Tax Type
Retail Sales and Use Tax
Description
Conferencing and long distance calling services
Topic
Taxability of Persons and Transactions
Date Issued
09-06-1990
September 6, 1990
Re: Ruling Request/ Virginia Sales and Use Tax
Dear**********************
This will reply to your letter dated January 12, 1990 on behalf of your client ("taxpayer") in which you request a ruling on the application of the Virginia Sales and Use tax.
FACTS
The taxpayer is in the business of providing telephone conferencing services primarily via proprietary software and hardware which the taxpayer has developed.
In a typical conference transaction, a customer will call one of the taxpayer's operators who obtains the necessary information for the call including the number of parties to be included in the call, their names, telephone numbers, etc. At the time selected for the conference. the operator calls each of the parties and connects them to the conference call. Another option allows conferees to call a central number and be connected to the conference call automatically.
The taxpayer is not a regulated telephone company nor does it own any telephone facilities. In order to provide the conferencing service. the taxpayer purchases long distance telephone service from long distance telecommunication service providers.
Customers are billed a conferencing charge for the services needed to put together and manage the conference calls, and a charge for the long distance phone service which was purchased from the telecommunications provider.
The taxpayer requests a ruling as to whether the receipts from either the conferencing service or the resale of the long distance phone service are taxable under the sales and use tax statutes or any other utility tax statutes (assuming the taxpayer has nexus in Virginia).
RULING
Based upon the information you have presented. the conferencing services and long distance calling services to customers in Virginia represent personal service transactions. Therefore the charges for these services are exempt from the sales and use tax under §58.1-608(5)(a) of the Virginia Code.
If the taxpayer has property or employees in Virginia income derived in the state from the provision of teleconferencing services would generally be subject to the corporation income tax. (See VR 630-3-441, copy enclosed.)
The Public Service Taxation Division of the State Corporation Commission (P.O. Box 1197 Richmond. VA 23209) should be contacted to determine if any regulatory taxes are applicable.
If you have further questions regarding the application of the sales and use tax to your client. please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner