Is Texas sales tax due on broadcast-quality television transmission and video conferencing services provided to networks and television stations?

Subject

Satellite Transmission Services/One — Way Video Transmissions — Transmitted By Non — Licensed Broadcasters To Television Stations/Racetracks

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9402L1288A05

Plain-English Summary

The Texas Comptroller addressed the tax treatment of broadcast-quality television transmission services and video conferencing services provided to networks and television stations. The Comptroller ruled that these services are "telecommunications services" as defined in Texas Tax Code Section 151.0103.

Because they are telecommunications services, charges are subject to Texas state sales tax if the transmission originates from a point within Texas. Local sales taxes, which are imposed on a local-option basis, are not assessed on interstate telecommunications services. However, charges for local access loops are subject to both state and local sales taxes.

What This Means For You

If you provide satellite or television transmission services (or video conferencing) that originate in Texas: Charge Texas state sales tax on those charges. Because the underlying service is interstate telecommunications, do not add local sales tax to the transmission charge itself.

If you bill separately for local access loops: Those charges are subject to both state and local sales tax, unlike the interstate transmission charge.

If your transmissions do not originate in Texas: This ruling only addresses tax on charges for transmissions that originate from a point within Texas; it does not extend Texas tax to transmissions originating elsewhere.

Q&A

Q: Are broadcast-quality television transmission services and video conferencing services taxable in Texas?
A: Yes. The Comptroller classified them as telecommunications services under Tex. Tax Code § 151.0103, and charges are subject to Texas sales tax if the transmission originates from a point within Texas.

Q: Does local sales tax apply to these transmission charges?
A: No, not to the interstate transmission charge itself — local sales taxes are not assessed on interstate telecommunications services. Charges for local access loops, however, are subject to both state and local sales taxes.

Q: What test determines whether Texas tax applies to a given transmission?
A: Whether the transmission originates from a point within Texas. If it does, the charge is subject to Texas state sales tax.

Citations

• Tex. Tax Code § 151.0103 (definition of telecommunications services)

Original ruling text

February 17, 1994

Dear **:

Thank you for your recent letter questioning the tax treatment of
broadcast quality television transmission services provided to
networks and television stations. Your facts are included by
reference.

The television transmission, and, video conferencing services you
describe are telecommunications services as defined in Texas Tax
Code Section 151.0103.

Charges for such service are subject to Texas sales tax if the
transmissions originate from points within Texas. Local sales taxes
are imposed on a local option basis, but, are not assessed on
interstate telecommunications services.

Under separate cover, I am sending you a brochure entitled "Sales
Tax on Telecommunications Services."

Charges for local access loops are also subject to state and local
sales taxes.

This opinion is rendered based on the facts you submitted. 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 (ext.
34680). My direct line 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

NOTE: Previous Accession Number 9402086L