DRS: Ruling 93-25, Sales and Use Taxes / Telecommunications Service / Computer and Data Processing Services

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

 

This Ruling is cited in Ruling 96-1

NOTE:  This ruling should not be relied upon to the extent it conflicts with The Telecommunications Act of 1996, Pub. Law No. 104-104, 110 Stat. 56 (1996)

Ruling 93-25

Sales and Use Taxes
Telecommunications Service
Computer and Data Processing Services


FACTS:

An out-of-state company (hereinafter referred to as "the Company"), with a conferencing office in Connecticut, provides several types of teleconferencing services by joining multiple telephone calls at a single connection point through the use of a computerized device known as an audio bridge. In each type of service, the Company's conference coordinators personally introduce the participants and close the conference meetings, and monitor and maintain the audio quality of the conference as well as providing other services, such as performing special roll calls, polling the participants, or recording the conference. The Company, and, depending upon the type of service being provided by the Company, each conference participant, is being provided with telecommunications services by, and is using, its own telecommunications carrier and is being charged for these services by its own carrier during the conference call. In each type of service, the Company bills its customers for its teleconferencing services at a standard rate per minute.


ISSUE:

Whether teleconferencing services that are provided other than by a telecommunications carrier are telecommunications services, as defined in Conn. Gen. Stat. 12-407(26)(a), and therefore taxable under Conn. Gen. Stat. 12-407(2)(k).


DISCUSSION:

Conn. Gen. Stat. 12-407(2)(k) includes in the definition of "sale" and "selling" "the rendering of telecommunications service, as defined in [Conn. Gen. Stat. 12-407(26)], for a consideration..." "Telecommunications service" is defined by Conn. Gen. Stat. 12-407(26)(a) as:

the transmission of any interactive electromagnetic communications ... by means of but not limited to wire, cable, including fiber optical cable, microwave, radio wave or any combinations of such media, and the leasing of any such service, [and] includes but is not limited to basic telephone service, ... toll telephone service and teletypewriter or computer exchange service ... directory assistance, two-way cable television service, cellular mobile telephone or telecommunication service, specialized mobile radio and pagers and paging service, including any form of mobile two-way communication.

If the word "transmission" is construed according to the commonly approved usage of the language; Conn. Gen. Stat. 1-1(a); it means "an act, process, or instance of transmitting: as ... the passage of radio waves in the space between transmitting and receiving stations ...." Webster, Third New International Dictionary. Here, the interactive electromagnetic communications are being transmitted by the Company's or its customers' telecommunications carrier. Furthermore, the Company is not providing basic telephone service or toll telephone service, as these terms were formerly defined in now repealed Conn. Gen. Stat. 12-255a(b) and (c) and 12-256a(b) and (c) (relating to the Telecommunications Service Company Tax); once again, these services are being provided by the Company's or its customers' telecommunications carrier.

Thus, the Company is not providing a service described in the definition of "telecommunications services" in Conn. Gen. Stat. 12-407(26)(a). The Company merely uses the telecommunications service that is provided by telecommunications carriers in providing its teleconferencing services. Therefore, the Company is not a telecommunications service provider and its services are not a "sale" or "selling" under Conn. Gen. Stat. 12-407(2)(k).

The legislative history of 1989 Conn. Pub. Acts 251, which first treated telecommunications services as a "sale" and "selling" for purposes of the Sales and Use Taxes Act, supports this conclusion as well as the broader proposition that no company other than a telecommunications carrier was intended by the General Assembly to be treated as a seller of telecommunciations services. Until the passage of the Public Act, regulated telecommunications service companies were subject to a gross earnings tax under Conn. Gen. Stat. 12-256 et seq., and unregulated telecommunications service companies were subject to a gross receipts tax under Conn. Gen. Stat. 12-255a et seq. These taxes on these companies were repealed by the Public Act. The intent to replace one type of tax with another, and to impose the new tax on the same taxpayers on which the old tax was imposed, was indicated by the chief proponent of Senate Bill No. 1068 (which became 1989 Conn. Pub. Acts 251) in each chamber: "We are eliminating the gross receipts tax of 9% on regulated telephone companies and 6 1/2% on nonregulated telephone companies and imposing a sales tax in lieu of that on the services provided by both regulated and nonregulated companies, at the rate, in the Senate package, of 7 1/2%." 32 H.R. Proc., Pt. 28, 1989 Sess., p. 9816 (remarks of Rep. Cibes, House Co-Chairman, Finance, Revenue and Bonding Committee). See 32 S. Proc., Pt. 7, 1989 Sess., pp. 2457-2458, for similar remarks by Sen. DiBella, Senate Co-Chairman, Finance, Revenue and Bonding Committee.


RULING:

Teleconferencing services rendered by a service provider other than a telecommunications carrier are not a "telecommunications service" as defined in Conn. Gen. Stat. 12-407(26)(a), and therefore are not taxable under Conn. Gen. Stat. 12-407(2)(k).


LEGAL DIVISION

December 17, 1993