Telecommunications Service and Ancillary Service

What Sales and Use Tax is Due?

Gross receipts derived from providing telecommunications service and ancillary service are subject to the 7% combined general rate of sales and use tax. 

Gross Receipts Subject to Tax

The gross receipts derived from providing telecommunications service and ancillary service is the total amount or consideration for which telecommunications service and ancillary service are sold. The gross receipts must be valued in money, whether paid in money or otherwise.

Charges or Fees that are Part of the Gross Receipts Subject to Tax

The gross receipts include all charges providing telecommunications service and ancillary service, notwithstanding that some charges may be billed separately.

Examples of charges included in the gross receipts include charges for the following:

  • Receipts from flat rate service, service provided on a call-by-call basis, a postpaid calling service, mobile telecommunications service, and private telecommunications service.
  • Charges for directory assistance, directory listing that is not yellow page classified listing, call forwarding, call waiting, three-way calling, caller ID, voice mail, and other similar services.
  • Customer access line charges billed to subscribers for access to the intrastate or interstate inter-exchange network.
  • Charges billed to a pay telephone provider that uses the telecommunications service to provide pay telephone service.
  • Charges for reconnecting services to customers after services have been terminated for nonpayment and charges for disconnecting services.
  • Allowable surcharges imposed to recoup assessments for the Universal Service Fund.
  • Paging service, both one-way and two-way.
  • Installation charges by the retailer to provide telecommunication services or ancillary service.

Items that are Not Part of the Gross Receipts but may be Subject to a Different Rate of Tax

Certain charges or services provided by a retailer of telecommunications service and ancillary service that are not part of the gross receipts may be subject to a different rate of tax, including the following:

  • Radio and television audio and video programming service, regardless of the medium of delivery, and the transmission, conveyance, or routing of the service by the programming service provider. The term includes cable service and audio and video programming service provided by a mobile telecommunications service provider.
  • Directory advertising, yellow-page classified listings, and other advertising.
  • An information service is a service that generates, acquires, stores, processes, or retrieves data and information and delivers it electronically to or allows electronic access by a consumer whose primary purpose for using the service is to obtain the processed data or information. For additional information refer to SUTB 48.
  • Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services.
  • Billing and collection services provided to a third party.
  • Charges for bad checks or late payments.

How to File and Pay?

Report and pay the tax due on telecommunications service and ancillary service on Form E-500E, Combined General Rate Sales and Use Tax Return.

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