Where did Texas source city, county, and MTA tax on intrastate private-line service when it appeared on the same or a separate bill from local exchange service?

Plain-English summary

Private-line service connected fixed points without access to a switch for calling other numbers. Because calls could originate at either end and the flat-rate service generated no origin records, PHONE CO. A proposed using billing structure and service location to source local tax.

The Comptroller approved that approach. When private-line or similar service appeared on the same bill as local exchange service, it originated at the local-exchange service's situs. When separately billed and not associated with local exchange service, it originated at the customer's primary serving address determined when the service began.

What this means for you

The historical sourcing method used an administrable service location where actual call origin could not be identified. Combined billing followed the local exchange; separate billing followed the initially determined primary serving address.

Common questions

Why could the company not identify call origin? Private-line calls could start at either fixed endpoint, and the flat-rate service produced no origin records.

What controlled on a combined bill? The local-exchange service's situs.

What controlled on a separate bill? The customer's primary serving address determined when service was initiated.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8708L0829G01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller August 21, 1987

Dear ***:

Thank you for your suggestions on how we should administer city, county
and
MTA Tax on intrastate private line telecommunications services.

Situation:

Private line service connects two or more points. Calls can only
be made between the points and can originate at either end of the
line. A private line does not have access to a switch to allow
calls to be made to numbers not directly connected to the private
line. Because private line service is a flat rate service and no
records are available to identify at which end of the circuit the
call was initially made, it is not possible to identify where a
private line call originates. Nonetheless, the service is provided
to a primary serving address which PHONE CO. A proposes to use as
the point of origin for the service. This is consistent with both
the language and the intent of the local sales tax legislation. More-
over, PHONE CO. A intends to interpret billing address as primary
serving address inasmuch as the two are, except in rare occasions,
the same. To do otherwise may result in local taxing jurisdictions
not being able to collect taxes on totally intrastate private line or
similar services if the billing address which has no connection with
the service address is outside the State of Texas.

Response: Your solution is acceptable. Therefore:

o Where private line or a similar service is billed on the same bill as
local exchange service, the private line or similar service will be
taxed as originating at the situs of the local exchange service; and

o Where private line or similar service is billed on a separate bill not
associated with local exchange service, the private line or similar
service will be taxed as originating at the customer's primary serving
address as determined at the time the service was initiated.

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division