

The "Answering Service Application & Agreement" (Agreement)
states, in part:

6. PAGER PROTECTION. Pager protection provides maintenance
   for rental and customer owned pagers. Pager Protection
   covers a pager for minor damage (normal wear and tear only)
   and pager malfunction. XX shall replace pager in such
   condition at no charge so long as the pager is covered by
   Pager Protection. Pager Protection does not include
   replacement of pagers as a result of accidental or
   intentional LCD screen damage or accidental or intentional
   water damage or accidental or intentional loss or theft. In
   the event of loss or theft or the return of a pager/s in a
   condition not covered by Pager Protection, replacement will
   be made subject to a charge of up to $169.00 per pager....

REQUESTED ADVISEMENT

Whether answering services, as described above, are subject to
the communications services tax?

APPLICABLE LAW

Florida Communications Services Tax

Subsection 202.11(3), F.S., defines the term "communications
services" to mean:

... the transmission, conveyance, or routing of voice,
data, audio, video, or any other information or signals,
including cable services, to a point, or between or among
points, by or through any electronic, radio, satellite,
cable, optical, microwave, or other medium or method now in
existence or hereafter devised, regardless of the protocol
used for such transmission or conveyance.

Paragraph 202.11(14)(a), F.S., states that the sales price of
communications services shall include, whether or not separately
stated, "[t]he service of sending or receiving a document
commonly referred to as a facsimile or fax, except when
performed during the course of providing professional or
advertising services."

Section 202.12, F.S., regarding sales of communications services
states, in part:

The Legislature finds that every person who engages in the
business of selling communications services at retail in
this state is exercising a taxable privilege. It is the
intent of the Legislature that the tax imposed by chapter
203 be administered as provided in this chapter.
(1) For the exercise of such privilege, a tax is levied on
each taxable transaction, and the tax is due and payable as
follows:

(a) Except as provided in this subsection, at the rate of
6.8 percent applied to the sales price of the
communications service which:

1. Originates and terminates in this state, or

2. Originates or terminates in this state and is charged to
   a service address in this state, when sold at retail,
   computed on each taxable sale for the purpose of remitting
   the tax due. The gross receipts tax imposed by chapter 203
   shall be collected on the same taxable transactions and
   remitted with the tax imposed by this paragraph. If no tax
   is imposed by this paragraph by reason of s. 202.125(1),
   the tax imposed by chapter 203 shall nevertheless be
   collected and remitted in the manner and at the time
   prescribed for tax collections and remittances under this
   chapter.

(d) At the rate set forth in paragraph (a) on the sales
price of private communications services provided within
this state....

Local Communications Services Tax

Section 202.19, F.S., states, in pertinent part:

(1) The governing authority of each county and municipality
may, by ordinance, levy a discretionary communications
services tax.

(5) In addition to the communications services taxes
authorized by subsection (1), a discretionary sales surtax
that a county or school board has levied under s. 212.055
is imposed as a local communications services tax under
this section, and the rate shall be determined in
accordance with s. 202.20(3).

Sales tax

Section 212.08(7)(v)1., F.S., provides:

(v) Professional services.1. Also exempted are professional, insurance, or personal
service transactions that involve sales as inconsequential
elements for which no separate charges are made.

DETERMINATION

Answering Services With Live Operators

Beginning October 1, 2001, Chapter 202, F.S., imposes Florida
communications services tax on communications services comprised
of the rate of 6.8 percent for the state portion of the Florida
communications services tax, and at the rate of 2.37 percent for
the state gross receipts tax portion of the tax. Paragraph
202.12(1)(a), F.S. Chapter 202, F.S., also imposes a local
communications services tax, which is comprised of two parts: 1.
the discretionary communications services tax levied by a
municipality or county, authorized by subsection 202.19(1); and

2. any local discretionary sales surtaxes levied by a county or
   school board under section 212.055, F.S. See subsection
   202.19(5), F.S.

Taxpayer provides answering service with live operators who
answer the telephone and provide messages in various forms to
Taxpayer's Customers. Customers are not charged based on the
number of messages received or on the distance of each incoming
or outgoing call. Instead, Taxpayer charges its current
Customers a monthly flat rate based on a monthly allowance of
calls answered and a supplemental charge for each additional
call beyond the monthly allowance; and Taxpayer charges new
Customers a charge based on minutes. Customers are not charged
separately stated charges for automated voice mail services.
Thus, Customer's invoice does not reflect the different
components of the answering service, the live operator and voice
mail services. When the answering service uses live operators
to answer telephone lines, take messages, and provide those
messages to clients, the charges to its clients are not charges
for communications services, as defined in Chapter 202, F.S.
Such charges are personal service charges that are not subject
to the taxes imposed on communications services. Even though
the answering services with live operators may include an auto

attendant feature, automated voice mail, charges for usage of
the 1-800 lines and the transmission of messages by fax or
pager, such charges are a component of the personal service
charges provided by Taxpayer to its customers, and are not the
sale of communications services.

Sale/Lease of Pagers

Furthermore, Taxpayer provides pagers to Customers. Upon further
clarification, you stated that Taxpayer charges customers a onetime charge for the sale of a pager, or a $10.00 monthly charge
for the lease of a pager. The invoice provided separately states
the charge for the pager. The sale or lease of a pager is a
taxable sale or lease of tangible personal property. Sales tax
at the rate of 6 percent and any applicable discretionary sales
surtax is due on the total sales price charged to Customer for a
pager. See s. 212.05(1)(a)1.a., F.S. Sales tax at the rate of 6
percent and any discretionary sales surtax is due on the total
lease price paid by the Customer or contracted or agreed to be
paid by the Customer to Taxpayer for the lease of the pager. See
paragraph 212.05(1)(d), F.S.

Pager Protection

Pursuant to section 212.0506(2) and (3), F.S., a sales tax at
the rate of 6 percent is due on the total amount received by a
person for issuing a service warranty, an agreement that
indemnifies the holder of the agreement for the cost of
maintaining, repairing, or replacing tangible personal property.
The Agreement provided by Taxpayer contains a service warranty
provision for rental and customer owned pagers. Furthermore,
some invoices provided by Taxpayer contain a "pager protection"
charge, which pertains to the service warranty. Because the
service warranty provision in the Agreement covers the cost of
repairing or replacing tangible personal property, the charge
for pager protection is subject to sales tax.

Purchases of Communications Services by Taxpayer

Taxpayer is consuming communications services when providing its
personal services to its clients. The purchase of communications

services by Taxpayer is subject to Florida communications
services tax and local communications services tax. Therefore,
Taxpayer should pay the applicable Florida communications
services tax and local communications services tax on its
purchases of communications services from its providers. Because
Taxpayer is not purchasing communications services for resale,
Taxpayer may not issue resale certificates in lieu of paying
tax, when purchasing communication services from its providers.

This advisement addresses the specific service by Taxpayer of
providing answering services with live operators. It does not
contemplate a scenario where Taxpayer provides separately stated
voice mail services that do not include the option of speaking
with a live operator.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the department
only under the facts and circumstances described in the request
for this advice, as specified in Section 213.22, F.S. Our
response is predicated upon those facts and the specific
situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
Taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Isabel Nogues

Attorney
Technical Assistance & Dispute Resolution

ILN/
Control #: 47919