Sales Tax Articles
Sales Tax State Activity Update - December 2007
When is a Telecommunication Service not a Telecommunication Service?
In a Letter Ruling the Pennsylvania Department of Revenue (PDR) concluded that a taxpayer's automated Tele-messaging service is an enhanced telecommunication service that is not subject to tax.
Background
The taxpayer provides computerized medical and emergency Tele-messaging services. The system is automated and electronically distributes, transcribes and processes messages.
The taxpayer has developed and maintains an on-line, networked, computerized database containing detailed client records including on-call schedules, hours of operation, detailed protocols and client data. Stored data and messages are delivered to its customers electronically over the internet via email, alpha numeric, multi-port fax server, and by computerized voice mail systems via .wav files.
Ruling
The sale at retail or use of a telecommunications service is subject to sales or use tax pursuant to 72 P.S. ยงยง 7201(m), 7202(a). The PDR interprets the term "telecommunications service" as any transmission of messages or information by or through any media such as wire, cable radio-wave, cable, satellite or any combination of those or similar media.
However, the PDR does not tax enhanced telecommunication services. Enhanced telecommunication services are defined as those services, offered over a telecommunications network, which employ computer processing applications that involve the purchaser's interaction with stored information.
The PDR considers the taxpayer's automated Tele-messaging service to be an enhanced telecommunication service because the taxpayer's customers, when retrieving voice mail messages, are interacting with stored information. Accordingly, the Taxpayer's rendition of its automated Tele-messaging service is not subject to tax.
The full letter ruling can be viewed on the Pennsylvania Department of Revenue Website.
(Pennsylvania Department of Revenue, Letter Ruling No. SUT-07-007, 10/16/2007)
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