Texas Letter Ruling 9209L1196D11: Municipal Franchise Fee/Access Fee — Cable Television Services — To Use City Rights — Of — Way/Easements

Subject

Municipal Franchise Fee/Access Fee — Cable Television Services — To Use City Rights — Of — Way/Easements

Plain-English summary

A cable television provider asked the Texas Comptroller whether an access fee it charges for local government programming, which it passes on to its customers, is taxable. The Comptroller answered that the access fee is taxable to the customers, even if it is separately stated on the bill, because it is part of the sales price of the cable television service. The Comptroller noted the opinion is based on the facts presented, and could change if the facts are different or additional facts arise.

What this means for you

Cable television providers

If you charge your customers an access fee tied to local government (municipal) programming and pass that cost through, the Comptroller treats it as part of the taxable sales price of your cable television service. Listing the access fee as a separate line item on the customer's bill does not make it exempt — it is still folded into the taxable sales price.

Accountants and tax professionals

This ruling is a narrow, fact-specific answer about a single element of a cable bill: an access fee for local government programming passed through to customers. The Comptroller's letter is explicit that its conclusion rests on the facts as presented to it, and that the answer could change with different facts, so it should not be extended automatically to other types of fees or charges on a cable bill without confirming the facts match.

Common questions

Q: Is the access fee for local government programming taxable?
A: Yes. The Comptroller ruled it is taxable to the customer because it is part of the sales price of the cable television service.

Q: Does separately stating the access fee on the bill make it exempt?
A: No. The letter specifically says the access fee is taxable "even if separately stated."

Q: Can I rely on this ruling for my own situation?
A: The letter states its opinion is based on the facts presented, and that the opinion may change if there are additional or different facts. Under STAR's general rules, a letter ruling can only be relied upon by the taxpayer to whom it was issued.

Citations and references

No statutes, rules, or other authorities are cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9209L1196D11

Original ruling text

September 17, 1992

Dear ***:

Thank you for your letter asking about the taxability of an access fee for
local government programming that will be passed on to your customers.

The access fee is taxable to your customers even if separately stated.It is
part of the sales price of cable television service when billed to the
customer.

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

You may call me toll free at 1-800-252-5555, ext. 5-0030.The direct line is
512/475-0030.You may also write to Tax Administration, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Administration Division