What did Texas correct about telecom exemption letters, national banks, and prior-contract exemptions in 1985?

Plain-English summary

The Comptroller corrected a telecommunications company's notice telling customers to return an exemption certificate with a state exemption letter. Texas did not issue such letters to federal, state, or local governments or their agencies, or to churches and public schools.

The guidance also said national banks were not entitled to sales-tax exemptions and had lost exempt status in the early 1970s.

Finally, the legislation taxing telecommunications contained no prior-contract exemption, so telecommunications services had no such grandfathering.

Common questions

Did Texas issue the requested exemption letters to governments? No.

Did it issue them to churches or public schools? No.

Were national banks exempt? No, according to the guidance.

Was there a prior-contract exemption for telecommunications? No.

Citations and references

The reproduced guidance cites no numbered statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8510L0668B06

Original ruling text

October 1, 1985

Dear **:

I have a copy of a letter your company sent to all its customers regarding the
telecommunication tax. There were a couple of misstatements in the letter and
the exemption certificate attached. I know that you probably had nothing to do
with this letter, but I would ask you to help me get the correct information to
the proper party.

The letter asked the company's customers to complete the certificate, if
applicable, and return it along with a copy of a letter from the state
establishing the customer's exempt status. We do not issue letters of exemption
to Federal, state or local governments or their departments or agencies.
Neither do we issue letters to churches or public schools.

National banks are not entitled to any sales tax exemptions. They lost their
exempt status in the early 1970's.

Additionally, we have been receiving inquiries about a prior contract exemption
for telecommunication services. There were no provisions made for prior
contract exemptions in the bill passed by the legislature; hence, there are no
prior contract exemptions available for telecommunication services.

Thank you for your help with these matters.

Sincerely,

(Mrs.) Wanda Hutcheson
Tax Policy Section
Tax Administration Division

Dear Customer:

When you receive your telephone bill this month, it will include an insert we
designed to inform all customers of the new state sales tax which will be
reflected on bills beginning September 21.

The new tax is the result of a recent change in the state tax structure which
will subject most intrastate telephone services--except basic local service--to
state sales tax effective October 1, 1985.

Since your telephone service is presently exempt from Federal Tax, you may also
qualify for exemption from state sales tax. We have enclosed a state sales tax
exemption certificate for your convenience.

If your organization qualifies for exemption status, please fill out the
enclosed form and return it to your local business office. Also, please enclose
a copy of the state of Texas letter which established your tax exempt status.

When we receive this information, if you qualify for exemption, it will provide
the authorization we need to remove state sales tax charges for applicable
items on your bill.

NOTE: To request a copy of exemption certificate from our office please send
an email or call us at 1-800-252-5555.