Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-27-1 - MULTISTATE TAX COMPACT › Section 810-27-1-.18.07 - Special Rules: Telecommunications and Ancillary Service Providers

Current through Register Vol. 42, No. 9, June 28, 2024
The following special rules are established with respect to the
				apportionment of income from the sale of telecommunications and ancillary
				services by a person that is taxable both in Alabama and in one or more other
				states.
(1) In general, A person
			 providing telecommunications or ancillary services whose business activity is
			 taxable both within and without Alabama shall allocate and apportion its net
			 income as provided in §
								40-27-1,
Code of Ala. 1975
, and rules issued thereunder,
			 exclusive of §
								40-27-1,
Code of Ala. 1975
, except as modified by this special
			 rule. However, business income shall be determined in accordance with §
								40-27-1.1,
Code of Ala. 1975
.
(2) Definitions.
(a) "800 service" means a "telecommunications
			 service" that allows a caller to dial a toll-free number without incurring a
			 charge for the call. The service is typically marketed under the name "800",
			 "855", "866", "877", and "888" toll-free calling, and any subsequent numbers
			 designated by the Federal Communications Commission.
(b) "900 service" means an inbound toll
			 "telecommunications service" purchased by a subscriber that allows the
			 subscriber's customers to call in to the subscriber's prerecorded announcement
			 or live service. "900 service" does not include collection services provided by
			 the seller of the "telecommunications services" to the subscriber, or service
			 or product sold by the subscriber to the subscriber's customer. The service is
			 typically marketed under the name "900" service, and any subsequent numbers
			 designated by the Federal Communications Commission.
(c) "Air-to-Ground Radiotelephone service"
			 means a radio service, as that term is defined in
			 47
			 CFR 22.99, in which common carriers are
			 authorized to offer and provide radio telecommunications service for hire to
			 subscribers in aircraft.
(d)
			 "Ancillary service" means services that are associated with or incidental to
			 the provision of telecommunications services, including but not limited to the
			 following subcategories: detailed telecommunications billing, directory
			 assistance, vertical service, conference bridging service and voice mail
			 services. The term "ancillary service" is defined as a broad range of services
			 and is broader than the sum of the subcategories.
(e) "Bundled transaction" means the retail
			 sale of two or more products where (1) the products are otherwise distinct and
			 identifiable, and (2) the products are sold for one non-itemized price. For
			 purposes of this special rule, a "bundled transaction" does not include the
			 sale of any products in which the "sales price" varies, or is negotiable, based
			 on the selection by the purchaser of the products included in the transaction.
			 A transaction that otherwise meets the definition of a "bundled transaction" is
			 not a "bundled transaction" if it is:
(1) the
			 "retail sale" of two products where the first product is essential to the use
			 of the second product, and the first product is provided exclusively in
			 connection with the second, and the true object of the transaction is the
			 second;
(2) the "retail sale" of
			 more than one product, but the products are sourced the same under this special
			 rule; or (3) the "retail sale" of more than one product, but the sum of the
			 "purchase price" or "sales price" of products which are sourced differently
			 under this special rule is de minimis.
(f) "Call-by-call Basis" means any method of
			 charging for telecommunications services where the price is measured by
			 individual calls.
(g)
			 "Coin-operated telephone service" means a "telecommunications service" paid for
			 by inserting money into a telephone accepting direct deposits of money to
			 operate.
(h) "Communications
			 Channel" means a physical or virtual path of communications over which signals
			 are transmitted between or among customer channel termination points.
(i) "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.
(j)
			 "Customer" means the person or entity that contracts with the seller of
			 telecommunications services. If the end user of telecommunications services is
			 not the contracting party, the end user of the telecommunications service is
			 the customer of the telecommunication service. "Customer" does not include a
			 reseller of telecommunications service or for mobile telecommunications service
			 of a serving carrier under an agreement to serve the customer outside the home
			 service provider's licensed service area.
(k) "Customer Channel Termination Point"
			 means the location where the customer either inputs or receives the
			 communications.
(l) "Detailed
			 telecommunications billing service" means an ancillary service of separately
			 stating information pertaining to individual calls on a customer's billing
			 statement.
(m) "Directory
			 assistance" means an ancillary service of providing telephone number
			 information, and/or address information.
(n) "End user" means the person who utilizes
			 the telecommunication service. In the case of an entity, "end user" means the
			 individual who utilizes the service on behalf of the entity.
(o) "Fixed wireless service" means a
			 telecommunications service that provides radio communication between fixed
			 points.
(p) "Home service provider"
			 means the same as that term is defined in §124(5) of
			 Public
			 Law 106-252 (Mobile Telecommunications Sourcing
			 Act).
(q) "International" means a
			 "telecommunications service" that originates or terminates in the United States
			 and terminates or originates outside the United States, respectively. United
			 States includes the District of Columbia or a U.S. territory or
			 possession.
(r) "Interstate" means
			 a "telecommunications service" that originates in one United States state, or a
			 United States territory or possession, and terminates in a different United
			 States state or a United States territory or possession.
(s) "Intrastate" means a "telecommunications
			 service" that originates in one United States state or a United States
			 territory or possession, and terminates in the same United States state or a
			 United States territory or possession.
(t) "Mobile telecommunications service" means
			 the same as that term is defined in §124(7) of
			 Public
			 Law 106-252 (Mobile Telecommunications Sourcing
			 Act).
(u) "Mobile wireless service"
			 means a telecommunications service that is transmitted, conveyed or routed
			 regardless of the technology used, whereby the origination and/or termination
			 points of the transmission, conveyance or routing are not fixed, including, by
			 way of example only, telecommunications services that are provided by a
			 commercial mobile radio service provider.
(v) "Network access service" means the
			 provision by a local exchange telecommunication service provider of the use of
			 its local exchange network by an inter-exchange telecommunication service
			 provider to originate or terminate the inter-exchange telecommunication service
			 provider's traffic carried to or from a distant exchange.
(w) "Outer-jurisdictional property" means
			 tangible personal property, such as orbiting satellites, undersea transmission
			 cables and the like, that are owned or rented by the taxpayer and used in a
			 telecommunications or ancillary service business, but that are not physically
			 located in any particular state.
(x) "Paging service" means a
			 telecommunications service that provides transmission of coded radio signals
			 for the purpose of activating specific pagers; such transmissions may include
			 messages and/or sounds.
(y) "Pay
			 telephone service" means a telecommunications service provided through any pay
			 telephone.
(z) "Place of primary
			 use" means the street address representative of where the customer's use of the
			 telecommunications service primarily occurs, which shall 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" shall be
			 within the licensed service area of the home service provider.
(aa) "Post-paid calling 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 a
			 telecommunications service, except a prepaid wireless calling service that
			 would be a prepaid calling service except it is not exclusively a
			 telecommunication service.
(bb)
			 "Prepaid calling 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.
(cc) "Prepaid wireless
			 calling service" means the sale of a telecommunications service that provides
			 the right to utilize mobile wireless service as well as other
			 non-telecommunications services including the download of digital products
			 delivered electronically, content and ancillary services, which must be paid
			 for in advance that is sold in predetermined units of dollars of which the
			 number declines with use in a known amount.
(dd) "Private communications service" means a
			 telecommunications 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.
(ee)
			 "Product" means tangible personal property, digital good or service.
(ff) "Service address" means:
1. The location of the customer's
			 telecommunications equipment, to which the customer's call is charged, and from
			 which the call originates or terminates, regardless of where the call is billed
			 or paid.
2. If the location in
			 subparagraph 1. above 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.
3. If the
			 location in subparagraph 1. and subparagraph 2. above are not known, the
			 service address means the location of the customer's place of primary
			 use.
(gg)
			 "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.
1. The term "telecommunication service" is
			 defined as a broad range of services. The term includes, but is broader than
			 the sum of, the following subcategories: 800 service, 900 service, fixed
			 wireless service, mobile wireless service, paging service, prepaid calling
			 service, prepaid wireless calling service, private communication service,
			 value-added non-voice data service, coin-operated telephone service,
			 international telecommunications service, interstate telecommunications
			 service, intrastate telecommunications service, network access service and pay
			 telephone service.
2. The term
			 "telecommunications service" does not include:
(i) 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 where such purchaser's
			 primary purpose for the underlying transaction is the processed data or
			 information;
(ii) Installation or
			 maintenance of wiring or equipment on a customer's premises;
(iii) Tangible personal property;
(iv) Advertising, including but not limited
			 to directory advertising.
(v)
			 Billing and collection services provided to third parties;
(vi) Internet access service;
(vii) 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;
(viii) "Ancillary services"; or
(ix) Digital products "delivered
			 electronically", including but not limited to software, music, video, reading
			 materials or ring tones.
3. Examples of Included and Excluded
			 Services.
(i) Example: An entity provides
			 dedicated network service to an entity which will resell that service as
			 intrastate telecommunications service. Both entities are providing a
			 telecommunications service.
(ii)
			 Example: An entity provides an interstate telecommunications service to an
			 internet service provider which will use that service in the provision of
			 internet access service. The entity providing interstate telecommunications
			 service is providing a telecommunications service. The entity providing
			 internet access service is not providing a telecommunications
			 service.
(iii) Example: An entity
			 primarily engaged in the provision of cable television provides an interstate
			 telecommunications service. The entity is engaged in the provision of
			 telecommunications service.
(hh) "Value-added non-voice data service"
			 means a service that otherwise meets the definition of "telecommunications
			 services" in which computer processing applications are used to act on the
			 form, content, code, or protocol of the information or data primarily for a
			 purpose other than transmission, conveyance or routing.
(ii) "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.
(jj)
			 "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.