Are gross receipts from pager (beeper) services subject to Kansas retailers' sales tax, and are the pagers themselves taxable?

Plain-English summary

A pager (paging) company asked how Kansas retailers' sales tax applies to its business. The Department gave two answers.

First, the service itself is taxable. K.S.A. 79-3603(t) imposes sales tax on "the gross receipts received for the telephone answering services, including mobile phone services, beeper services and other similar services." Pager services fall within that language, so their gross receipts are subject to Kansas sales tax.

Second, the pagers the provider buys are taxable to the provider. Because the pagers are supplied to the customer as part of a taxable service, the provider owes tax when it purchases them — it cannot buy them tax-free for resale. The Department cited the Kansas Supreme Court decision In re Tax Appeal of AT&T Technologies, Inc., 242 Kan. 554, for this treatment.

What this means for you

If you provide paging or beeper service in Kansas, expect tax on both the service you sell and the devices you buy to deliver it.

• Charge sales tax on the service. Gross receipts from pager services are taxable under 79-3603(t) as a beeper/"similar" service.
• Pay tax on the pagers you buy. Because the devices are furnished to customers as part of the taxable service, you are the consumer of them and owe tax on the purchase — no resale exemption for equipment used to provide the service.
• The rule tracks a Supreme Court case. The Department relied on the AT&T Technologies decision to treat the equipment as taxable to the service provider.
• Bundle carefully. Even if equipment charges are separately stated, the equipment used to provide the taxable service is taxable input to you.

Common questions

Are pager/beeper services taxable in Kansas?
Yes. K.S.A. 79-3603(t) taxes telephone answering, mobile phone, beeper, and other similar services, and the Department ruled pager services are covered.

Can I buy the pagers tax-free for resale?
No. Because the pagers are provided to the customer as part of the taxable service, you owe sales tax when you purchase them.

Why does the ruling cite a court case?
The Department relied on In re Tax Appeal of AT&T Technologies, Inc., 242 Kan. 554, which supports taxing equipment that is furnished as part of a taxable service to the provider.

Can other paging companies 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 the telephone answering services, including mobile phone services, beeper services and other similar services." The Department held pager services taxable under this provision.
• In re Tax Appeal of AT&T Technologies, Inc., 242 Kan. 554 — cited for the conclusion that the pagers, furnished as part of a taxable service, are taxable to the provider when purchased.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-79.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 30, 1999

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Dear Ms. TTTTTTTT:

We wish to acknowledge receipt of your letter dated January 7, 1999, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3603(t) imposes a sales tax upon: “the gross receipts received for the telephone answering services, including mobile phone services, beeper services and other similar services.”

Kansas sales tax shall be imposed on the gross receipts received from pager services.

Please be advised that the sale of these pagers to the service provider are subject to the appropriate Kansas sales tax(es), since these respective pagers are provided to the consumer as part of a taxable service. See In re Tax Appeal of AT&T Technologies, Inc., 242 Kan. 554.

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 in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Enc

Date Composed: 04/02/1999 Date Modified: 10/11/2001

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