34 Tex. Admin. Code § 3.313 - Cable Television Service and Bundle Cable Service
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Bundled cable service--The provision of cable television service and at least
one other taxable service by a cable service provider through a cable system
for a single price. Other taxable services may include, but are not limited to,
telecommunications services, as defined in §
3.344 of this title (relating to
Telecommunications Services); Internet access services, as defined in §
3.366 of this title (relating to
Internet Access Services); data processing services, as defined in §
3.330 of this title (relating to
Data Processing Services); information services, as defined in §
3.342 of this title (relating to
Information Services); and security services, as defined in §
3.333 of this title (relating to
Security Services). Services sold to a purchaser by a third party, rather than
the cable service provider, are not bundled cable services even if they are
provided by means of a cable system.
(2) Cable service provider--A person who
provides cable television service or bundled cable service through a cable
system.
(3) Cable system--The
system through which a cable service provider delivers cable television or
bundled cable service. A cable system may comprise any or all of the following:
tangible personal property; real property; and other media, such as radio
waves, microwaves, or any other means of conveyance now in existence or that
may be developed.
(4) Cable
television service--The digital distribution of video programming to purchasers
by any means now in existence or that may be developed. The term includes, but
is not limited to, direct broadcast satellite service (DBS); subscription
television service (STV); satellite master antenna television service (SMATV);
master antenna television service (MATV); multipoint distribution service
(MDS); multichannel multipoint distribution service (MMDS); fixed programming;
any audio portion of a video program; streaming video programming provided via
the Internet or other technology, regardless of the type of device used by the
purchaser to receive the service; video on demand services or subscription
services that allow purchasers to choose from a library of available content;
and any other video programming provided in exchange for consideration. The
term does not include the provision of tangible personal property, such as
video content that has been downloaded by the purchaser or is stored on a
compact disc or other physical media, or the provision of telecommunications
services, as defined in §
3.344 of this title.
(5) Fixed physical connection--The place at a
purchaser's residence or business where the cable service provider or its
agent, or the purchaser, by agreement with the cable service provider, has
installed any materials or equipment that connect the purchaser to the
provider's cable system. For example, a coaxial cable connection at a
distribution box or an outdoor antenna or dish that connects to a satellite
receiver is a fixed physical connection. The connection of equipment, such as a
personal computer, Internet-ready television, or other device that allows the
purchaser to view content that is not provided directly by the cable service
provider, does not create a fixed physical connection.
(6) Nomadic access--The ability to access
cable television service or bundled cable service from multiple locations with
or without the use of a fixed physical connection.
(7) Point of delivery--The physical address
of the purchaser's fixed physical connection or, in the absence of such
connection, the physical address of the purchaser at which the cable television
or bundled cable service is considered to be received, as determined in
subsection (g)(3) of this section.
(b) Imposition of tax. The sale of cable
television or bundled cable service, and any services or expenses connected to
the provision of the service, are subject to sales and use tax.
(1) Taxable charges include:
(A) service connection fees. The term
"service connection fee" includes terms such as "installation," "connect," or
"reconnect;"
(B) charges for video
programming services;
(C) charges
for tangible personal property, such as converters, descramblers, and digital
video recorders, transferred to the care, custody, and control of purchasers as
an integral part of the services provided;
(D) amounts billed to purchasers for repairs
or maintenance;
(E) municipal
franchise fees; and
(F) any
licensing fees for the right to receive or distribute a satellite
signal.
(2) Unrelated
services.
(A) A service will be considered as
unrelated if:
(i) it is not a cable
television service or bundled cable service, nor a service taxed under other
provisions of Tax Code, Chapter 151;
(ii) it is of a type which is commonly
provided on a stand-alone basis; and
(iii) the performance of the service is
distinct and identifiable.
(B) Where nontaxable unrelated services and
taxable services are sold or purchased for a single charge and the portion
relating to taxable services represents more than 5.0% of the total charge, the
total charge is presumed to be taxable. The presumption may be overcome by the
taxable service provider at the time the transaction occurs by separately
stating to the purchaser a reasonable charge for the taxable services. If the
charge for the taxable portion of the services is not separately stated at the
time of the transaction, the service provider or the purchaser may later
establish for the comptroller, through documentary evidence, the percentage of
the total charge that relates to nontaxable unrelated services. The service
provider's books must support the apportionment between exempt and nonexempt
activities based on the cost of providing the service or on a comparison to the
normal charge for each service if provided alone. If the charge for exempt
services is unreasonable when the overall transaction is reviewed considering
the cost of providing the service or a comparable charge made in the industry
for each service, the comptroller will adjust the charges and assess additional
tax, penalty, and interest on the taxable services.
(c) Deposits. A deposit that
represents future payment for cable television or bundled cable service is part
of the sales price of the service and is taxable when the deposit is used to
pay for the service. A deposit paid to receive equipment that is transferred to
the care, custody, and control of the purchaser as an integral part of the
service, such as a converter that is returned to the cable service provider
when the service is terminated, is not taxable.
(d) Sales for resale.
(1) Taxable services. A cable service
provider may issue a resale certificate to purchase a taxable service tax-free
in the following circumstances:
(A) if the
service will be transferred as an integral part of the cable television or
bundled cable service. For example, if a cable service provider sells a bundled
cable service that includes data storage, and the provider purchases data
storage capacity from a third party, then the provider may issue a resale
certificate to the provider of the data storage capacity; or
(B) if the service is performed on tangible
personal property that the cable service provider will transfer to the care,
custody, and control of the purchaser as an integral part of the cable
television or bundled cable service. For example, if a cable service provider
that provides digital video recorders or converters to purchasers hires a third
party to repair a digital video recorder or converter, then the provider may
issue a resale certificate to the repair service provider in lieu of paying tax
on the repair service. See §
3.285 of this title (relating to
Resale Certificate; Sales for Resale).
(2) Tangible personal property. A resale
certificate may be used to purchase tangible personal property tax free if
care, custody, and control of the property are transferred to the purchaser of
the cable television or bundled cable service as an integral part of the
service. For example, a cable service provider may issue a resale certificate
to the seller of remote controls that are provided to purchasers of the cable
television service as part of the sale of the service. See §
3.285 of this title.
(e) Taxable purchases.
(1) Taxable services. A cable service
provider owes tax on its purchases of taxable services that are not transferred
to purchasers as an integral part of a cable television or bundled cable
service, but are instead used by the cable service provider in providing that
service.
(2) Tangible personal
property. A cable service provider owes tax on its purchases of equipment,
supplies, and other items that are not transferred to the care, custody, and
control of purchasers as an integral part of the cable television or bundled
cable service, but are instead used by the cable service provider to provide
that service. For example, a cable service provider owes tax on the satellite
receiving and transmitting equipment, cables, and wiring that it uses to
provide cable television service and that are not located on the purchaser's
premises. Taxable items that a cable service provider purchases out of state
and brings into Texas for use in providing a cable television or bundled cable
service are subject to Texas use tax. See §
3.346 of this title (relating to
Use Tax). Credit will be allowed against the use tax for any sales or use tax
legally imposed and paid to another state. See §
3.338 of this title (relating to
Multistate Tax Credits and Allowance of Credit for Tax Paid to
Suppliers).
(3) A cable television
service provider may seek an annual refund of Texas sales and use taxes paid on
certain tangible personal property directly used or consumed in providing cable
television services. See §
3.345 of this title (relating to
Annual Refund Program for Providers of Cable Television, Internet Access, and
Telecommunications Services).
(f) Real property rental. An owner of real
property, such as an apartment complex or hotel, that provides cable television
or bundled cable service to its residents or guests must collect sales tax on
any charge it imposes on residents or guests that is attributable to the cable
television or bundled cable service. If the owner does not charge the residents
or guests for the cable television or bundled cable service, the owner is the
consumer of the service and must pay tax on that service and all services or
expenses connected to the provision of that service, in accordance with
subsection (b) of this section.
(g)
Local tax.
(1) Cable service providers are
required to collect all local tax due on the sale of cable television or
bundled cable service, and on all services or expenses connected with the
provision of that service, in accordance with subsection (b) of this section,
based upon the point of delivery to the purchaser. For more information
regarding the calculation of local tax, see Tax Code, Title 3, Subtitle
C.
(2) Direct-to-home satellite.
The sale of cable television or bundled cable service by means of
direct-to-home satellite is exempt from local tax under the Telecommunications
Act of 1996, §602. For purposes of this section, direct-to-home satellite
refers to cable television or bundled cable service that is transmitted
directly to a purchaser's premises, including a residence, hotel, or motel,
without use of ground receiving or distribution equipment, except at the
purchaser's premises or in the uplink process to the satellite. Tangible
personal property transferred to the care, custody, and control of the
purchaser as an integral part of the cable television or bundled cable service
is considered to be part of the service and is also exempt from local tax.
Equipment used by a cable service provider to provide direct-to-home satellite
cable television or bundled cable service is subject to local sales and use
taxes, unless otherwise exempt.
(3)
Point of delivery.
(A) Service delivered
through a fixed physical connection.
(i) If a
cable service provider delivers, or under its contract with the purchaser is
able to deliver, cable television or bundled cable service, or any portion or
element thereof, to the purchaser by means of a fixed physical connection, then
the address of that fixed physical connection is the point of delivery, even if
the purchaser can access the service both through a fixed physical connection
and by means of nomadic access.
(ii) Two or more fixed physical connections.
If fixed physical connections at two or more locations are associated with a
single account, then the service provider must collect local taxes for each
separately stated charge for cable television or bundled cable service based
upon the location of the fixed physical connection to which the charge is
allocable. For example, if a purchaser's account is associated with coaxial
cable connections in City A and in City B, and the purchaser incurs a
separately stated charge for a pay-per-view movie that is provided through the
coaxial cable connection in City B, then the service provider should collect
local taxes on the pay-per-view charge using the City B location as the point
of delivery. If the service provider cannot determine the location of the fixed
physical connection to which a charge is allocable, then the point of delivery
is the location of the fixed physical connection designated by the purchaser
prior to or at the time of purchase. Information about a purchaser's designated
point of delivery must be maintained in the seller's books and records. For
example, if a purchaser's account is associated with fixed physical connections
at two or more locations, and the purchaser incurs a separately stated charge
for video programming that is provided by means of nomadic access, then the
point of delivery is the location of the fixed physical connection designated
by the purchaser prior to or at the time of purchase.
(B) Service delivered by mobile
telecommunications service provider. If the purchaser's account does not have a
fixed physical connection, and if the cable service provider is also a mobile
telecommunications service provider, then the point of delivery to the
purchaser is the purchaser's place of primary use of the mobile
telecommunications service, as that term is defined in §
3.344 of this title.
(C) Service delivered without a fixed
physical connection. If the purchaser does not have a fixed physical
connection, and the cable service provider is not a mobile telecommunications
service provider, then the point of delivery shall be:
(i) the purchaser's mailing address in this
state. For example, if there is no fixed physical connection, but the cable
service provider sends invoices to the purchaser at a mailing address in this
state, or has on file in its books and records for the purchaser a mailing
address in this state, then the purchaser's Texas mailing address is the point
of delivery. A cable service provider acting in good faith may rely upon a
statement from a purchaser regarding the purchaser's mailing address as
provided in paragraph (4) of this subsection, in which case the provider will
not be held liable for any additional tax, penalty, or interest if the
comptroller subsequently determines that the statement is invalid; or
(ii) the address in this state that is
associated with the payment instrument used by the purchaser to pay for the
service, but only if the cable service provider cannot determine, or the
purchaser has not provided, a mailing address in this state under clause (i) of
this subparagraph.
(4) Purchaser's rights and remedies.
(A) Mailing address. If the point of delivery
to the purchaser is not a fixed physical connection under paragraph (3)(A) of
this subsection or the place of primary use under paragraph (3)(B) of this
subsection, then the purchaser may contact the cable service provider to
provide an accurate mailing address or to update the mailing address already in
the provider's books and records. The cable service provider must then collect
local tax on the sale of cable television and bundled cable service to the
purchaser based upon the point of delivery determined in accordance with
paragraph (3)(C)(i) of this subsection using the information provided by the
purchaser.
(B) Refund. If a cable
service provider collects local sales tax from a purchaser in error, then the
purchaser may request a refund of that local sales tax from the comptroller in
accordance with the procedures set forth in §
3.325 of this title (relating to
Refunds and Payments Under Protest).
(5) Nomadic access. If a purchaser has an
account with nomadic access, the point of delivery is determined in accordance
with paragraph (3) of this subsection.
(6) Tangible personal property. Tangible
personal property that is transferred to the care, custody, and control of the
purchaser as an integral part of a cable television or bundled cable service is
regarded as a component of that service and is subject to local tax based upon
the point of delivery to the purchaser in accordance with paragraph (3) of this
subsection. A cable service provider is responsible for collecting local tax in
accordance with Tax Code, Title 3, Subtitle C on any other sale, lease, or
rental of tangible personal property. When a cable service provider charges a
single price for the provision of both cable television or bundled cable
service and tangible personal property that is not an integral part of that
service, such as the rental of compact discs containing video programming, then
the cable service provider must identify in its contracts, invoices, or books
and records that portion of each charge that is attributable to the provision
of tangible personal property and must collect local sales tax upon that amount
in accordance with the provisions of the Tax Code governing the application of
local tax to the sale of tangible personal property.
(7) Other taxable services.
(A) A cable service provider providing a
service other than cable television or bundled cable service through a cable
system is responsible for collecting local tax on the separately stated charges
for that service in accordance with Tax Code, Title 3, Subtitle C, or, if
applicable, the specific provisions of the section of the title that address
the services provided. For example, a cable service provider who provides an
information service for a separate charge must collect the local tax due on
that charge in accordance with the provisions of Tax Code, §
321.203 and §
323.203.
(B) A service provider, other than a cable
service provider, who provides services through a cable system is responsible
for collecting local tax on those services in accordance with Tax Code, Title
3, Subtitle C, or, if applicable, the specific provisions of the section of the
title that address the services provided.
Notes
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