N.Y. Tax Law § 186-e: Excise tax on telecommunication services

§ 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 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 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 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 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 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 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

section one thousand eighty-six of this chapter; provided, however, the

provisions of subsection (c) of 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 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.