Were a common carrier's interstate long-distance telephone charges subject to Texas sales tax, and what applied if tax had been charged in error?

Plain-English summary

The requester asked whether its common-carrier client was exempt from Texas sales tax on interstate long-distance telephone service, including WATS charges, and how to recover tax already paid.

The Comptroller said interstate telecommunications services were not subject to Texas tax. If Texas sales tax had been charged on those services, it was charged in error. The limitations period was four years, and no exemption certificate was necessary because the tax should not have been collected.

The carrier status did not create a broader exemption: common carriers still owed Texas sales tax on intrastate telecommunications services.

Common questions

Were interstate telecommunications charges taxable? No.

How far back did the letter say an erroneous-tax claim could go? Four years.

Was an exemption certificate needed to correct the erroneous tax? No.

Were the carrier's intrastate telecommunications charges exempt? No. Those charges remained taxable.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8609L0751E04

Original ruling text

September 3, 1986

Dear ***:

Thank you for your recent letter which is restated with response below.

Would my client, *** (as a Common Carrier), be exempt from
sales tax on charges associated with interstate long distance telephone
communication services (WATS)?

Also, if exempt, how far back could we go in claiming a refund from the
telephone company? In addition, what document or exemption certificate
do we need to file with the telephone company in obtaining this refund?

Response:
Interstate telecommunications services are not subject to Texas tax. If
your client has been charged Texas sales tax on interstate telecommunications
it has been an error. The statute of limitations is four years. Because
the tax would have been connected in error no exemption certificate is necessary.

However, common carriers are not exempt from Texas sales tax on
intrastate telecommunications services.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact us if you have additional questions. You
may write us, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4600.

Sincerely,

Tax Policy Section
Tax Administration Division