Does Illinois E911 tax apply to SIP trunk telephone services, and will IDOR confirm the calculation?

Plain-English summary

A company asked the Illinois Department of Revenue (IDOR) to confirm its calculation of Illinois' E911 (Emergency Telephone System) tax on Session Initiated Protocol (SIP) trunk services — the circuits connecting its premises equipment to the public switched telephone network. The company argued its system met the statutory definitions of a "private branch exchange" and its SIP trunks qualified as "Advanced Telecommunication Service" under the Illinois Emergency Telephone System Act, and it worked out a specific per-connection surcharge calculation it wanted IDOR to bless.

IDOR declined to issue the requested Private Letter Ruling and did not evaluate the company's calculation at all. Instead, it explained that the Emergency Telephone Assistance Act (50 ILCS 750/) — the law that governs E911 surcharges — is administered by the Illinois Department of State Police, not the Department of Revenue. IDOR pointed the company to State Police for an answer and noted that it would only be able to help with questions about Illinois telecommunications tax or sales tax laws more generally.

What this means for you

Telecom and SIP trunk service providers/users

If you need clarity on how Illinois' E911 surcharge applies to SIP trunks, PBX equipment, or similar telecommunications configurations, IDOR is not the agency to ask — direct that inquiry to the Illinois Department of State Police, which administers the Emergency Telephone System Act (50 ILCS 750/).

Businesses seeking a binding ruling from IDOR

This letter is a reminder that IDOR has discretion whether to issue a Private Letter Ruling at all. Under 2 Ill. Adm. Code 1200.110(a)(4), the Department can respond to a ruling request either by issuing the ruling or by a letter explaining the request won't be honored — which is exactly what happened here because the underlying tax (E911) falls outside IDOR's jurisdiction.

Accountants and tax professionals

Don't assume every "Xxx Tax" question belongs to the Department of Revenue. Illinois splits administration of some special-purpose taxes and surcharges — here, E911/Emergency Telephone System Act surcharges — to other agencies (State Police). Confirm the correct administering agency before submitting a ruling request, since a misdirected request will come back as a non-answer GIL like this one.

Readers looking for E911 tax guidance generally

This GIL does not state any Department position on whether SIP trunks meet the definition of "Advanced Telecommunication Service," whether the company's system qualifies as a private branch exchange, or how the E911 surcharge formula in 50 ILCS 750/20 should be applied to SIP trunk connections. None of the taxpayer's proposed facts or calculations were confirmed or rejected — the letter simply redirects the question elsewhere.

Common questions

Q: Did IDOR confirm the company's E911 tax calculation for its SIP trunks?
A: No. IDOR did not evaluate the calculation. It declined to issue a Private Letter Ruling and explained the question falls under a law it doesn't administer.

Q: Who does administer the Illinois E911 tax under the Emergency Telephone System Act?
A: The Illinois Department of State Police, not the Illinois Department of Revenue, per this letter.

Q: Is this letter binding on IDOR or on the taxpayer?
A: No. It is a General Information Letter (GIL), issued under 2 Ill. Adm. Code 1200.120. A GIL is not a statement of Department policy and is not binding on the Department.

Q: Can I still get IDOR's help with telecommunications tax questions?
A: Yes, but only for telecommunications tax or sales tax matters that IDOR actually administers. The letter directs general telecommunications/sales tax questions to IDOR's Taxpayer Information Division, while E911-specific questions go to the Department of State Police.

Citations and references

• 50 ILCS 750/ (Emergency Telephone System Act, administered by the Illinois Department of State Police, not IDOR)
• 50 ILCS 750/2 (definition of private branch exchange (PBX))
• 50 ILCS 750/20 (E911 surcharge calculation formula for network connections)
• 2 Ill. Adm. Code 1200.110(a)(4) (Department's discretion to decline a Private Letter Ruling request)
• 2 Ill. Adm. Code 1200.120 (General Information Letters are not binding Department policy)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2017.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2017/st-17-0035-gil.pdf

Original ruling text

ST 17-0035-GIL

11/08/2017

MISCELLANEOUS

The Emergency Telephone Assistance Act is administered by the Illinois Department of State
Police. See 50 ILCS 750/. (This is a GIL.)

November 8, 2017

RE:

Ruling Request for the COMPANY
FEIN: ########

Dear Xxxxxx:
This letter is in response to your letter, in which you requested 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:
The purpose of this letter is to obtain clarity from the Illinois Department of Revenue
(“IDOR”) regarding the application and calculation of E911 taxes on Session Initiated
Protocol (SIP) trunk services. In this context, SIP trunks are a PRODUCT connection
between the public switched telephone network and premise-based telephone
equipment. The COMPANY has contracted with a major telecommunications carrier for
SIP trunk services, which COMPANY uses for inbound and outbound voice
communications.

FACTS

1. COMPANY has contracted for ## SIP trunks for the purpose of carrying voice
   communications between the company’s premises within the U.S. and the
   public switched telephone network. These trunks are shared across all
   COMPANY’s locations in all states where COMPANY operates. All of the

ST 17-0035-GIL
Page 2
company’s North American Direct Inward Dial (DID) numbers have been
ported into the carrier’s network to enable proper routing for inbound calls.

2. Calls ingress and egress COMPANY’s premises across two ###Mbps circuits
   terminating in our data centers located in CITY, IL and CITY 1, IL. The
   carrier’s responsibility for the service ends at this demarcation point.
   COMPANY then extends those circuits into a SYSTEM to route calls to the
   telephone endpoint in office buildings in Illinois and other states.
   COMPANY has reviewed the current statute and seeks your agreement on the rationale
   and calculation of Illinois’ E911 taxes as stated below that:
3. The SYSTEM meets the definition of a private branch exchange (PBX) as
   defined in the Illinois Emergency Telephone System Act (50 ILCS 750/2).
   Given the fact that the carrier’s responsibility for the service ends at the
   service demarcation point within COMPANY’s premises, we conclude that the
   carrier’s service acts like a central office. In addition, our network design
   does not fit the definition of a Centrex service.
4. The SIP trunks meet the definition of Advanced Telecommunication Service
   as defined in the Illinois Emergency Telephone System Act (50 ILCS 750/2),
   and that the taxes ought to be calculated in accordance with the formula
   provided within the Act (50 ILCS 750/20). Following that formula means that
   the ## SIP trunks translate into ## trunk lines (## ÷ ##). ## trunk lines equal

network connections (one network connection per trunk line). Using a rate

of # $$ surcharges per network connection, COMPANY owes $$ on each
connection ($$ x #). ## network connections, at $$ per connection, come to
$$ per month in taxes.
The attached position paper provides a more in-depth description of the facts and a
detailed analysis of the issue.

CONCLUSION
In this regard, COMPANY respectfully requests the IDOR to issue a letter ruling to
COMPANY confirming our understanding of the correct calculation of Illinois’ E911 tax
as applied to SIP trunk telephone service. If you have any questions, or need additional
information, please don’t hesitate to contact me.
DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization” provides that
“[w]hether to issue a private letter ruling in response to a letter ruling request is within the discretion of
the Department. The Department will respond to all requests for private letter rulings either by

ST 17-0035-GIL
Page 3
issuance of a ruling or by a letter explaining that the request for ruling will not be honored.” 2 Ill. Adm.
Code 1200.110(a)(4). The Department declines to issue a Private Letter Ruling in response to your
request. We hope, however, the following General Information Letter will be helpful in addressing
your questions.
The Department of Revenue does not administer the Emergency Telephone Assistance Act,
50 ILCS 750/. It is administered by the Illinois Department of State Police. We suggest you direct
your inquiry to the Department of State Police.
If you have questions related to the Illinois telecommunications tax or sales tax laws, 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
Chairman, Private Letter Ruling Committee
RSW:bkl