N.Y.
Tax Law Section 186-E
Excise tax on telecommunication services
1.
Definitions. As used in this section, where not otherwise specifically defined and unless a different meaning is clearly required:(a)
(1) “Gross receipt” means the amount received in or by reason of any sale, conditional or otherwise, of telecommunication services or in or by reason of the furnishing of telecommunication services. Gross receipt from the sale of mobile telecommunications service provided by a home service provider shall include “charges for mobile telecommunications service” as described in paragraph one of subdivision (l) of § 1111 (Special rules for computing receipts and consideration)section eleven hundred eleven of this chapter, regardless of where the mobile telecommunications service originates, terminates or passes through. Gross receipt is expressed in money, whether paid in cash, credit or property of any kind or nature, and shall be determined without any deduction therefrom on account of the cost of the service sold or the cost of materials, labor or services used or other costs, interest or discount paid, or any other expenses whatsoever except that there shall, however, be allowed a deduction for bad debts with respect to charges previously subjected to the tax hereunder when the debt has become worthless in accordance with generally accepted accounting principles consistently applied by the taxpayer. “Amount received” for the purpose of the definition of gross receipt, as the term gross receipt is used throughout this article, means the amount charged for the provision of a telecommunication service.(2)
(A) Any charge for a service or property billed by or for a mobile telecommunications customer’s home service provider shall be deemed to be provided by such mobile telecommunications customer’s home service provider. (B) Charges for mobile telecommunications service that are provided or deemed to be provided by a mobile telecommunications customer’s home service provider shall be sourced to the taxing jurisdiction where the mobile telecommunications customer’s place of primary use is located, regardless of where the mobile telecommunications service originates, terminates or passes through.(b)
(1) “Interexchange carrier” means any provider of telecommunication services between two or more exchanges that qualifies as a common carrier. Common carrier means any person engaged as a common carrier for hire in intrastate, interstate or foreign telecommunication services.(2)
“Local carrier” means any provider of telecommunication services for hire to the public, which is subject to the supervision of the public service commission and is engaged in providing carrier access service to a switched network. For the sole purpose of the application of the sale for resale exclusion under paragraph (b) of subdivision two of this section, a reference to an “interexchange carrier” or “local carrier” shall include a cellular common carrier which is a facilities-based cellular common carrier without regard to a determination of whether such carrier is providing local or interexchange service as such.(c)
“Person” means persons, corporations, companies, associations, joint-stock companies or associations, partnerships or limited liability companies, estates, assignee of rents, any person acting in a fiduciary capacity, or any other entity, and persons, their assignees, lessees, trustees or receivers, appointed by any court whatsoever, or by any other means, except the state, municipalities, political and civil subdivisions of the state or municipality, public districts and corporations and associations organized and operated exclusively for religious, charitable or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual.(d)
“Private telecommunication service” means a dedicated telecommunication service that entitles the user or users to the exclusive or priority use of a communications channel or group of channels from one or more locations to one or more locations. “Exclusive” as used herein means that the user-subscribers have use of a communications channel to the exclusion of all others who are not authorized to use such channel, and “priority” as used herein means that only authorized user-subscribers, as opposed to unauthorized persons, receive preferential use of a communications channel, but not necessarily a preference to the use of such channel with respect to each other.(e)
“Provider of telecommunication services” means any person who furnishes or sells telecommunications services regardless of whether such activities are the main business of such person or are only incidental thereto. Where a reference is made to a “utility” in this chapter in regard to the tax imposed by this section or by this section and section one hundred eighty-six-a of this article, such reference to “utility” shall be deemed to include a reference to a provider of telecommunication services.(f)
“Service address” means the location of the telecommunication equipment from which the telecommunication is originated or at which the telecommunication is received from the provider of telecommunication services. The foregoing rule is amplified, but not limited, by the following special provisions, which are listed in order of priority of application so that only the first applicable special provision will apply, if more than one potentially applies:(i)
if the telecommunication originates or terminates in this state and the service is charged to telecommunication equipment which is not associated with the origination or termination of the telecommunication (for example, by the use of a calling card or third party billing) and the location of such equipment is in this state, the service address of the telecommunication will be deemed to be in this state;(ii)
if the service is obtained through the use of a credit or payment mechanism such as a bank, travel, credit or debit card or if the service is obtained by charging telecommunication equipment which is not associated with the origination or termination of the telecommunication (for example, by the use of a calling card or third party billing) and the equipment is not located in the state of origination or termination, then the service address is deemed to be the location of the origination of the telecommunication; and (iii) if the service address is not a defined location, as in the case of mobile telephones, paging systems, maritime systems, air-to-ground systems and the like, service address shall mean the location of the subscriber’s primary use of the telecommunication equipment as defined by telephone number, authorization code, or location in this state where bills are sent, provided, however, the location of the mobile telephone switching office or similar facility in this state that receives and transmits the signals of the telecommunication will be deemed the service address where the mobile telephone switching office or similar facility is outside the subscriber’s assigned service area.(g)
“Telecommunication services” means telephony or telegraphy, or telephone or telegraph service, including, but not limited to, any transmission of voice, image, data, information and paging, through the use of wire, cable, fiber-optic, laser, microwave, radio wave, satellite or similar media or any combination thereof and shall include services that are ancillary to the provision of telephone service (such as, but not limited to, dial tone, basic service, directory information, call forwarding, caller-identification, call-waiting and the like) and also include any equipment and services provided therewith. Provided, the definition of telecommunication services shall not apply to separately stated charges for any service which alters the substantive content of the message received by the recipient from that sent.(h)
For the purpose of applying the provisions of this section to mobile telecommunications service, the following terms when used in relation to mobile telecommunications service shall be defined as such terms are defined in § 1101 (Definitions)section eleven hundred one of this chapter: “mobile telecommunications service,” “mobile telecommunications customer,” “home service provider,” “licensed service area,” “reseller,” “serving carrier,” “place of primary use” and “taxing jurisdiction”.2.
Imposition.(a)
(1) There is hereby imposed an excise tax on the sale of telecommunication services, except for the sale of mobile telecommunication services that are subject to tax under subparagraph two of this paragraph, by any person which is a provider of telecommunication services, to be paid by such person, at the rate of three and one-half percent prior to October first, nineteen hundred ninety-eight, three and one-quarter percent from October first, nineteen hundred ninety-eight through December thirty-first, nineteen hundred ninety-nine, and two and one-half percent on and after January first, two thousand of gross receipt from:(i)
any intrastate telecommunication services;(ii)
any interstate and international telecommunication services (other than interstate and international private telecommunication services) which originate or terminate in this state and which telecommunication services are charged to a service address in this state, regardless of where the amounts charged for such services are billed or ultimately paid; and (iii) interstate and international private telecommunication services, the gross receipt to which the tax shall apply shall be determined as prescribed in subdivision three of this section.(2)
There is hereby imposed an excise tax on the sale of mobile telecommunication services, by any person which is a provider of telecommunication services, to be paid by such person, at the rate of two and nine-tenths percent on and after May first, two thousand fifteen of gross receipts from any mobile telecommunications service provided by a home service provider where the mobile telecommunications customer’s place of primary use is within this state.(b)
(1) Sale for resale exclusion. There shall be excluded from the tax imposed by this section the sale of telecommunication services to a provider of telecommunication services where such services are purchased by such provider for resale as telecommunication services to its purchasers.(i)
All gross receipts are deemed taxable to the provider of telecommunication services under this section, unless the provider, within ninety days after the provision of telecommunication services, has taken from the purchaser a certificate of resale in the form the commissioner has prescribed, to document that the telecommunication services were purchased for resale as telecommunication services. If the provider of telecommunication services obtains a properly completed certificate of resale from the purchaser within ninety days after the provision of telecommunication services, that certificate constitutes conclusive proof that the telecommunication services covered by the certificate were sold for resale as telecommunication services, the provider is relieved of liability for the tax due on the sale of those services, and the burden of proving that the gross receipt is not taxable is on the purchaser. Where a certificate of resale is received within the time prescribed, but is deficient in some material manner, and that deficiency is later removed, the receipt of the certificate will be deemed to have satisfied all of the requirements of this clause. Where a certificate of resale is not received within ninety days after the provision of telecommunication services, the provider may, within sixty days after a request by the commissioner, either prove that the telecommunication services were sold for resale as telecommunication services, or obtain a fully completed certificate of exemption from the purchaser. A certificate of exemption obtained within this sixty day period constitutes evidence, but not conclusive proof, that the telecommunication services covered by the certificate were sold for resale as telecommunication services. The certificate of exemption will be administered in a manner consistent with subdivision (c) of § 1132 (Collection of tax from customer)section eleven hundred thirty-two of this chapter.(ii)
A certificate of resale is not properly completed if it does not include the purchaser’s certificate of authority number issued pursuant to § 1134 (Registration)section eleven hundred thirty-four of this chapter, or if the purchaser’s certificate of authority has expired or is invalid because it has been suspended or revoked as provided in § 1134 (Registration)section eleven hundred thirty-four of this chapter and the commissioner has furnished providers of telecommunication services registered under that section with information identifying those persons whose certificates of authority have expired or have been suspended or revoked. (iii) The relief provided by this subparagraph does not apply to a provider of telecommunication services that fraudulently fails to pay tax or solicits a purchaser or purchasers to submit one or more unlawful certificates of exemption.(iv)
Any person who issues a false or fraudulent certificate of resale with intent to evade tax is, in addition to any other penalty imposed, subject to a penalty of one hundred percent of the tax that would have been due had there not been a misuse of that certificate, plus a penalty of fifty dollars for each false or fraudulent certificate.(v)
For any other sale of telecommunication services by a provider of telecommunication services to a purchaser who resells those services as telecommunication services but does not provide a properly completed certificate of resale to the provider of telecommunication services in accordance with the provisions of this subparagraph, the credit allowed in subparagraph one of paragraph (a) of subdivision four of this section shall be allowed.(2)
Cable television service exclusion. The sale of cable television service shall in no event constitute a telecommunications service, and the receipts from the sale of such service are without the scope of the tax imposed by this section. The provision of such service shall mean the transmitting to subscribers of programs broadcast by one or more television or radio stations or any other programs originated by any person by means of wire, cable, microwave or any other means.(3)
Air safety and navigation exclusion. There shall be excluded from the tax imposed by this section, the sale of telecommunication services to air carriers solely for the purpose of air safety and navigation where such telecommunication service is provided by an organization, at least ninety percent of which (if a corporation, ninety percent of the voting stock of which) is owned, directly or indirectly, by air carriers, and which organization’s principal function is to fulfill the requirements of (i) the federal aviation administration (or the successor thereto) or (ii) the international civil aviation organization (or the successor thereto), relating to the existence of a communication system between aircraft and dispatcher, aircraft and air traffic control or ground station and ground station (or any combination or the foregoing) for the purposes of air safety and navigation.(4)
With respect to services or property described in subparagraph (B) of paragraph one of subdivision (1) of § 1111 (Special rules for computing receipts and consideration)section eleven hundred eleven of this chapter and internet access service, a home service provider shall pay tax on the gross receipt from any charge that is aggregated with and not separately stated from other charges for mobile telecommunications service. Provided, however, if such home service provider uses an objective, reasonable and verifiable standard for identifying each of the components of the charge for mobile telecommunications service, then such home service provider may separately account for and quantify the amount of each such component charge. If a home service provider chooses to so separately account for and quantify and separately sells the subparagraph (B) property or service or internet access service, then the charge for such property or service shall be based upon the price for such property or service as separately sold. If a home service provider chooses to so separately account for and quantify and does not separately sell such property or service, then the charge for such property or service shall be based upon the prevailing retail price of comparable property or service sold separately by other home service providers. In any case, the charge for such property or service shall be reasonable and proportionate to the total charge to the mobile telecommunications customer. Such charges for such subparagraph (B) services or property or internet access service, as the case may be, will not constitute gross receipts from charges for mobile telecommunications services. Nothing herein shall be construed to exempt from tax any service or property otherwise subject to tax under this section.(c)
Federal limitations. The tax imposed by this section shall not be made applicable to the sale of telecommunication services under circumstances which would preclude the application of such tax by reason of the United States constitution and the laws of the United States enacted pursuant thereto.3.
Apportionment for certain private telecommunication services.(a)
General. With respect to interstate and international private telecommunication services, the gross receipt, if not separately ascertainable for each use of such service, shall be determined as follows:(1)
one hundred percent of the charge imposed at each channel termination point within this state, (2) one hundred percent of the charge imposed for the use of a channel between channel termination points within this state, and(3)
(i) if each segment between each termination point is separately billed and the amounts so billed are fairly reflective of New York origination and/or termination traffic, then one hundred percent of the charge imposed at each termination point in New York and for service in New York between those points and fifty percent of the charge imposed for service between a channel termination point outside the state and a point inside the state measured by the nearest termination point inside the state to first termination point outside the state relative to such point inside the state, or(ii)
if each segment of the interstate or international circuit between each channel termination point is not separately billed or if such billing does not fairly reflect the New York origination and/or termination traffic handled by such private telecommunication service, an allocated portion of the interstate and international channel charge with respect to points in New York and points outside the state based on the ratio which the number of channel termination points in this state bears to the total number of channel termination points within and without the state.(b)
Other allocation methods. Where the commissioner decides that, with respect to a certain provider of telecommunication services, the method prescribed in paragraph (a) of this subdivision does not fairly and equitably reflect the private telecommunication services attributable to this state, the commissioner shall prescribe methods of allocation which fairly and equitably reflect the private telecommunication services attributable to this state. Provided, further, that the commissioner may require that another allocation method be used so as to insure that the sum of the allocation factor of this state and the allocation factor of the other jurisdiction involved is not greater than one. In making this determination, the commissioner may take into account the reasonableness of the allocation prescribed by other states.4.
Credits against tax.(a)
Allowance of credits. The following credits against the tax imposed under this section shall be allowed:(1)
Certain resold telecommunication services. A credit equal to the amount of tax imposed by this section, with respect to the sale of telecommunication services, shall be allowed to the purchaser where such purchaser is a provider of telecommunication services, and where the telecommunication service purchased are later resold by such purchaser as telecommunication services, and the exclusion in subparagraph one of paragraph (b) of subdivision two of this section is not allowed. To accomplish the purpose of the credit, it shall be determined as follows: the tax on the resold service shall be computed so that the tax under this section is imposed on the difference between the amount of the charge made by the provider to the purchaser and the amount of the charge made by the purchaser for the resold service.(2)
Tax paid in another jurisdiction. With respect to the tax on interstate or international telecommunication services imposed under this section, in order to prevent actual multijurisdictional taxation of a sale of telecommunication services which is the subject of taxation under this section, any provider of telecommunication services or such provider’s purchaser, upon proof that such provider or purchaser has actually paid a like tax to another state or country, or jurisdiction thereof on such telecommunication services, shall be allowed a credit against the tax imposed under this section. The amount of the credit shall be the amount of tax lawfully due and paid to such other state or country or jurisdiction, provided, however, the amount of the credit shall in no event exceed the tax due to this state.(b)
Refunds-overpayments of tax. In lieu of the credits set forth in paragraph (a) of this subdivision, the taxpayer may elect to take a refund. Amounts to be credited or refunded under this subdivision shall be considered overpayments of tax in accordance with the provisions of § 1086 (Overpayment)section one thousand eighty-six of this chapter; provided, however, the provisions of subsection (c) of § 1088 (Interest on overpayment)section one thousand eighty-eight of this chapter notwithstanding, no interest shall be paid on any credit or refund allowed under subparagraph one of paragraph (a) of this subdivision.5.
Record keeping. Every provider of telecommunication services subject to tax under this section shall keep such records of its business and in such form as the commissioner may require, and such records shall be preserved for a period of three years, except that the commissioner may consent to their destruction within that period or may require that they be kept longer.6.
Returns. Every provider of telecommunication services subject to tax under this section shall file, on or before March fifteenth of each year, for taxable years beginning before January first, two thousand sixteen, and on or before April fifteenth of each year, for taxable years beginning on or after January first, two thousand sixteen, a return for the year ended on the preceding December thirty-first, and pay the tax due, which return shall state the gross receipts for the period covered by each such return and the resale exclusions during such period. Returns shall be filed with the commissioner on a form to be furnished by the commissioner for such purpose and shall contain such other data, information or matter as the commissioner may require to be included therein. Notwithstanding the foregoing provisions of this subdivision, the commissioner may require any provider of telecommunication services to file an annual return, which shall contain any data specified by the commissioner, regardless of whether such provider is subject to tax under this section. Every return shall have annexed thereto a certification by the head of the provider of telecommunication services making the same, or of the owner or of a partner or member thereof, or of a principal officer of the corporation, if such business be conducted by a corporation, to the effect that the statements contained therein are true.7.
(a) Applicability of article nine. If any provision of this section conflicts with any other provision contained in this article, the provision of this section shall control, but the provisions of this article which do not conflict with the provisions of this section shall apply with respect to the taxes under this section, so far as they are, or may be made applicable. The taxes and surcharges imposed by this section and sections one hundred eighty-four, one hundred eighty-four-a, one hundred eighty-six-a, one hundred eighty-six-c, and one hundred eighty-eight of this article may be jointly administered with respect to years ending in nineteen hundred ninety-five and thereafter, in the manner established by the commissioner.(b)
Applicability of Mobile Telecommunications Sourcing Act. The provisions of sections 119(c), 120, 121 and 122 of title 4 of the United States Code as enacted and in effect on July twenty-eighth, two thousand, to the extent relevant and to the extent required by preemption, shall apply to the provisions of this section in the same manner and with the same force and effect as if the language of such sections of such title 4 of the United States Code had been incorporated in full into this section and had expressly referred to the tax under this section, with such modifications as may be necessary in order to adapt the language of such provisions to the tax imposed by this section.8.
Enhanced emergency telephone system surcharge fee and public safety communications surcharge. Notwithstanding any other provision contained in this chapter or any other law, any surcharge collected or any administrative fee retained by any provider of telecommunication services acting as collection agent for a municipality pursuant to the provisions of article six of the county law or acting as a collection agent for the state pursuant to the provisions of § 186-F (Public safety communications surcharge)section one hundred eighty-six-f of this article will not be considered as, nor included in the determination of gross receipts of the provider.9.
Distribution. Seven and six-tenths percent of the monies collected from the excise tax imposed by this section shall be distributed pursuant to subdivision three of section two hundred five of this chapter.
Source:
Section 186-E — Excise tax on telecommunication services, https://www.nysenate.gov/legislation/laws/TAX/186-E (updated Apr. 22, 2016; accessed Dec. 21, 2024).
