Sales Tax State Activity Update - November 2004

Wyoming Defines Communication Fees and Surcharges Taxability

The following is a list of items most frequently questioned on telephone bills and the taxability of each for sales tax purposes:

• Federal Access Charge—Taxable: This charge was instituted in 1984 to cover the cost of maintaining the local telephone network. This charge can be known by other names such as the End User Common Line Charge (EUCL), Interstate Access Charge, Federal Communications Line Charge, etc. While the FCC caps the amount of the charge, it is not a tax and is not a source of government revenue. While this charge is incidental to telephone service, it is not a federal tax and falls within the taxable sales price of W.S. 39-15-103(a)(i)(C).
• Federal Universal Service Fund—Taxable: This fund supports telecommunications in under served areas. This service is incidental to telephone service and is therefore part of the sales price of telecommunication service under W.S. 39-15-101(a)(viii)(A) and W.S. 39-15-103(a)(i)(C).
• Local Franchise Fees—Taxable: These fees, also known as municipal charges, are assessed by cities to make up for the cost of maintaining the streets under which the cables and lines run. Since these are fees and not taxes, they are part of the taxable sales price of telecommunication service under W.S. 39-15-101(a)(viii)(A) and W.S. 39-15-103(a)(i)(C).
• WY Universal Service Fund—Taxable: State Universal Fund mechanisms are required in all states by Federal Law. The monies are used to subsidize smaller local exchange companies. This service is incidental to telephone service and is therefore part of the taxable sales price of telecommunication service under W.S. 39-15-101(a)(viii)(A) and W.S. 39-15-103(a)(i)(C).
• Telephone Assistance Plan (TAP)—Taxable: This fund is used to provide discounted phone service to low-income, elderly or disabled customers, and applies to all customers within the state. This service is incidental to telephone service and is therefore part of the taxable sales price of telecommunication service under W.S. 39-15-101(a)(viii)(A) and W.S. 39-15-103(a)(i)(C).
• Federal Excise Tax—Nontaxable: Excluded from the definition of “sales price” as a tax imposed directly upon the consumer per W.S. 39-15-101(a)(viii)(B)(III).
• Relay Service Fund—Nontaxable: This statutory fund is for the benefit of Wyoming residents who are hearing impaired. This fee is used to administer a statewide message relay system for Wyoming residents who are communications impaired. The fee is specifically exempted from sales tax per W.S. 16-9-209(f).
• 911 Emergency Tax—Nontaxable: This tax is imposed on each assess line within a Wyoming governing body’s 911 service area. This tax is excluded from the definition of “sales price” as a tax imposed directly upon the consumer per W.S. 39-15-101(a)(viii)(B)(III).
  
  (Bulletin #12, Department of Revenue, Excise Tax Division, Issued 10/25/04)
  

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