NE 09-06-1 Local Option Sales and Use Tax 2006-05-31

Does Nebraska local option (city/county) sales tax apply to direct-to-home satellite programming delivered to a business?

Short answer: No. Revenue Ruling 09-06-1 concludes that direct-to-home satellite programming includes programming transmitted or broadcast directly to a subscriber's business or commercial premises, and Nebraska local option sales and use tax does not apply to it. The Federal Telecommunications Act of 1996 (P.L. 104-104) prohibits local jurisdictions from imposing any local sales or use tax on direct-to-home satellite programming broadcast directly to the subscriber's premises, and 'premises' means any residential, business, or commercial premises. As a result, the provision of Local Option Sales and Use Tax Regulation 9-011.01C stating that satellite programming to a business or commercial customer is subject to local option tax is incorrect and will not be applied to any periods; all other provisions of Regulation 9-011 remain in effect. (Note: state sales tax can still apply -- see Revenue Ruling 01-06-4 on prepaid satellite cards -- but local option tax does not.)

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This page answers the general question as of 2006. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Nebraska cities and counties can add a local option sales and use tax on top of the state rate. This ruling addresses whether that local tax can apply to direct-to-home satellite TV programming -- specifically when it is delivered to a business or commercial subscriber rather than a home.

The rule. It cannot. Direct-to-home satellite programming includes programming transmitted or broadcast directly to a subscriber's business or commercial premises, and local option sales and use tax does not apply to it.

Why -- federal preemption. The Federal Telecommunications Act of 1996 (P.L. 104-104) prohibits local jurisdictions from imposing any local sales or use tax on direct-to-home satellite programming broadcast by satellite directly to the subscriber's premises. The ruling clarifies that "premises" means any residential, business, or commercial premises -- not just homes.

Effect on the regulation. Because of this, the part of Local Option Sales and Use Tax Regulation 9-011.01C that said charges for satellite programming to a business or commercial customer are subject to local option tax is incorrect and will not be applied to any periods. All other provisions of Regulation 9-011 remain in effect.

What this means for you

Satellite providers and business subscribers

Do not charge local option (city/county) sales tax on direct-to-home satellite programming -- whether the subscriber is residential, business, or commercial. Federal law bars the local tax on this service.

State tax still can apply

This ruling is about the local option tax only. State sales tax can still apply to satellite arrangements -- for example, Revenue Ruling 01-06-4 taxes prepaid satellite programming cards at the state level and collects at the point of sale. So the takeaway is: state tax may apply, local option tax does not.

Common questions

Q: Does local option sales tax apply if my business (not home) gets the satellite service?
A: No. "Premises" includes business and commercial premises, so local option tax does not apply to direct-to-home satellite programming delivered to a business either.

Q: Why can't the city or county tax it?
A: The Federal Telecommunications Act of 1996 (P.L. 104-104) preempts local jurisdictions from imposing local sales or use tax on direct-to-home satellite programming.

Q: Is the whole Regulation 9-011 void?
A: No. Only the subsection (9-011.01C) treating business/commercial satellite programming as locally taxable is incorrect and unenforced; the rest of Regulation 9-011 stands.

Citations and references

Federal Telecommunications Act of 1996, P.L. 104-104 -- prohibits local jurisdictions from imposing local sales or use tax on direct-to-home satellite programming to the subscriber's premises.
Local Option Sales and Use Tax Regulation 9-011 -- governs direct-to-home satellite programming; subsection 9-011.01C (business/commercial taxability) is held incorrect and not applied, while the remainder stays in effect.

Source

Original ruling text

REVENUE RULING 9-06-1
May 31, 2006
Local Option Sales and Use Tax - Taxability of direct-to-home satellite programming. DIRECTTO-HOME SATELLITE PROGRAMMING INCLUDES PROGRAMMING THAT IS
TRANSMITTED OR BROADCAST DIRECTLY TO THE SUBSCRIBER’S BUSINESS OR
COMMERCIAL PREMISES, AND THE LOCAL OPTION SALES AND USE TAX DOES NOT
APPLY TO SUCH PROGRAMMING.
Advice has been requested as to whether the term “direct-to-home” as used in the Federal
Telecommunications Act of 1996, P. L. 104-104 includes programming that is transmitted or
broadcast directly to a subscriber’s business or commercial premises.
The Federal Telecommunications Act of 1996 prohibits local jurisdictions from imposing any local
sales and use tax on direct-to-home satellite programming transmitted or broadcast by satellite
directly to the subscriber’s premises. The proper deﬁnition of “premises” means any residential,
business, or commercial premises.
The provision of Local Option Sales and Use Tax Regulation 9-011.01C which states that charges
for satellite programming transmitted to a business or commercial customer are subject to local
option sales and use tax is not correct and will not be applied to any periods. All other provisions
of Local Option Sales and Use Tax Regulation 9-011 remain in effect.
APPROVED:

Mary J. Egr Edson
State Tax Commissioner
May 31, 2006

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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