Are subscription voice mail services subject to Kansas retailers' sales tax?

Plain-English summary

A company provides voice mail service to small businesses on a monthly subscription. Subscribers call in to hear recorded messages; the service works like an answering service but takes recorded messages instead of using live operators, forwarding a caller to the voice-mail box after several rings. The company asked whether the service is taxable.

Kansas imposes sales tax on "the gross receipts received for telephone answering services, including mobile phone services, beeper services and other similar services" (K.S.A. 79-3603(t)). The Department concluded that the voice mail service falls within this language and is therefore subject to Kansas retailers' sales tax. The company must register, collect, and remit sales tax on the service.

What this means for you

If you sell voice mail, messaging, or answering-type services to Kansas customers, expect the service itself to be taxable.

• Voice mail is a taxable telephone answering service. It fits within 79-3603(t), which taxes telephone answering, mobile phone, beeper, and "other similar" services.
• Register, collect, and remit. The provider must register for Kansas sales tax and charge it on the subscription receipts.
• "Similar services" is broad. Even without live operators, a recorded-message service was treated as a taxable answering-type service.
• Bill the tax on the subscription. The taxable base is the gross receipts you receive for the service.

Common questions

Is voice mail service taxable in Kansas?
Yes. The Department ruled it is a taxable telephone answering (or "similar") service under K.S.A. 79-3603(t).

Does it matter that there are no live operators?
No. The service takes recorded messages and functions like an answering service, which the Department treated as within the taxable "similar services" language.

What must the provider do?
Register for Kansas sales tax, then collect and remit the tax on the monthly subscription receipts.

Can other providers rely on this ruling?
Not directly. A private letter ruling binds the Department only for the requesting taxpayer and stated facts; treat it as guidance.

Citations and references

• K.S.A. 79-3603(t) — imposes sales tax on "the gross receipts received for telephone answering services, including mobile phone services, beeper services and other similar services." The Department held the subscription voice mail service is taxable under this provision.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-72.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 12, 1999

XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX

Dear XXXXXXXXX:

I have been asked to respond to your letter of February 24, 1999. In it, you ask about the sales and use tax responsibilities of your company. Your letter states that you provide voice mail services to small businesses on a monthly subscription basis. Your subscribers call in to your service to listen to their recorded messages. Your service is similar to an answering service, only that you take recorded messages and do not have live operators. It functions similar to XXXXXXXXX in that after three rings, the caller is forwarded to your service to leave a voice message.

Kansas law imposes sales tax on “the gross receipts received for telephone answering services, [emphasis added] including mobile phone services, beeper services and other similar services.” K.S.A. 79-3603(t).

It is the opinion of the Kansas Department of Revenue that your service is subject to Kansas retailers’ sales tax. Your company must register, collect and remit sales tax on this service.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 03/29/1999 Date Modified: 10/10/2001

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