Could a seller of taxable two-way-radio airtime issue resale certificates for telecommunications services it purchased?

Plain-English summary

A business selling airtime for two-way radios was selling taxable telecommunications services and had to collect sales tax under Rule 3.344(b)(4). Rule 3.344(h) supplied the local-sales-tax collection guidance.

The business could issue a resale certificate for telecommunications services that it bought and resold under Rule 3.285(b)(3). That treatment clearly applied to long-distance charges identifiable as part of the service sold to a particular customer.

The letter said basic local exchange service generally could not be identified that way, so a resale certificate generally could not be issued for the basic local charge.

Common questions

Was two-way-radio airtime taxable? Yes.

Could identifiable long-distance charges be bought for resale? Yes.

Could basic local exchange service generally be bought for resale? No.

Citations and references

• 34 Tex. Admin. Code Rule 3.344(b)(4) and (h)
• 34 Tex. Admin. Code Rule 3.285(b)(3)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8910L0964G07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller October 6, 1989

Dear **:

Thank you for your letter of September 18, 1989, concerning your
client's sales tax responsibilities when selling air time for two-
way radios.

You client is selling taxable communications services and is re-
quired to collect sales tax in accordance with the provisions un-
Dear section (b)(4) of the enclosed Rule 3.344 - Telecommunications
Services. Section (h) of the rule gives the guidelines for the
collection of local sales taxes.

Your client may issue a resale certificate in lieu of paying sales
tax on telecommunications services that it purchases and resells
in accordance with the provisions of Rule 3.285 - Resale Certifi-
cates; Sales of Resale, particularly section (b)(3). A resale
certificate clearly may be issued for telecommunications services
such as long-distance charges that can be identified as part of
the telecommunications services that your client sells to a parti-
cular customer. This generally is not the case with the purchase
of basic local exchange services meaning a resale certificate may
not be issued.

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 additional information, you may
call toll free 1-800-252-5555. The regular number 512/463-4600.
You may write to Tax Correspondence, Comptroller of Public Ac-
counts.

Sincerely,
Eddie C. Washington
Tax Correspondence