Were charges for renting space on a communications tower taxable as a rental of tangible personal property in Kansas?

Plain-English summary

Charges for renting space on a communications tower were not subject to Kansas sales tax as rentals of tangible personal property.

The company owned the tower but not the ground beneath it. Customers used tower space for employee paging systems or two-way radios.

In some arrangements, customers installed their own equipment on the tower. In others, the tower owner installed equipment used to facilitate communications for multiple entities. The Department said the tower-space charges in these situations were not taxable as tangible-personal-property rentals.

What this means for you

Communications-tower owners

Separate the charge for tower space from any equipment sale, equipment lease, installation, maintenance, or communications service. This ruling addressed only the tower-space rental classification.

Businesses placing equipment on towers

The fact that equipment is attached to or shared on the tower did not make the described space charge a taxable rental of tangible personal property.

Common questions

Q: Was tower-space rent taxable as tangible personal property?
A: No.

Q: Did it matter whether the customer installed its own equipment?
A: The ruling covered both customer-installed equipment and tower-owner equipment used by several entities.

Q: Did the ruling address tax on separate equipment charges?
A: No. It addressed charges for renting tower space.

Citations and references

• K.A.R. 92-19-59 — Kansas Private Letter Ruling procedure

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-033

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 30, 2004

XXXX
XXXX
XXXX

Re: Request for Private Letter Ruling

Dear XXXX:

You requested a private letter ruling on the question of whether charges for renting tower space on a communications tower to a company for use in operating its paging system for that company’s employees are subject to sales tax. You indicate that your company owns a communications tower (a “guided” tower), but not the ground it sits on. Our understanding is that in the typical situation, your company “rents tower space” to users who may have paging systems or two-way radios that rely on the tower space to operate, and those users may install their own equipment on the tower. In other situations, your company owns and installs the equipment on the tower used in facilitating operation of these communication systems, which may be used by several entities.

Please be advised that we would not consider such charges subject to sales tax as the rental of tangible personal property.

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 (785) 296-3081.

Very truly yours,

Richard L. Cram

Date Composed: 07/06/2004 Date Modified: 07/09/2004

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