| WAC 245 |
Telephone
business, telephone service. |
| SOURCE |
DOCUMENT |
DETER. NO |
DATE OF ISSUE |
DESCRIPTION |
| WAC: |
458-20-245 |
|
08/23/1983 |
Telephone business,
telephone services. |
| RCW: | 82.08.0289 |
|
1983 |
Exemptions--Certain network
telephone service. |
| |
82.04.065 |
|
1997 |
"Competitive telephone
service," "network telephone service," "telephone
service," "telephone business." |
| ETA: |
3169.2011 |
|
12/28/2011 |
Sourcing Wholesale Sales of Non-Mobile Telecommunications Services |
| |
3171.2012 |
|
04/04/2012 |
Taxation of Dark Fiber (unlit fiber optic cable)
This ETA provides business and occupation tax and retail sales tax guidance for the taxation of “dark fiber” used in telecommunications services.
|
| |
3159.2011 |
|
05/20/2011 |
Internet Protocol (IP) enabled telecommunications service taxability, sourcing, and allocation. This ETA addresses the taxability, sourcing, and apportionment of telecommunications services using Voice over Internet Protocol (“VoIP”) and Fax over Internet Protocol (“FoIP”) technologies under Washington’s retail sales tax and retailing B&O tax. It also clarifies that these types of telecommunications services are not currently exempt as local services under RCW 82.08.0289. With respect to sourcing and allocation, the ETA is limited to those telecommunications services sold on either a call-by-call basis or on an other than call-by-call basis. |
| |
3093.r109 |
|
12/28/09 |
Prepaid telephone debit cards. Effective January 1, 2010, reseller permits will replace resale certificates as the means to substantiate wholesale purchases. Chapter 563, Laws of 2009. |
| |
3047.2009 |
|
2/2/09 |
Taxation of network telephone service used to provide Internet access |
| |
3086.2009 |
|
2/2/09 |
Telephone answering service - Services or retail sales |
| |
3089.2009 |
|
2/2/09 |
Retail sales tax on telephone services sold to Indians |
| |
3093.2009 |
|
2/2/09 |
Prepaid telephone debit cards |
| |
3135.2009 |
|
2/2/09 |
Applicability of RCW 82.08.0289 residential telephone service exemption to cellular telephone service |
| |
544.04/.08.245 |
|
8/1/89 |
TELEPHONE ANSWERING SERVICE - SERVICES OR RETAIL SALES Revised 2/2/09 See ETA 3086.2009 |
| |
555.08.245/192 |
|
4/15/92 |
RETAIL SALES TAX ON TELEPHONE SERVICES SOLD TO INDIANS Revised 2/2/09 See ETA 3089.2009 |
| |
567.08.245 |
|
12/31/94 |
TELEPHONE DEBIT CARDS Are persons who sell telephone debit cards making retail sales? If so, how does the seller determine the local sales tax to apply to these sales? Revised 2/2/09 See ETA 3093.2009 |
| |
2019.08.245 |
|
12/1/04 |
Applicability of RCW 82.08.0289 residential telephone service exemption to cellular telephone service Revised 2/2/09 See ETA 3135.2009 |
| |
2029.04.245 |
|
2/24/06 |
Taxation of network telephone service used to provide Internet access services- Expires 11/01/2007. Internet Tax Freedom Act (ITFA) amendments will be in revised ETA. |
| |
2029.04.245r1 |
|
6/25/08 |
Retail Sales Taxes Imposed on Telecommunications Used to Provide Internet Access Revised 2/2/09 See ETA 3047.2009 |
| INDUSTRY GUIDES: |
|
Sep 2010 |
Internet-based Businesses cancelled |
| SPECIAL
NOTICES: |
|
|
|
| Subject
Title Reference: |
|
|
|
| Telecommunications |
|
|
04/05/2012 |
Telephone Program Excise Tax Rates for Fiscal Year 2013 |
| Enhanced 911 |
|
|
11/01/2010 |
Enhanced 911 Excise Tax Changes |
| Enhanced 911 |
|
|
01/25/2011 |
Enhanced 911 Excise Tax Changes |
| Telecommunications |
|
|
11/01/2010 |
Enhanced 911 Excise Tax Changes |
| Telecommunications |
|
|
01/25/2011 |
Enhanced 911 Excise Tax Changes |
| Telecommunications |
|
|
03/24/2011 |
Telephone Program Excise Tax Rates for Fiscal Year 20l2 |
| Paging
Services | |
06/09/2000 |
Paging Services Subject to
Retail Sales Tax |
| Telecommunications | |
09/10/2002 |
Address-based Database Now
Available for Local Tax Coding for Mobile Telecommunication Services |
| Enhanced
911/ Telecommunications |
|
|
11/14/2002 |
New State Enhanced 911 Tax on
Cellular Telephone Service |
| Telecommunications | |
04/29/2004 |
Place of Sale for Telephone
Services |
| Telecommunications | |
04/29/2004 |
Telephone Taxes Previously Paid
to DSHS Now Paid to the Department of Revenue |
| | |
04/28/2005 |
Taxes on Telephone Switched
Access Lines |
| | |
04/20/2006 |
Telephone Program Excise Tax
Rates for Fiscal Year 2007 |
| | |
04/24/2007 |
Telephone Program Excise Tax
Rates for Fiscal Year 2008 |
| Telecommunications | |
03/18/2008 |
Telephone Program Excise Tax
Rates for Fiscal Year 2009 |
| Telecommunications | |
03/18/2008 |
Telephone Program Excise Tax
Rates for Fiscal Year 2009 |
| Telecommunications | |
05/23/2008 |
Sales Tax Exemption
Telecommunication Services for Internet Service Providers |
| Telecommunications |
|
4/7/09 |
Telephone Program Excise Tax Rates for Fiscal Year 2010 |
| Telecommunications |
|
12/2/09 |
Sourcing Prepaid Wireless Calling Services |
| Telecommunications |
|
|
03/25/10 |
Telephone Program Excise Tax Rates for Fiscal Year 20ll |
| |
|
|
|
| |
|
|
|
| DIRECTIVE: |
NONE |
|
|
|
| RPM: |
NONE |
|
|
|
| WTD: |
2 WTD 361 |
87-71 |
|
RETAIL SALES TAX -- LONG
DISTANCE TELEPHONE CALL MARK-UPS -- EVIDENCE -- TEST PERIOD. Tax assessed on
unreported long distance telephone mark-ups will be reduced if taxpayer hotel
provides evidence that its occupancy rate was lower during the period assessed
than during the test periods used by the audits. |
| |
4 WTD 191 |
87-328 |
|
B&O TAX -- RETAIL SALES TAX
-- TELEPHONE ANSWERING SERVICE -- TELEPHONE CALLS -- CROSS CONNECTION OF. The
patching by a telephone answering service of parties on different telephone
lines so that they can speak to each other is a switching activity subject to
Retailing B&O and retail sales tax. Where the charge for such service is
made to a residential customer, however, the transaction is exempt of retail
sales tax. |
| |
5 WTD 347 |
88-193 |
|
B&O TAX -- RETAILING
RESELLING LOCAL NETWORK TELEPHONE SERVICE -- BILLING INVOICE SENT TO TAXPAYER
IN ANOTHER STATE. Where taxpayer purchases local network telephone service
and resells the service to another person, the proceeds of the resale are subject
to Retailing B&O tax. The sales took place in this state. It matters not
that the taxpayer or its buyer receives the billing invoice in another state
from their respective seller. |
| |
5 WTD 347 |
88-193 |
|
B&O TAX -- RETAILING --
RETAIL SALES TAX -- EXEMPTION -- INTERSTATE NETWORK TELEPHONE SERVICE --
CHARGE FOR SERVICE BILLED TO INSTATE PERSON -- CHARGE FOR SERVICE BILLED TO
ORIGINATING OR RECEIVING EQUIPMENT. Whereinterstate network telephone service (toll service) is provided and
the cost is charged to the originating or receiving (in the nature of a
collect call) equipment in Washington, the charge is subject to Retailing
B&O tax and retail sales tax regardless of where the bill is sent. If the
cost is charged to originating or receiving (collect call) equipment outside
Washington, the charge is exempt from Retailing B&O tax and retail sales
tax regardless of where the bill is sent. |
| |
5 WTD 347 |
88-193 |
|
RETAIL SALES TAX -- EXEMPTION --
RESALE OF TELEPHONE SERVICE -- RESALE CERTIFICATE. Where taxpayer resells
telephone service, it can furnish its seller with a resale certificate and be
exempt from retail sales tax charges by its seller. |
| |
7 WTD 191 |
89-111 |
|
RETAILING B&O TAX --
BUSINESS ACTIVITY -- NETWORK TELEPHONE SERVICE -- PROVIDING ACCESS. Where
taxpayer provides its customers/consumers with access to a local telephone net-work, the taxpayer is engaged in the
business activity of network telephone service. It is not required that the
taxpayer operate and manage the local telephone lines and exchanges; that
service can be rendered by the local telephone companies who sell that
service to the taxpayer who, in turn, sells the service to its
customers/consumers.Thus, the
telephone company is a wholesaler and taxpayer is a retailer of network
telephone service subject to Retailing B&O tax. |
| |
7 WTD 191 |
89-111 |
|
RETAILING B&O TAX --
RESELLING LOCAL NETWORK TELEPHONE SERVICE -- GROSS PROCEEDS OF SALE. Where
taxpayer contracts with and is billed as the solely liable party by local
telephone companies to receive telephone service at the residences or offices
of its customers/consumers who pay the taxpayer for such service plus a
"handling charge," the taxpayer is reselling "network
telephone service." The amounts billed by the taxpayer to its
customers/consumers are the gross proceeds of sale subject to retailing
B&O tax with no deduction allowed for taxpayer's payments to the local
telephone companies. |
| |
7 WTD 283 |
89-174 |
|
TAXATION OF INTERNATIONAL
TELEPHONE SERVICES. The lack of a specific reference to foreign or
international telephone service in RCW 82.04.065(2) does not affect the
taxability of foreign or international telephone services when the statutory
provision taxes all "Network telephone services" originating or
terminating in this state for which charges are billed to persons in the
state. It is the local activity (sale) of the service that is the
determiningfactor not the character
of the transaction. Distinguishing: Simpson v. State, 26 Wn.App 687. 615 P, 2nd 1297 (1980). |
| |
8 WTD 79 |
89-352 |
|
TELEPHONE BUSINESS -- NETWORK
TELEPHONE SERVICE -- SWITCHING SERVICE -- "HOOK FLASH" CROSS
CONNECTIONS -- PROSPECTIVE APPLICATION. An electronic, computerized system
which connects local telephone access lines to reroute telephone calls and
avoid toll call charges constitutes a "local telephone network switching
service" under RCW 82.04.065 (2). Charges for providing such "hook
flash" cross connects are retail sales, subject to sales tax.
Prospective application granted. |
| |
8 WTD 89 |
87-328A |
|
SEGREGATED TELEPHONE SERVICE
CHARGES -- NETWORK TELEPHONE SERVICE -- SWITCHING SERVICE -- CROSS CONNECTION
SERVICE. A system which connects local telephone access lines to reroute
telephone calls constitutes a "local telephone network switching service"
under RCW 82.04.065(2). Segregated charges for providing such cross
connections and switches are retail sales by a telephone service provider,
subject to sales tax and Retailing B&O under RCW 82.04.050. |
| |
8 WTD 89 |
87-328A |
|
NON-SEGREGATED TELEPHONE SERVICE
CHARGES -- SERVICE B&O. Telephone answering service businesses are taxed
under the Service category of B&O for unsegregated receipts derived
mainly from answering or message taking, even though some undifferentiated
retail "telephone service" receipts may be included. |
| |
8 WTD 427 |
88-378A |
|
HOTEL'S TELEPHONE SERVICE
BUSINESS -- RETAILING B&O & RETAIL SALES TAX -- TAX ON WHOLESALE
COSTS. Hotel's provision of telephones, telephone equipment, and access to
local and long distance phone networks to guest at cost-plus rates
constitutes the activity of Telephone Service, subject to Retailing B&O
and retail sales tax and eligible for credit for retail sales tax mistakenly
paid on wholesale purchases. |
| |
9 WTD 1 |
88-378 |
|
B&O TAX -- RETAILING --
RETAIL SALES TAX -- HOTEL -- TELEPHONE CHARGES -- SERVICES RELATED TO
LODGING. Where a hotel leased WATS lines from two telephone companies for use
by its employees and guests, the charges to guests for the use of room
telephones are for services related to lodging and taxable as retail sales.
The hotel was not providing "competitive telephone service" or
"network telephone service" as those services are defined in RCW
82.04.065 |
| |
9 WTD 165 |
90-86 |
|
TELEPHONE CHARGES -- RETAIL
SALES TAX -- RETAILING B&O TAX -- HOTEL -- SERVICES RELATED TO LODGING.
When a hotel leases lines from several telephone carriers for the use of its
employees and hotel guests, the charges to the guests are for services related
to lodging and taxable as retail sales. This constitutes the activity of
telephone service. Accord: 88-378_WTD_(1988); 88-378A_WTD_(1989); 89-111, 7
WTD 191 (1989).THIS
DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO.
93-269ER, 14 WTD 153 (1995).
|
| |
9 WTD 280 |
90-128 |
|
INFORMATION AND COMPUTER
SERVICES -- FURNISHING TELEPHONE LINES FOR DATA TRANSMISSION -- SERVICE
B&O TAX. Charges to customers for "dedicated" telephone lines
furnished by taxpayers for use in connection with on-line data processing
services rendered by taxpayer are subject to Service B&O tax. Providing
telephone lines is incidental to service activity and is not "network
telephone service" as defined by RCW 82.04.065 and Rule 245. |
| |
11 WTD 207 |
91-168 |
|
RETAIL SALES TAX -- TELEPHONE
BILLING. Telephone companies operating in Washington are responsible to
account for, collect and remit retail sales taxes collected from consumers. |
| |
12 WTD 57 |
92-015 |
|
RETAIL SALES TAX -- NETWORK
TELEPHONE SERVICES -- INTERSTATE SERVICE -- ORIGINATING AND TERMINATING IN
WASHINGTON -- OUT-OF-STATE BILLING. Toll (long-distance) telephone calls
which both originate and terminate within the state of Washington but are
billed to an out-of-state telephone apparatus are included within the
definition of network telephone services. F.I.D. |
| |
12 WTD 57 |
92-015 |
|
RETAILS SALES TAX -- NETWORK
TELEPHONE SERVICES -- DIRECTORY ASSISTANCE -- EXCESS CHARGES. The $.25 per
inquiry charges above the four free inquiries included in the basic monthly
telephone rates are merely additional compensation received for network telephone
services. As such, they are taxable under the Retailing and retail sales tax
classifications. F.I.D. |
| |
12 WTD 57 |
92-015 |
|
RETAIL SALES TAX -- NETWORK
TELEPHONE SERVICES -- COIN-OPERATED TELEPHONES -- RESIDENTIAL CREDIT CARD.
Local telephone calls which originated from coin-operated telephones but were
billed to a residential credit card are exempt from retail sales tax as network
telephone services to residential customers. F.I.D. |
| |
12 WTD 243 |
92-273 |
|
B&O TAX -- RETAIL SALES TAX
-- NETWORK TELEPHONE SERVICE -- "REPEATER" INCOME. Gross receipts
derived from the activity of providing two-way voice communications via
repeaters is within the definition of network telephone services and taxable
under the retailing B&O tax classification. |
| |
12 WTD 519 |
92-363 |
|
B&O TAX -- RETAILING --
NETWORK TELEPHONE SERVICE -- INTERSTATE SERVICE -- ORIGINATING OR TERMINATING
IN WASHINGTON. Amounts charged by a satellite transmission company forreceiving and relaying a signal to a facility
located in another state are included within the definition of "network
telephone service" if the signal originates or terminates within the
state of Washington and the transmission services are subsequently billed to
an apparatus within the state. See Det. No. 88-193, 5 WTD 347 (1988). |
| |
14 WTD 72 |
93-321 |
|
RETAIL SALES TAX -- TELEPHONE
SERVICES -- NETWORK TELEPHONE SERVICES -- FACSIMILE CHARGES. The term"
telephone services" is broadly defined to include the providing of
access or transmission for hire through a telephone network by any person. That
term is not limited to services provided by the owner of the telephone
network. A business which provides facsimile services is engaged in providing
telephone services for its customers, and retail sales tax is due on the
facsimile charges. |
| |
14 WTD 232 |
94-071 |
|
RETAIL SALES TAX -- NETWORK
TELEPHONE SERVICES -- LOCAL SERVICE -- INTERSTATE SERVICE. Except for local
telephone service charged to a residential account, all charges by an
operator service for access to a local telephone network are subject to
retail sales tax. All calls charged through an operator service for access to
an intrastate toll service are subject to retail sales tax, even if charged
to an out-of-state residential or commercial account. |
| |
14 WTD 232 |
94-071 |
|
RETAIL SALES TAX -- NETWORK
TELEPHONE SERVICE -- INTERSTATE SERVICE. In accordance with the Commerce
Clause, it was the intent of the legislature that only those interstate calls
which originate or terminate in Washington and are charged in Washington are
subject to retail sales tax. |
| |
14 WTD 232 |
94-071 |
|
RETAIL SALES TAX -- NETWORK
TELEPHONE SERVICE -- RULE CONSTRUCTION. The language in Rule 245 concerning
calls charged to an apparatus in Washington applies only to interstatecalls. |
| |
15 WTD 26 |
94-116 |
|
RETAIL SALES TAX -- B&O TAX
MEASURE -- MUNICIPAL TAXES -- CELLULAR PHONE SERVICE. Receipts attributed to
municipal taxes imposed upon cellular phone companies and separately stated
on their invoices were properly included in the gross proceeds of sales from
providing telephone service in measuring Business & Occupation and retail
sales taxes. |
| |
15 WTD 96 |
94-209 |
|
B&O TAX -- NEXUS --
DISSOCIATION -- DOCUMENTATION. A nonresident manufacturer's request to
dissociate telephone sales from the nexus-creating activity of its
independent sales agents was disallowed where taxpayer failed to submit
documentation establishing an independent source for telephone customer
relationships, and also failed to document that the local activities of its
independent sales agents were not significantly associated with those sales. |
| |
17 WTD 69 |
97-157 |
|
RETAIL SALES TAX -- PURCHASE FOR
RESALE -- DOMINION & CONTROL -- FIBER-OPTIC CABLE -- BAND WIDTHS.An owner of fiber-optic cable may not
purchase the cable without payment of retail sales tax even though it rebills
its customers for use of the cable in separately identifiable band widths and
on a monthly basis.Under these
circumstances, the owner does not relinquish possession and dominion and
control of the cable to its customers. |
| |
17 WTD 69 |
97-157 |
|
RETAIL SALES TAX -- PURCHASE FOR
RESALE -- DOMINION & CONTROL -- FIBER-OPTIC CABLE -- FIBER PAIRS.An owner of fiber-optic cable may not
purchase the cable without payment of retail sales tax even though it rebills
its customers for use of the cable in fiber pairs on a monthly basis.Under these circumstances, the owner does
not relinquish possession and dominion and control of the cable to its
customers. |
| |
17 WTD 69 |
97-157 |
|
RETAIL SALES TAX -- COMPETITIVE
TELEPHONE SERVICES -- FIBER-OPTIC CABLE.An owner of fiber-optic cable is not engaged in competitive telephone
services when it rebills the use of that cable in increments of band widths
or fiber pairs to telephone companies.It is engaged in providing network telephone services and is subject
to retail sales tax on all equipment utilized to provide that service,
including the fiber-optic cable. |
| |
17 WTD 304 |
96-090 |
|
RETAIL SALES TAX -- EXEMPTION --
RESIDENTIAL CUSTOMER -- CELLULAR SERVICES.Customers of cellular telephone services are not entitled to the
retail sales tax exemption for residential customers if the service provider
has not established a separate and well-defined class of residential service. |
| |
17 WTD 379 |
98-072 |
|
B&O TAX -- RETAIL SALE --
NETWORK TELEPHONE SERVICES -- COMMISSIONS -- PAY-PHONE.Where the owner of pay telephone equipment
received a commission from the long distance service provider for each call
originating from its equipment, the income was taxable under the service and
other activities tax classification. |
| |
20 WTD 20 |
99-280R |
|
USE TAX – DEFERRED SALES TAX
--VALUE – GIFT – CELLULAR PHONES:Use
tax on cellular phones given away to promote cellular service commissions is
measured by the donor’s arm’s length purchase price of the phones. |
| |
20 WTD 372 |
00-159E |
|
RETAILING
B&O AND RETAIL SALES TAX -- NETWORK TELEPHONE SERVICE -- DEFINITION-- TRUE OBJECT.Where Taxpayer’s network provided a
computer data protocol conversion service in addition to transmitting data
and information over its network to another computer, the true object of the
service was found to be the transmission of data and information. |
| |
20 WTD 372 |
00-159E |
|
SERVICE B&O TAX OR RETAIL
SALES TAX -- NETWORK TELEPHONE SERVICE -- INFORMATION SERVICE -- INTERNET
SERVICE.The term “internet service”
was held to not include a protocol conversion and transmission service that
acted upon only the protocols of the transmitted data or information. |
| |
21 WTD 13 |
01-036 |
|
RADIO AND TELEVISION
BROADCASTING -- INTERNET.Providing
access to pre-recorded programs over the Internet does not constitute radio
or television broadcasting because the signal is not delivered over the
airwaves. |
| |
21 WTD 13 |
01-036 |
|
CLARIFYING ACT – DEFINITION OF
INTERNET SERVICES.When the
legislature adopts a clarifying act, the act will apply retroactively.RCW 82.04.297 is a clarifying act,
therefore the definition of Internet Services contained therein, applies
retroactively. |
| |
21 WTD 13 |
01-036 |
|
AMBIGUOUS STATUTE –LEGISLATIVE
INTENT.RCW 82.04.297’s definition of
Internet Services is ambiguous in that it can be read to have two conflicting
meanings.The legislative history
shows that the legislature intended one specific meaning.Specifically, Internet Services as defined
in RCW 82.04.297 include only those persons who provide access to the
Internet, not those who maintain sites on the Internet. |
| |
21 WTD 13 |
01-036 |
|
Wa. Const., art. 2 § 19, RCW
82.04.297:SUBJECT OF BILL.The subject of a bill may not be broader
than its title.The title of SB5763,
which was codified as RCW 82.04.297, prohibited treating internet service
providers as network telephone service providers.Because persons who maintain homepages but
do not provide access to the Internet could not have been construed to have
provided network telephone services, they cannot be construed to provide
Internet Services. |
| |
21 WTD 13 |
01-036 |
|
DEFINITION OF INTERNET SERVICES
– CONTEMPORANEOUS CONSTRUCTION.The
purpose of RCW 82.04.297 was to ratify the department’s treatment of Internet
Services.The Department’s public
statement that RCW 82.04.297 applied to Internet Services Providers is
entitled to significant weight. |
| |
24 WTD 108 |
02-0030E |
|
RETAIL SALES TAX – NETWORK
TELEPHONE SERVICE -- INTERNATIONAL TELEPHONE SERVICE.Foreign and international telephone
services are subject to tax as network telephone services even though RCW
82.04.065(2) lacks a specific reference to foreign or international telephone
services. |
| |
26 WTD 148 |
06-0015E |
|
RULE
245; RCW 82.14B.030:E-911 EXCISE TAX
– IMPOSITION – WIRELESS SERVICES – PREPAID.A prepaid wireless service provider was held responsible for remitting
to the state enhanced 911 excise taxes for subscriber usage of radio access
lines where the place of primary use was within Washington. |
| |
26 WTD 148 |
06-0015E |
|
RULE
245; RCW 82.14B.020:STATUTORY
INTERPRETATION – EXEMPTIONS–INCORPORATED BY REFERENCE.When the Washington State Legislature
incorporated by reference a definition for “place of primary use” contained
in the federal Mobile Telecommunications Sourcing Act, it only incorporated
that specific definition for “place of primary use.”It did not incorporate any of the related
exemptions also contained in that Act. |
| |
26 WTD 148 |
06-0015E |
|
MISC:FEDERAL PRE-EMPTION – FEDERAL
COMMUNICATIONS ACT OF 1934.Where a
wireless telecommunications service provider had already successfully entered
the market place in Washington and Washington applied its E-911 tax in a
competitively neutral and nondiscriminatory manner, the E-911 tax imposed by
RCW 82.14B.030 was not pre-empted by federal law. |
| |
27 WTD 51 |
05-0377 |
|
RULE 155, RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME -- SATELLITE-BASED
COMMUNICATION NETWORK -- PRIMARY NATURE -- TRANSMISSION OF DATA FOR HIRE VS.
USE OF COMPUTER HARDWARE OR SOFTWARE TO FURNISH INFORMATION OR DATA. In determining the proper classification of a taxpayer's
income, we will consider the 'primary nature' of the taxpayer's activities.
If the primary nature of the taxpayer's activities was the transmission for
hire of data via a telephone network or similar transmission system,
including a satellite transmission system, the taxpayer's income would be
subject to retailing B&O tax, and the taxpayer would be required to
collect retail sales tax from its customers. In contrast, if the primary
nature of the taxpayer's activities was the use of computer hardware or
software to furnish information or data, the taxpayer's income would be
subject to service B&O tax. Where the furnishing of the satellite-based
communication network is the "real object" of the transaction, and
positioning information is merely incidental to the communication service
being rendered, the income is properly classified under the retailing
classification. |
| |
27 WTD 51 |
05-0377 |
|
RULE 245; RCW 82.04.065:MEASURE OF TAX – BIFURCATION – SINGLE,
INTEGRATED ACTIVITY. The measure of the retailing B&O
tax must be limited to transactions billed to the taxpayer’s Washington
customers.Where the taxpayer’s
transactions involved the transmission of data from the customers’ trucks to
a satellite, from the satellite to the taxpayer’s center, and from the center
to the customers’ dispatch centers but all of these elements comprised a
single, functionally integrated, activity, or a single “call” for purposes of
Rule 245, bifurcation was not allowed. |
| |
27 WTD 61 |
05-0377R |
|
RULE 245; RCW 82.04.065: NETWORK
TELEPHONE SERVICE -- STATUTORY CONSTRUCTION -- UNAMBIGUOUS STATUTE. RCW 82.04.065 is not an ambiguous tax imposing statute. It
defines precisely the range of activity that falls within its purview -- the
transmission of telephonic, video, data, or similar communication by
telephone line or microwave. |
| |
27 WTD 61 |
05-0377R |
|
RULE 155; RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME – PRIMARY NATURE
–TRANSMISSION OF DATA FOR HIRE VS. USE OF COMPUTER HARDWARE OR SOFTWARE TO
FURNISH INFORMATION OR DATA.In determining the proper classification of a taxpayer’s
income, we will consider the “primary nature” of the taxpayer’s
activities.If the primary nature of
the taxpayer’s activities was the transmission for hire of data via a
telephone network or similar transmission system, including a satellite
transmission system, the taxpayer’s income would be subject to retailing
B&O tax, and the taxpayer would be required to collect retail sales tax
from its customers.In contrast, if
the primary nature of the taxpayer’s activities was the use of computer
hardware or software to furnish information or data, the taxpayer’s income
would be subject to service B&O tax.Although a taxpayer’s service may provide some information, this fact
does not negate its classification as network telephone service. |
| |
27 WTD 99 |
05-0325 |
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RULE 155, RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME – PRIMARY NATURE-- ELECTRONIC INSURANCE CLAIMS PROCESSING.In determining the
proper classification of a taxpayer’s income, we will consider the “primary
nature” of the taxpayer’s activities.If the primary nature of a taxpayer’s activities was the transmission
for hire of data via a telephone network or similar transmission system, the
taxpayer’s income would be subject to retailing B&O tax, and the taxpayer
would be required to collect retail sales tax from its customers.In contrast, if the primary nature of the
taxpayer’s activities was information or internet services, the taxpayer’s
income would be subject to service B&O tax. Taxpayers, who provided
electronic insurance claims processing services were providing information
services subject to service B&O tax; however, separate charges for
telephone lines, and canned software were properly classified under the
retail classification and subject to retail sales tax. |
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