Section 100.3371 Sales Factor for Telecommunications Services

TITLE 86: REVENUE

CHAPTER I: DEPARTMENT OF REVENUE

PART 100 INCOME TAX

SECTION 100.3371 SALES FACTOR FOR TELECOMMUNICATIONS SERVICES

Section 100.3371  Sales Factor for Telecommunications

Services

a)         For

taxable years ending on or after December 31, 2008, IITA Section 304(a)(3)(B-5)

provides express guidance for determining when gross receipts from the sale of telecommunications

service or mobile telecommunications service are in this State for purposes of

computing the sales factor in IITA Section 304(a)(3).

b)         Definitions.

For purposes of this Section, the follow terms have the following meanings:

1)

"Ancillary

services" means services that are associated with or incidental to the

provision of "telecommunications services", including but not limited

to "detailed telecommunications billing", "directory

assistance", "vertical service", and "voice mail

services".

(IITA Section 304(a)(3)(B-5)(i))

2)

"Air-to-ground

radiotelephone service" means a radio service, as that term is defined in

47 CFR 22.99

(2007)

, in which common carriers are authorized to offer

and provide radio telecommunications service for hire to subscribers in

aircraft.

(IITA Section 304(a)(3)(B-5)(i)) 47 CFR 22.99 defines

"air-to-ground ratiotelephone service" to mean a "radio service

in which licensees are authorized to offer and provide radio telecommunications

service for hire to subscribers in aircraft".

3)

"Call-by-call

basis" means any method of charging for telecommunications services where

the price is measured by individual calls.

(IITA Section 304(a)(3)(B-5)(i))

4)

"Communications

channel" means a physical or virtual path of communications over which

signals are transmitted between or among customer channel termination points.

(IITA Section 304(a)(3)(B-5)(i))

5)

"Conference

bridging service" means an ancillary service that links two or more

participants of an audio or video conference call and may include the provision

of a telephone number

(B-5)(i))

4)

"Communications

channel" means a physical or virtual path of communications over which

signals are transmitted between or among customer channel termination points.

(IITA Section 304(a)(3)(B-5)(i))

5)

"Conference

bridging service" means an ancillary service that links two or more

participants of an audio or video conference call and may include the provision

of a telephone number. "Conference bridging service" does not include

the telecommunications services used to reach the conference bridge.

(IITA

Section 304(a)(3)(B-5)(i))

6)

"Customer

channel termination point" means the location where the customer either

inputs or receives the communications.

(IITA Section 304(a)(3)(B-5)(i))

7)

"Detailed

telecommunications billing service" means an ancillary service of

separately stating information pertaining to individual calls on a customer's

billing statement.

(IITA Section 304(a)(3)(B-5)(i))

8)

"Directory

assistance" means an ancillary service of providing telephone number

information, and/or address information.

(IITA Section 304(a)(3)(B-5)(i))

9)

"Home

service provider"

means the facilities-based carrier or reseller

with which the customer contracts for the provision of "mobile

telecommunications services".

(IITA Section 304(a)(3)(B-5)(i))

10)

"Mobile

telecommunications service"

means commercial mobile radio service,

as defined in 47 CFR 20.3

(June 1, 1999)

.

(IITA Section

304(a)(3)(B-5)(i))

A)         "Commercial

mobile radio service" is defined in 47 CFR 20.3 (June

1, 1999) as "mobile service that is provided for profit, i.e., with the

intent of receiving compensation or monetary gain; an interconnected service;

and available to the public, or to such classes of eligible users as to be

effectively available to a substantial portion of the public; or that is the

functional equivalent of such a mobile service."

B)        "Interconnected

service" is defined in 47 CFR 20.3 (June

1, 1999) as a "service  that is interconnected with the public switched

network, or interconnected w

n interconnected service;

and available to the public, or to such classes of eligible users as to be

effectively available to a substantial portion of the public; or that is the

functional equivalent of such a mobile service."

B)        "Interconnected

service" is defined in 47 CFR 20.3 (June

1, 1999) as a "service  that is interconnected with the public switched

network, or interconnected with the public switched network through an

interconnected service provider, that gives subscribers the capability to

communicate to or receive communication from all other users on the public

switched network; or for which a request for such interconnection is pending

pursuant to 47 USC 332(c)(1)(B). A mobile service offers interconnected service

even if the service allows subscribers to access the public switched network

only during specified hours of the day, or if the service provides general

access to points on the public switched network but also restricts access in certain

limited ways. Interconnected service does not include any interface between a

licensee's facilities and the public switched network exclusively for a

licensee's internal control purposes."

11)

"Place

of primary use" means the street address representative of where the

customer's use of the telecommunications service primarily occurs, which must

be the residential street address or the primary business street address of the

customer. In the case of mobile telecommunications services, "place of primary

use" must be within the licensed service area of the home service

provider.

(IITA Section 304(a)(3)(B-5)(i))

12)

"Post-paid

telecommunication service" means the telecommunications service obtained

by making a payment on a call-by-call basis either through the use of a credit

card or payment mechanism such as a bank card, travel card, credit card, or

debit card, or by charge made to a telephone number which is not associated

with the origination or termination of the telecommunications service

5)(i))

12)

"Post-paid

telecommunication service" means the telecommunications service obtained

by making a payment on a call-by-call basis either through the use of a credit

card or payment mechanism such as a bank card, travel card, credit card, or

debit card, or by charge made to a telephone number which is not associated

with the origination or termination of the telecommunications service. A post-paid

calling service includes telecommunications service, except a prepaid wireless

calling service, that would be a prepaid calling service except it is not

exclusively a telecommunication service.

(IITA Section 304(a)(3)(B-5)(i))

13)

"Prepaid

telecommunication service" means the right to access exclusively

telecommunications services, which must be paid for in advance and which

enables the origination of calls using an access number or authorization code,

whether manually or electronically dialed, and that is sold in predetermined

units or dollars of which the number declines with use in a known amount.

(IITA Section 304(a)(3)(B-5)(i))

14)

"Prepaid

mobile telecommunication service" means a telecommunications service that

provides the right to utilize mobile wireless service as well as other

non-telecommunication services, including but not limited to ancillary

services, which must be paid for in advance that is sold in predetermined units

or dollars of which the number declines with use in a known amount.

(IITA

Section 304(a)(3)(B-5)(i))

15)

"Private

communication service" means a telecommunication service that entitles the

customer to exclusive or priority use of a communications channel or group of

channels between or among termination points, regardless of the manner in which

such channel or channels are connected, and includes switching capacity,

extension lines, stations, and any other associated services that are provided

in connection with the use of such channel or channels

tion service that entitles the

customer to exclusive or priority use of a communications channel or group of

channels between or among termination points, regardless of the manner in which

such channel or channels are connected, and includes switching capacity,

extension lines, stations, and any other associated services that are provided

in connection with the use of such channel or channels.

(IITA Section 304(a)(3)(B-5)(i))

16)        "Service

address" means:

A)

The

location of the telecommunications equipment to which a customer's call is

charged and from which the call originates or terminates, regardless of where

the call is billed or paid.

(IITA Section 304(a)(3)(B-5)(i))

B)

If

the location in

subsection (b)(16)(A)

is not known, service address

means the origination point of the signal of the telecommunications services

first identified by either the seller's telecommunications system or in information

received by the seller from its service provider where the system used to

transport such signals is not that of the seller.

(IITA Section

304(a)(3)(B-5)(i))

C)

If

the locations in

subsections (b)(16)(A) and (B)

are not known, the

service address means the location of the customer's place of primary use.

(IITA Section 304(a)(3)(B-5)(i))

17)

"Telecommunications

service" means the electronic transmission, conveyance, or routing of

voice, data, audio, video, or any other information or signals to a point, or

between or among points. The term "telecommunications service"

includes such transmission, conveyance, or routing in which computer processing

applications are used to act on the form, code or protocol of the content for

purposes of transmission, conveyance or routing without regard to whether such

service is referred to as voice over Internet protocol services or is

classified by the Federal Communications Commission as enhanced or value added

service"

includes such transmission, conveyance, or routing in which computer processing

applications are used to act on the form, code or protocol of the content for

purposes of transmission, conveyance or routing without regard to whether such

service is referred to as voice over Internet protocol services or is

classified by the Federal Communications Commission as enhanced or value added.

"Telecommunications service" does not include:

A)

Data

processing and information services that allow data to be generated, acquired,

stored, processed, or retrieved and delivered by an electronic transmission to

a purchaser when such purchaser's primary purpose for the underlying

transaction is the processed data or information;

B)

Installation

or maintenance of wiring or equipment on a customer's premises;

C)

Tangible

personal property;

D)

Advertising,

including but not limited to directory advertising;

E)

Billing

and collection services provided to third parties;

F)

Internet

access service;

G)

Radio

and television audio and video programming services, regardless of the medium,

including the furnishing of transmission, conveyance and routing of such

services by the programming service provider. Radio and television audio and

video programming services shall include but not be limited to cable service as

defined in 47 USC 522(6) and audio and video programming services delivered by

commercial mobile radio service providers, as defined in 47 CFR

20.3.

i)          Under

47 USC 522(6), "cable service" is defined to mean "the one-way

transmission to subscribers of video programming or other programming service,

and subscriber interaction, if any, which is required for the selection or use

of such video programming or other programming service".

ii)         For

the provisions of 47 CFR 20.3, see subsection (b)(1).

H)

"Ancillary

services"

; or

I)

Digital

products "delivered electronically", including but not limited to

software, music, video, reading materials or ring tones

other programming service,

and subscriber interaction, if any, which is required for the selection or use

of such video programming or other programming service".

ii)         For

the provisions of 47 CFR 20.3, see subsection (b)(1).

H)

"Ancillary

services"

; or

I)

Digital

products "delivered electronically", including but not limited to

software, music, video, reading materials or ring tones.

(IITA Section

304(a)(3)(B-5)(i))

18)

"Vertical

service" means an "ancillary service" that is offered in

connection with one or more "telecommunications services", which

offers advanced calling features that allow customers to identify callers and

to manage multiple calls and call connections, including "conference

bridging services".

(IITA Section 304(a)(3)(B-5)(i))

19)

"Voice

mail service" means an "ancillary service" that enables the

customer to store, send or receive recorded messages. "Voice mail

service" does not include any "vertical services" that the

customer may be required to have in order to utilize the "voice mail

service".

(IITA Section 304(a)(3)(B-5)(i))

c)

Receipts

from the sale of telecommunications service sold on an individual call-by-call

basis are in this State if either of the following applies:

1)

The

call both originates and terminates in this State.

(IITA Section

304(a)(3)(B-5)(ii)(a))

2)

The

call either originates or terminates in this State and the service address is

located in this State.

(IITA Section 304(a)(3)(B-5)(ii)(b))

d)

Receipts

from the sale of postpaid telecommunications service at retail are in this

State if the origination point of the telecommunication signal, as first

identified by the service provider's telecommunication system or as identified

by information received by the seller from its service provider if the system

used to transport telecommunication signals is not the seller's, is located in

this State

from the sale of postpaid telecommunications service at retail are in this

State if the origination point of the telecommunication signal, as first

identified by the service provider's telecommunication system or as identified

by information received by the seller from its service provider if the system

used to transport telecommunication signals is not the seller's, is located in

this State.

(IITA Section 304(a)(3)(B-5)(iii))

e)

Receipts

from the sale of prepaid telecommunications service or prepaid mobile

telecommunications service at retail are in this State if the purchaser obtains

the prepaid card or similar means of conveyance at a location in this State.

Receipts from recharging a prepaid telecommunications service or mobile

telecommunications service is in this State if the purchaser's billing

information indicates a location in this State.

(IITA Section

304(a)(3)(B-5)(iv))

f)

Receipts

from the sale of private communication services are in this State as follows:

1)

One

hundred percent of receipts from charges imposed at each channel termination

point in this State.

(IITA Section 304(a)(3)(B-5)(v)(a))

2)

One

hundred percent of receipts from charges for the total channel mileage between

each channel termination point in this State.

(IITA Section

304(a)(3)(B-5)(v)(b))

3)

Fifty

percent of the total receipts from charges for service segments when those

segments are between two customer channel termination points, one of which is

located in this State and the other is located outside of this State, which

segments are separately charged.

(IITA Section 304(a)(3)(B-5)(v)(c))

4)

The

receipts from charges for service segments with a channel termination point

located in this State and in two or more other states, and which segments are

not separately billed, are in this State based on a percentage determined by

dividing the number of customer channel termination points in this State by the

total number of customer channel termination points

ion 304(a)(3)(B-5)(v)(c))

4)

The

receipts from charges for service segments with a channel termination point

located in this State and in two or more other states, and which segments are

not separately billed, are in this State based on a percentage determined by

dividing the number of customer channel termination points in this State by the

total number of customer channel termination points.

(IITA Section

304(a)(3)(B-5)(v)(d))

g)

Receipts

from charges for ancillary services for telecommunications service sold to

customers at retail are in this State if the customer's primary place of use of

telecommunications services associated with those ancillary services is in this

State. If the seller of those ancillary services cannot determine where the

associated telecommunications are located, then the ancillary services shall be

based on the location of the purchaser.

(IITA Section 304(a)(3)(B-5)(vi))

h)

Receipts

to access a carrier's network or from the sale of telecommunication services or

ancillary services for resale are in this State as follows:

1)

one

hundred percent of the receipts from access fees attributable to intrastate

telecommunications service that both originates and terminates in this State.

(IITA Section 304(a)(3)(B-5)(vii)(a))

2)

fifty

percent of the receipts from access fees attributable to interstate

telecommunications service if the interstate call either originates or

terminates in this State.

(IITA Section 304(a)(3)(B-5)(vii)(b))

3)

one

hundred percent of the receipts from interstate end user access line charges,

if the customer's service address is in this State. As used in this

subsection

)(3)(B-5)(vii)(a))

2)

fifty

percent of the receipts from access fees attributable to interstate

telecommunications service if the interstate call either originates or

terminates in this State.

(IITA Section 304(a)(3)(B-5)(vii)(b))

3)

one

hundred percent of the receipts from interstate end user access line charges,

if the customer's service address is in this State. As used in this

subsection

(h)(3),

"interstate end user access line charges" includes, but is

not limited to, the surcharge approved by the Federal Communications Commission

and levied pursuant to 47 CFR 69.

(IITA Section 304(a)(3)(B-5)(vii)(c))

4)

Gross

receipts from sales of telecommunication services or from ancillary services

for telecommunications services sold to other telecommunication service

providers for resale shall be sourced to this State using the apportionment

concepts used for non-resale receipts of telecommunications services if the

information is readily available to make that determination. If the information

is not readily available, then the taxpayer may use any other reasonable and

consistent method.

(IITA Section 304(a)(3)(B-5)(vii)(d))