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Ezel / Tax Rulings / TX
TX 8609L0767A01 Sales and/or Use Tax (State,Local,MTA) 1986-09-08

Did hotels and motels have to collect Texas sales tax on amounts charged to guests for local and intrastate long-distance telephone calls?

Short answer: Yes. The Comptroller said tax applied to the full amounts charged for local and intrastate long-distance calls; uncollected tax could be assessed with penalty and interest for four years.

Apply this to your situation

This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific 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) is the authoritative source for any reliance.

Plain-English summary

The Tax Administration Division warned a hotel or motel membership organization that some members were not collecting sales tax on amounts charged to guests for local telephone calls.

The letter said sales tax applied both to intrastate long-distance calls and to amounts charged for local calls. In an audit, a noncompliant hotel or motel could be assessed the uncollected tax plus penalty and interest. The letter warned that four years of liability could be substantial.

Common questions

Were guest charges for local telephone calls taxable? Yes.

Were intrastate long-distance calls taxable? Yes.

What could happen if a hotel failed to collect the tax? An audit could assess the tax, penalty, and interest.

How much historical exposure did the letter mention? A four-year period.

Source

Original ruling text

September 8, 1986

Dear ***:

It has been brought to my attention that many hotels and motels around
the state are still not collecting sales tax on the amounts they charge
their customers for local telephone calls. It has been almost twelve
months now, since sales tax began to apply to telecommunications charges
and some of your members are not complying with the law in this area.

It might be beneficial to your members if you put out a reminder on
this. In case of audit, your members will be assessed this tax, which
they are not collecting from their customer, plus penalty and interest.
For a four year period, the liability could be substantial.

You might remind them that not only is sales tax due on intrastate long
distance calls but upon the amount charged for local telephone calls as
well.

Your assistance in this matter will be appreciated.

You may write us, call toll free 1-800-252-5555 from anywhere in Texas or
phone 512/463-4633. If you have additional questions, please let us
know.

Sincerely,

Tax Administration Division

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