wac 245

Internet-based Businesses cancelled

"Competitive telephone service," "network telephone service," "telephone service," "telephone business."

Exemptions--Certain network telephone service.

Telephone business, telephone services.

Taxation of competitive telephone service, telecommunications service, and ancillary service The rule-making effort amended WAC 458-20-245, presently entitled: “Telephone business, telephone service” and to update it to present technology with the new title of: “Taxation of competitive telephone service, telecommunications service, and ancillary service.” This updating of the rule also incorporates the legislative changes from Chapter 8, Laws of 2013, 63rd Legislature 2013 2nd Special Session.

Applicability of RCW 82.08.0289 residential telephone service exemption to cellular telephone service Revised 2/2/09 See ETA 3135.2009

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.

Retail Sales Taxes Imposed on Telecommunications Used to Provide Internet Access Revised 2/2/09 See ETA 3047.2009

Taxation of network telephone service used to provide Internet access

Retail Sales Taxes Imposed on Telecommunications Used to Provide Internet Access. This ETA primarily addresses Washington’s taxation of telecommunications used to provide Internet access under the Internet Tax Freedom Act (“ITFA”), 47 U.S.C. § 151. This ETA is being updated to reflect ITFA’s new extension date ending October 1, 2015.

Telephone answering service - Services or retail sales

Retail sales tax on telephone services sold to Indians

Prepaid telephone debit cards

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.

Applicability of RCW 82.08.0289 residential telephone service exemption to cellular telephone service

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.

Sourcing Wholesale Sales of Non-Mobile Telecommunications Services

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.

(ETA 3193) Sourcing dark fiber sales. This ETA provides business and occupation (B&O) tax and retail sales and use tax guidance for the sourcing and apportionment of receipts from the sale of “dark fiber” used in telecommunications, including an example.

TELEPHONE ANSWERING SERVICE - SERVICES OR RETAIL SALES Revised 2/2/09 See ETA 3086.2009

RETAIL SALES TAX ON TELEPHONE SERVICES SOLD TO INDIANS Revised 2/2/09 See ETA 3089.2009

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

Paging Services Subject to Retail Sales Tax

Telephone Program Excise Tax Rates for Fiscal Year 2009

Sourcing Prepaid Wireless Calling Services

Telephone Program Excise Tax Rates for Fiscal Year 2014

Address-based Database Now Available for Local Tax Coding for Mobile Telecommunication Services

Telephone Program Excise Tax Rates for Fiscal Year 2011

Telephone Program Excise Tax Rates for Fiscal Year 2014

New State Enhanced 911 Tax on Cellular Telephone Service

Telephone Program Excise Tax Rates for Fiscal Year 2009

Enhanced 911 Excise Tax Changes

Telephone Tax Changes Effective August 1, 2013

E911 Taxes Must Be Collected by Sellers of Prepaid Wireless

Place of Sale for Telephone Services

Enhanced 911 Excise Tax Changes

Telephone Taxes Previously Paid to DSHS Now Paid to the Department of Revenue

Enhanced 911 Excise Tax Changes

Taxes on Telephone Switched Access Lines

Enhanced 911 Excise Tax Changes

Telephone Program Excise Tax Rates for Fiscal Year 2007

Sales Tax Exemption Telecommunication Services for Internet Service Providers

Telephone Program Excise Tax Rates for Fiscal Year 2012

Telephone Program Excise Tax Rates for Fiscal Year 2008

Telephone Program Excise Tax Rates for Fiscal Year 2010

Telephone Program Excise Tax Rates for Fiscal Year 2013

RETAIL SALES TAX -- TELEPHONE BILLING. Telephone companies operating in Washington are responsible to account for, collect and remit retail sales taxes collected from consumers.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

RULE 155, RULE 245; RCW 82.04.065; ETA 544:RETAILING B&O TAX VS.

RCW 82.04.065; RCW 82.04.297; RCW 82.04.050(5); Title 47 U.S.C. Sec. 151: INTERNET SERVICE PROVIDER (ISP) – DIGITAL SUBSCRIBER LINE INTERNET SERVICE (DSL) - An ISP selling DSL internet service is taxable as an ISP. It should pay Service & Other B&O tax on its income received as an ISP. For Washington State tax purposes, a DSL ISP’s internet service charges should not be bifurcated into a Service & Other B&O internet service component, and a retailing telephone line transmission component

RCW 82.04.065(5); ETA 3171.2012: DARK FIBER - COMPETITIVE TELEPHONE SERVICE. Lease of dark fiber is a “competitive telephone service.”

RCW 82.04.065(5): DARK FIBER - EQUIPMENT OR APPARATUS. Dark fiber is telecommunications “equipment or apparatus” under the plain meaning of those terms. Det. No. 97-157, 17 WTD 69 (1988) is overruled to the extent it is inconsistent with ETA 3171.2009 or this determination.

RCW 82.04.065(5) – DARK FIBER – LEASES OF REAL PROPERTY – FIXTURES. Dark fiber is not real property under the three-prong test developed by Washington courts.

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.

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.

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.

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.

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.

RETAILING B&O TAX -- RESELLING LOCAL NETWORK TELEPHONE SERVICE -- GROSS PROCEEDS OF SALE.

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).

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.

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.

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.

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.

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

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).

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.