Tax Type
Retail Sales and Use Tax
Description
Telecommunications; Prepaid phone cards
Topic
Taxability of Persons and Transactions
Date Issued
10-24-1994
See 2007 updated Tax Code 58.1- 602
Re: Request for Ruling: Retail Sales & Use Tax
Dear****************
This will respond to your letter of October 12, 1994 in which you seek a ruling on the tax status of prepaid long distance telephone cards to be sold by************* (the "Taxpayer") .
The Taxpayer intends to begin selling prepaid phone cards. The cards will entitle the purchasers to long distance phone service in the amount paid for the cards. Typically, a person will buy ten minutes of long distance time for $4.00. You seek a ruling on the tax status of the sales of the cards.
The department ruled in P.D. 93-105 (4/19/93), copy enclosed, that the retail sales of telephone calling card which enable the purchasers to make prepaid long distance telephone calls are nontaxable as the "true object" in purchasing a calling card is the long distance service. The card serves only as a medium for securing the telephone service.
Accordingly, sales by the Taxpayer of the prepaid phone cards are nontaxable.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8550H
October 24, 1994
Re: Request for Ruling: Retail Sales & Use Tax
Dear****************
This will respond to your letter of October 12, 1994 in which you seek a ruling on the tax status of prepaid long distance telephone cards to be sold by************* (the "Taxpayer") .
FACTS
The Taxpayer intends to begin selling prepaid phone cards. The cards will entitle the purchasers to long distance phone service in the amount paid for the cards. Typically, a person will buy ten minutes of long distance time for $4.00. You seek a ruling on the tax status of the sales of the cards.
RULING
The department ruled in P.D. 93-105 (4/19/93), copy enclosed, that the retail sales of telephone calling card which enable the purchasers to make prepaid long distance telephone calls are nontaxable as the "true object" in purchasing a calling card is the long distance service. The card serves only as a medium for securing the telephone service.
Accordingly, sales by the Taxpayer of the prepaid phone cards are nontaxable.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8550H
Rulings of the Tax Commissioner