Texas Letter Ruling 9211L1205F09: How is the location of a cellular telephone call determined for city, county, and MTA (Metropolitan Transit Authority) tax purposes?

Plain-English summary

This is a short 1992 Texas Comptroller letter ruling answering one question: for cellular telephone calls, what location determines whether city, county, and MTA (Metropolitan Transit Authority) local sales tax applies, and at what rate?

The Comptroller's answer is a two-step rule:

1. Primary rule — the call is sourced to the location of the cell site that receives the incoming transmission (i.e., the cell site the call originates from/through).
2. Fallback rule — if that originating cell site cannot be determined, local tax on the telecommunications service is instead based on the tax rate in effect at the customer's billing address.

The letter notes this answer is based on the facts presented by the requester, and that other, similar-looking facts could yield a different result.

What this means for you

Cellular telephone companies and telecom billing staff

When determining which city, county, and MTA local sales taxes apply to a cellular call, look first to the cell site that received the incoming transmission — that site's location sets the applicable local tax rate. Only if you cannot identify that originating cell site should you fall back to sourcing the charge based on the customer's billing address.

Accountants and tax professionals

This ruling is useful for understanding how the Comptroller approached local tax sourcing for cellular/roaming charges in the early 1990s. Because it is a taxpayer-specific letter ruling from 1992 (not a formal rule), it does not bind the Comptroller as to any other taxpayer, and telecommunications sourcing rules and technology have evolved considerably since then — confirm current STAR guidance or the applicable statute/rule before relying on this approach today.

Common questions

Q: How does Texas determine which city/county/MTA gets the local sales tax on a cellular call?
A: Based on the location of the cell site that receives the incoming transmission of the call.

Q: What if the originating cell site can't be identified?
A: Local sales tax for the telecommunications service is then based on the tax rate in effect at the customer's billing address.

Q: Does this ruling apply to my situation?
A: This is a taxpayer-specific letter ruling based on the facts presented to the Comptroller in 1992. Similar facts may yield different results, and the letter can be relied on as a detrimental-reliance defense only by the taxpayer it was issued to.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9211L1205F09

Original ruling text

November 20, 1992

Dear ***:

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

Question: Concerning cellular telecommunications, what determines the
location for a cellular call for the purpose of assessing city, county,
and MTA tax?

Response: The location of a cellular call is determined by the location
of thecell site where the cellular company receives the incoming
transmission. If the cell site from which the call originates cannot be
determined, local sales tax for telecommunications service is determined
by the tax rate in effect at the billing address of the customer.

This opinion is based on the facts you presented. Other facts, though
similar may yield different results.

If you have questions or need more information, please call or write. You
may reach me by calling toll free, (800) 531-5441 extension 3-4680. My
direct dial number is (512) 463-4680. The number for FAX transmissions is
(512) 475-0900. You may write to me in care of Tax Administration
Division.

Sincerely,

Al Van Allen
Tax Administration Division