Is a toll-free 800 'call before you dig' message-relay answering service subject to New York sales tax?

Plain-English summary

One Call Systems, Inc. operates a New York City call center with a toll-free 800 "call before you dig" line. Contractors, utilities, and the public call to report their intent to disturb the earth; One Call transmits that message to the member utilities whose underground facilities are in the area, and the utilities then inform the caller of line locations (and may stake them out). The service is funded by One Call User's Council, Inc., a not-for-profit owned by the member utilities, to prevent damage to underground lines and harm to the public. One Call asked whether these receipts are subject to sales and use tax.

The Department held they are not:

• A telephone answering service isn't an enumerated service. Providing a telephone answering service is not one of the services taxed under § 1105(c), so it is not subject to sales or use tax.
• It's not a taxable information service under § 1105(c)(9). That paragraph (effective 9/1/1990) taxes entertainment or information services delivered by telephony (e.g., 800/900-number services), but only if the information service would be taxable as an information service if furnished in printed form. One Call does not provide callers any information — it merely transmits their dig notices to the utilities — so it is not furnishing a taxable information service.
• Result: the receipts One Call gets from the utility-owned council are not subject to state or local sales and use tax.

What this means for you

Relaying messages is not the same as selling information

A service that simply takes and forwards messages — an answering/message-relay service — was not an enumerated taxable service here. The taxable "information service" category turns on the provider furnishing information to the customer. One Call flunked that test in the taxpayer-favorable direction: it passes dig requests along to utilities without giving the caller data itself.

Watch the effective dates — this area of law changed

This is a March 1991 opinion, decided before telephone answering services became taxable under § 1105(b) effective 9/1/1991. A later advisory opinion (TSB-A-92(1)S) treated a similar One Call "call before you dig" line as a taxable telephone answering service for the post-9/1/1991 period. If you're analyzing an answering or message-relay service, pin down the time period and the current statute before relying on this result.

The 800/900-number information-service tax has a printed-form gate

Section 1105(c)(9) only taxes a telephone-delivered information service if the same information would be taxable if furnished in printed form. A pure message-relay function that furnishes no information doesn't clear that gate.

Common questions

Q: Is a "call before you dig" or similar message-relay line taxable in New York?
A: In this 1991 opinion, no — it was a nontaxable telephone answering service and not an information service under § 1105(c)(9). But note the law later changed.

Q: Why wasn't it a taxable information service?
A: Because One Call furnished callers no information; it only transmitted their dig notices to the utilities. The § 1105(c)(9) tax requires actually furnishing an information service.

Q: Does this still apply today?
A: Be careful. Telephone answering services became taxable under § 1105(b) effective 9/1/1991, and a later opinion (TSB-A-92(1)S) taxed a similar One Call line for that later period. Check the current law and dates.

Citations and references

Statutes:

• Tax Law § 1105(c) — enumerated taxable services (a telephone answering service is not among them at the time of this opinion)
• Tax Law § 1105(c)(9) — tax on entertainment/information services delivered by telephony (eff. 9/1/1990), limited to information services taxable if furnished in printed form
• Tax Law § 1105(c)(1) — tax on information services (referenced by the § 1105(c)(9) printed-form condition)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_29s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (29)S
Sales Tax
March 18, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S901129A

On November 29, 1990, a Petition for Advisory Opinion was received from One Call
Systems, Inc., Three Allegheny Center, Pittsburgh, PA 15212.
The issue raised by Petitioner, One Call Systems, Inc., is whether the providing of a toll-free
800 telephone answering service for One Call User's Council, Inc. is subject to New York State and
local sales and use tax.
Petitioner operates a call center in New York City whereby contractors, utilities, and the
general public may call its toll-free 800 telephone answering service number to report their intent
to disturb the earth. This message is transmitted by the Petitioner to the member utilities who have
underground facilities located in the area of the dig. The utilities then inform the caller of
underground line locations based on the utilities research maps and records of facilities. The utilities
may also stake out the location of underground lines prior to the dig. The telephone answering
service is funded and otherwise maintained by One Call User's Council, Inc., a not-for-profit
corporation owned by member utility companies. The purpose of the service is to prevent damage
to underground utilities and harm to the public and property from excavating in areas where
underground facilities are located.
Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services. The providing of a telephone answering service is not one of
the services enumerated under Section 1105(c) of the Tax Law and, therefore, such service is not
subject to sales or use tax.
Section 1105(c)(9) of the Tax Law, effective September 1, 1990, imposes tax upon the
receipts received from the following:
The furnishing or provision of an entertainment service or of an information
service, which is furnished, provided, or delivered by means of telephony or
telegraphy or telephone or telegraph service (whether intrastate or interstate) of
whatever nature, such as entertainment or information services provided through 800
or 900 numbers of mass announcement services or interactive information network
services. Provided, however, that in no event (i) shall the furnishing or provision of
an information service be taxed under this paragraph unless it would otherwise be
subject to taxation under paragraph one of this subdivision if it were furnished by
printed, mimeographed or multigraphed matter or by duplicating written or printed
matter in any other manner nor (ii) shall the provision of cable television service to
customers be taxed under this paragraph. (emphasis added)

-2­
TSB-A-91 (29)S
Sales Tax
March 18, 1991

The type of service provided by Petitioner to the member utility companies is similar to a
telephone answering service which is not an enumerated service subject to sales or use tax under
Section 1105(c) of the Tax Law. Further, Petitioner is not providing an information service subject
to sales or use tax pursuant to Section 1105(c)(9) of the Tax Law since it does not provide callers
with any information, but merely transmits messages to the utility companies of the caller's intent
to dig. Therefore the receipts received by Petitioner from One Call User's Council, Inc. are not
subject to the imposition of State and local sales and use tax.

DATED: March 18, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.