Were urgent-response medical monitoring, wireless data, and ordinary cell-phone services subject to Illinois Telecommunications Excise Tax?

Plain-English summary

A company sold senior-focused cell phones and an urgent-response medical device that connected users to its call center, and in some circumstances to local 9-1-1. It asked IDOR to confirm its Telecommunications Excise Tax treatment.

IDOR declined to confirm the company's application of law in a GIL and said a binding, fact-specific answer required a properly filed private-letter-ruling request.

The letter nevertheless provided general rules. Illinois imposed a 7% State tax on gross retail telecommunications charges, with possible municipal tax. Value-added or data-processing services had to be disaggregated and separately stated from telecommunications in the retailer's records or the entire charge was taxable. Wireless data plans used for Internet access generally were protected by the federal moratorium.

IDOR also quoted earlier guidance that a limited telematics service was a nontaxable information service when it allowed only vehicle-to-call-center communication and could not make or receive public-network calls. The provider itself still owed tax on telecommunications it purchased. IDOR warned that different facts could produce a different result and separately stated that ordinary mobile phone service incurred Telecommunications Excise Tax.

What this means for you

Medical-monitoring and telematics providers should map every communication path, including public-network and emergency calling, and separate information or data services from taxable telecommunications in their records. A prior telematics example does not resolve a service with different calling capabilities.

Common questions

Did IDOR rule that this urgent-response service was exempt? No.

Were ordinary cell-phone services taxable? Yes.

Were wireless Internet data plans taxable? The letter said they generally fell under the federal moratorium.

Citations and references

• 35 ILCS 630/2, 3, and 4.
• 35 ILCS 636/5-10 and 5-15.
• 86 Ill. Adm. Code 495.100(c).
• 47 U.S.C. § 151 note, § 1101.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0032-gil.pdf

Original ruling text

ST 16-0032 GIL 07/29/2016

TELECOMMUNICATIONS EXCISE TAX

The Telecommunications Excise Tax is imposed upon the act or privilege of originating or
receiving intrastate or interstate telecommunications in Illinois. See 35 ILCS 630/1 et seq.

July 29, 2016

RE: Advice Regarding Urgent Response Medical Service
Dear Xxxxx:
This letter is in response to your letter dated April 28, 2016, in which you request information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
Pursuant to 2 ILL. ADMIN. CODE 1200.120, this letter requests a General Information
Letter from the Illinois Department of Revenue (the “Department”). This letter is on
behalf of a provider (the “Company”) of urgent response medical monitoring services (or
“urgent response medical service[s]”) and mobile communications and requests
confirmation of the manner in which it and other similar service providers are taxed
under the (1) Telecommunications Excise Tax Act and (2) Simplified Municipal
Telecommunications Tax Act. For purposes of the Facts and Analysis provided below,
the capitalized terms are defined in Appendix A.

FACTS
The Company offers easy-to-use cell phones, accessories, and services that target the
senior citizen market. Its product offerings include an urgent response medical device
(“URMD”) and two phones (the “Phones”). The URMDs are purchased up front, with
monitoring service plans billed prospectively before the beginning of the billing cycle.
The mobile phones are purchased up front and are billed separately for minutes, text,
data usage, and add-on services provided by the Company as described below. The

minutes, data, and text messaging are billed at the end of the billing cycle. The add-on
services are billed at the beginning.

URGENT RESPONSE MEDICAL DEVICE
The urgent response medical service is provided via the URMD. The device is
equipped with a push button, microphone, and speakerphone. It does not have access
to the digits 9-1-1. When the button is pressed or the device detects an owner’s fall, the
owner is connected to the Company’s call center. The owner of the device and the call
center operator may then engage in a two-way conversation via the device itself. The
call center may then direct the communications to emergency responders local to the
owner or a service offered by the Company such as the urgent care line. If the button is
pressed and held, the owner is connected directly to local 9-1-1 operators.
The service comes with three basic plans:


Plan 1 includes access to the Company’s call center, which can then direct help
to the device owner.



Plan 2 includes Plan 1 service. Additionally, it includes (1) access to an urgent
care line where the owner may speak to a doctor or nurse at any time and (2)
updates a phone application which shows an authorized user if the owner of the
URMD has used the emergency service and the status of the device, such as
location and power level.



Plan 3 includes Plan 2 service. Additionally, it includes (1) a device replacement
guarantee if the phone is lost, stolen, or broken, and (2) fall detection. If the
URMD detects the owner has fallen, it will connect to the call center, which will
then check the status of the URMD owner.

The service is completely mobile and connects to the call center via the same Network
provider as the Phones. The Company then incorporates this access into the URMD.
After customers purchase the URMD, the Company sells the service for one fixed price,
which includes access to the Network Provider via the device and the Company’s own
services. It is also equipped with GPS technology to find the owner in an emergency.
The device cannot be programmed to connect with any person other than the
Company’s call center and local 9-1-1 operators. Call center are located in STATE 1
and STATE 2
MOBILE PHONE SERVICES
These are standard Cell phone services offering mobile communications across a
nationwide cellular network (the “Network Provider”). Additionally, one of the Phones
providing the service is a smartphone and offers mobile Internet access across WiFi or
the Network Provider. Access through both Phones may be purchased from the
Company a la carte for monthly minutes, text messaging, and data usage. The
Company, in turn, purchases these services for the Phones from the Network Provider.
The Telecommunications services provided by the Company, such as the minutes, text
messaging, and data usage, are charged based on usage at the end of the billing cycle

after calls are made or received or the data is consumed. Add-on services provided by
the Company, such as direct connection to the Company call center, are billed in
advance. The Company separately states its charges for minutes, text messaging,
data, and add-on services provided by the Company.
These Phones come equipped with a button that connects the owner of the device
directly with the Company’s call center. This service provided by the Company allows
the Phone owner to be directed to one of the services offered by the Company,
including an urgent care line and access to other health and wellness services.
SUMMARY CONCLUSIONS
Based on the foregoing facts and Illinois law, the Company, and other similar product
and service providers, are taxable as follows:






The Company, and all other similar products and service providers, are providing
a nontaxable urgent response medical service in connection with the URMDs.
All Telecommunications services are consumed by the company and any
Telecommunications Taxes imposed in Illinois are paid by the Company when it
purchases Telecommunications services from the Network Provider.
The Phones are mobile communications devices subject to the
Telecommunications Excise Tax (“TET”) and Simplified Municipal
Telecommunications Tax (“SMTT”) (collectively, the “Telecom taxes”) on the
gross billings of usage minutes charged and text messages charged but not on
data charges or add-on-services.
All Telecom Taxes listed are the full extent of taxes on wireless
Telecommunications services that may be charged to or passed along to
consumers for resellers of wireless communications.

LAW
FEDERAL LAW
The federal Mobile Telecommunications Sourcing Act (“MTSA”) preempts all state law
for mobile telecommunications services sourcing. The law applies to all taxes, charges,
or fees, whether charged as a flat fee per customer or based on usage, and applies if
the charge is on the vendor or customer of the telecommunications service.1 Under the
MTSA, Mobile Telecommunications Services provided to a Customer in a Taxing
Jurisdiction are sourced to that Taxing Jurisdiction if: (1) the Mobile
Telecommunications Service was billed by the Customer’s Home Service Provider, and
(2) the Home Service Provider covers the Customers Place of Primary Use. This is true
regardless of where the Mobile Telecommunications Service originated, passed
through, or terminated.2
Generally, this will mean the source of the Mobile
Telecommunications Service will be the Customer’s home address and the authority to
tax the Customer will be with the district, municipality, county, and/or state of the home
address of the Customer.
1
2

4 U.S.C. § 116.
Id. § 117.

Per the MTSA, charges for taxable and nontaxable services may be separately stated
on bills or invoices. If charges for mobile telecommunications services are aggregated
with other taxable services, the charges for nontaxable Mobile Telecommunications
Services may be subject to tax.
The federal Internet Tax Freedom Act, made permanent in 2015, bans taxation of
charges for Internet access. Internet access includes services or features (such as
email) related to the access.3
ILLINOIS LAW
Services
Services are not subject to sales taxes in Illinois unless a service is specifically
enumerated.4 Urgent response medical services are not an enumerated service subject
to tax in Illinois.
Telecommunications Excise Tax
The TET is imposed on all persons originating or receiving Telecommunications in the
state.5 The rate for intrastate Telecommunications is 7% of the Gross Charge for the
Telecommunications Purchased at Retail from a Retailer by the purchaser.6 Retailers
collect the TET by applying the rate to the Gross Charge.7 A Gross Charge does not
include nontaxable services or Telecommunications if “(1) the charges are aggregated
with other charges, (2) the charges are not separately stated, and (3) the Retailer can
reasonably identify the nontaxable charges on the retailer’s books and records kept in
the regular course of business.”8
A person originating or receiving Telecommunications may claim to be a reseller of the
Telecommunications. As a reseller, the person would not be liable for the TET on the
purchase of the Telecommunications if they have obtained a resale number from the
Department.9
In a previously issued General Information letter, the Department determined a vehicle
tracking and monitoring service offering “Telematics” was not subject to the Telecom
Taxes.10 In it the vehicle tracking service had the ability to connect to a call center to
receive services such as emergency services and roadside assistance, as well as
detect crashes. This service was triggered by either a vehicle detecting a crash or the
vehicle owner manually pushing a button for assistance. Further, the vehicle owner was
not able to make outbound calls or receive inbound calls. The Department determined
the taxpayer Telematics company was the ultimate consumer of the
3
4

5

47 U.S.C. § 151.
ILL. ADMIN. CODE 130.120(d)

35 ILCS § 630/3./4.
Id. § 630/3.
7
Id. § 630/5.
8
Id. § 630/2(a).
9
Id. § 630/8.
10
Illinois Dept. of Rev. General Information Letter ST 12-0041-GIL (07/27/2012).
6

Telecommunications service used and paid tax on the consumption of the
Communications Services.
Simplified Municipal Telecommunications Tax
The SMTT is imposed on all persons originating or receiving Telecommunication in the
municipality.11 The rate for intrastate Telecommunications is no greater than 6% for
municipalities with populations of less than 500,000 and at a rate of no greater than 7%
for municipalities with populations of 500,000 or more.12 This rate is imposed on the
Gross Charges for the Telecommunication Purchased at Retail from a Retailer by the
purchaser.13 Retailers collect the SMTT by applying the rate to the Gross Charge.14 A
Gross Charge does not include nontaxable services or Telecommunications if “(1) the
charges are aggregated with other charges, (2) the charges are not separately stated,
and (3) the Retailer can reasonably identify the nontaxable charges on the retailer’s
books and records kept in the regular course of business.” 15 A person originating or
receiving Telecommunications may claim to be a reseller of the Telecommunications.
As a reseller, the person would not be liable for the TET on the purchase of the
Telecommunications if they have obtained a resale number from the Department, or, for
municipalities with a population of 500,000 or more, from the municipalities
themselves.16
ANALYSIS
The URMD
The URMD is an emergency response unit, and the Company provides urgent response
medical services. Its main function is to allow its owner to receive medical attention
when needed. The device cannot be programmed or manipulated to connect to any
number other than the Company call center or local 911. The service provided by the
Company is to assist owners of the devices to get the help they need in an emergency.
In a previously issued General Information Letter (“GIL”), the Illinois Department of
Revenue determined a “Telematics” vehicle tracking and monitoring service was not
subject to the Telecom Taxes.17 In the GIL, the vehicle tracking service had the ability
to connect to a call center to receive services such as emergency services and roadside
assistance, as well as detect crashes. The Department determined a service that (1)
provided only voice and data communications between a customer device and a call
center and (2) did not permit customers to make call to or receive calls from any
location other than the call center was not subject to the TET. Further, the Department
concluded the taxpayer service provider was the ultimate consumer of the
Telecommunications services.18 The taxpayer paid tax on the consumption of tangible

11

Id. § 636/5-10.
Id. § 636/5-15.
13
Id. § 636/5-7.
14
Id. § 636/5-20.
15
Id. § 636/5-7.
16
Id. § 636/5-45.
17
Illinois Dept. of Rev. General Information Letter ST 12-0041-GIL (07/27/2012).
18
Id.
12

personal property and Telecommunications services associated with providing the
service to customers.
Like the Telematic service in General Information Letter 12-0041, the URMD cannot be
programmed to connect to any number other than the company call center and local 91-1. Therefore, the Company is the ultimate consumer of the Telecommunications
service it purchases from the Network Provider in order to provide its urgent response
medical service.
The Company pays the Telecom Taxes on its purchase of
Telecommunications service from the Network Provider and the urgent response
medical service provided to its customers is nontaxable.
THE PHONES
The Company is a reseller of Telecommunications from the Network Provider with
respect to the Phones sold to Customers. Since the Company separately states its
charges for minutes, text messaging, data, and the Company-provided add on services,
there is no bundling of services provided by the Company.
The Telecom Taxes are imposed on persons originating Telecommunications in the
state of municipalities. Under the MTSA, this means all taxes, fees, and surcharges are
imposed on Customers whose place of primary use, or billing address, is the state (or
municipality for the SMTT).
The Company is liable for the Telecom Taxes because it sells Telecommunications at
Retail. Telecommunications includes the charges on the Company’s invoices for
minutes and text messaging. However, since the add-on services provided by the
Company for the elderly assistance are not bundled with charges for
Telecommunications, and the Illinois statutes do not specifically subject these services
to tax, these services are not subject to Telecom Taxes.
Additionally, providing access to the Internet is a non-taxable service under the Internet
Tax Freedom Act. Therefore, all charges for “data” for the phone that is a smartphone
are not subject to any of the above taxes and fee.

REQUEST FOR CONFIRMATION
Based on the facts as described herein and Illinois law, the company respectfully
requests rulings from the Department that:


The Company, and all other similar products and service providers, are providing
a nontaxable urgent response medical service in connection with the URMDs.
All Telecommunications services are consumed by the Company and any
Telecommunications Taxes imposed in Illinois are paid by the Company when it
purchases Telecommunications services from the Network Provider.



The Phones are mobile communications devices subject to the Telecom Taxes
on the gross billings of usage minutes charged and text messages charged but
not on data charges or add-on-services.



All Telecom Taxes listed are the full extent of taxes on wireless
Telecommunications services that may be charged to or passed along to
consumers for resellers of wireless communications.

There are no audits or litigation pending with the Department regarding this issue. To
the best of the knowledge of the Company and its representative, the Department has
not previously ruled on the same or a similar issue for the taxpayer or a predecessor
If the Department does not agree with each of the conclusions stated herein, the
Company respectfully requests a meeting with the Department prior to the issuance of
any written statement in this matter. If there is any additional information that would be
helpful to you in responding to this request, please call me at (404) 581-8012 or email
me at LAWFIRM.COM, or PERSON at (XXX) XXX-XXXX or LAWFIRM.COM.
DEPARTMENT’S RESPONSE:
A person seeking a PLR binding on the Department must comply with the procedures for PLRs
found in the Department’s regulations at 2 Ill. Adm. Code 1200.110. One of the conditions for
obtaining a PLR is the identification of the taxpayer seeking the PLR. You have advised the
Department that you are not seeking a PLR on the behalf of the Company but are seeking a GIL. In
your letter you seek confirmation of the Company’s interpretation of how various laws and regulations
apply to the Company. The purpose of a GIL is to direct a taxpayer to Department regulations or
other sources of information regarding the topic about which it has inquired. The purpose of a GIL is
not to render a ruling or confirm a taxpayer’s interpretation of the law or regulations to a specific set of
facts. The Department cannot provide the confirmations you have requested. You are free to file a
request for a PLR.
Telecommunications Excise Tax
The Illinois Telecommunications Excise Tax Act imposes a tax on the act or privilege of
originating or receiving intrastate or interstate telecommunications by persons in Illinois at the rate of
7% of the gross charges for such telecommunications purchased at retail from retailers by such
persons. 35 ILCS 630/3 and 4. The Simplified Municipal Telecommunications Tax Act allows
municipalities to impose a tax on the act or privilege of originating in such municipality or receiving in
such municipality intrastate or interstate telecommunications by persons in Illinois at a rate not to
exceed 6% for municipalities with a population of less than 500,000, and at a rate not to exceed 7%
for municipalities with a population of 500,000 or more, of the gross charges for such
telecommunications purchased at retail from retailers by such persons. 35 ILCS 636/5-10 and 5-15.
“Telecommunications,” in addition to the meaning ordinarily and popularly ascribed to it,
includes, without limitation, messages or information transmitted through use of local, toll and wide
area telephone service; private line services; channel services; telegraph services; teletypewriter;
computer exchange services; cellular mobile telecommunications service; specialized mobile radio;
stationary two way radio; paging service; or any other form of mobile and portable one-way or twoway communications; or any other transmission of messages or information by electronic or similar
means, between or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite or
similar facilities. “Telecommunications” does not include “value added services in which computer
processing applications are used to act on the form, content, code and protocol of the information for
purposes other than transmission.” See 35 ILCS 630/2(a) and 2(c). If telecommunications retailers

provide these services, the charges for each service must be disaggregated and separately stated
from telecommunications charges in the books and records of the retailers. If these charges are not
thus disaggregated, the entire charge is taxable as a sale of telecommunications.
“Gross charges” means the amount paid for the act or privilege of originating or receiving
telecommunications in this State and for all services and equipment provided in connection therewith
by a retailer, valued in money whether paid in money or otherwise, including cash, credits, services
and property of every kind or nature, and shall be determined without any deduction on account of the
cost of such telecommunications, the cost of materials used, labor or service costs or any other
expense whatsoever. “Gross charges” do not include “charges for the storage of data or information
for subsequent retrieval or the processing of data or information intended to change its form or
content.” See 86 Ill. Adm. Code 495.100(c).
Internet Access
The Internet Tax Freedom Act imposes a federal moratorium on state or municipal taxes on
Internet access. 47 USCA § 151 note; § 1101. “Internet access”:
(A) means a service that enables users to connect to the Internet to access content,
information, or other services offered over the Internet;
(B) includes the purchase, use or sale of telecommunications by a provider of a service
described in subparagraph (A) to the extent such telecommunications are purchased,
used or sold(i) to provide such service; or
(ii) to otherwise enable users to access content, information or other services
offered over the Internet;
(C) includes services that are incidental to the provision of the service described in
subparagraph (A) when furnished to users as part of such service, such as a home
page, electronic mail and instant messaging (including voice and video-capable
electronic mail and instant messaging), video clips, and personal electronic storage
capacity;
(D) does not include voice, audio or video programming, or other products and services
(except services described in subparagraph (A), (B), (C), or (E)) that utilize Internet
protocol or any successor protocol and for which there is a charge, regardless of
whether such charge is separately stated or aggregated with the charge for services
described in subparagraph (A), (B), (C), or (E); and
(E) includes a homepage, electronic mail and instant messaging (including voice and
video-capable electronic mail and instant messaging), video clips, and personal
electronic storage capacity, that are provided independently or not packaged with
Internet access.
Telecommunications that are purchased, used or sold by a provider to enable users to connect
to the Internet or to otherwise enable users to access content, information or other services offered
over the Internet are subject to the federal moratorium. 47 USCA § 151 note; § 1101(B). Generally,
data plans provided by mobile or wireless telecommunications providers are subject to the
moratorium.

Telematic Services
In ST 12-0041 (GIL) the Department had an opportunity to respond to a taxpayer inquiry
regarding a telematic service that allowed customers to contact the provider to summon help or
roadside assistance, or obtain information, either automatically in the case of a collision or through
the press of a button. The call centers did not have the ability to contact customers through the
telematics units. The call center could only call the contact numbers that the customers provided to
the company. In addition, customers did not have the ability to make outbound calls or receive
inbound calls using the Telematics unit, as the telematics unit was not connected to the Public
Switched Telephone Network. The Department responded:
“Telematic services that allow only voice and data communications between a customer
vehicle and a call center and do not permit the customer to make calls to, or receive
calls from, the public switched telephone network are considered information services
and are not subject to Telecommunications Excise Tax. In those situations, the
telematics service provider would be liable for Telecommunications Excise Tax on
telecommunications services purchased from vendors and used by it to provide
telematic services.”
It is important to note that the Department’s decision in ST 12-0041 was based on representations
made by the company that the company was providing a service and the communications provided
were merely a component of that service. The Department may reach a different result in the future
based on different set of facts if the Department concludes that the services being provided are in fact
telecommunications services.
I would also note that the company incurs Telecommunications Excise Tax liability on the
standard cell phone service offering mobile telecommunications services.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.

Very truly yours,

Richard S. Wolters
Associate Counsel
RSW:bkl