Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 285 - Taxable and Exempt Sales Determined by Method of Transaction or Usage › Rule 701-285.20 - Communication Services

Current through Register Vol. 47, No. 3, July 24, 2024
This rule applies to sales of communication services billed
				  prior to November 23, 2011. For communication service, telecommunication
				  service, ancillary service and other related communication service billed on or
				  after November 23, 2011, refer to 701-Chapter 224, Iowa Administrative Code.
				  The gross receipts from the sale of all communication services provided in this
				  state are subject to tax. (Communication services are not subject to use tax
				  prior to July 1, 2001. See rule
				  701-31.7 (423).)
(1) Definitions.
a. Communication service shall mean the act
				of providing, for a consideration, any medium or method for, or the act of
				transmission and receipt of, information between two or more points. Each point
				must be capable of both transmitting and receiving information if
				"communication" is to occur. The term "communication service" includes, but is
				not limited to, the transmission and receipt of sound, printed materials
				(including letters and materials printed by teletype), other images perceived
				visually and data encoded in computer languages. Any separate charge for the
				service of transmitting and receiving information between automatic data
				processing equipment and remote facilities shall be subject to tax, see
				paragraph 18.34(3)
"c."
b. Communication service is provided "in this
				state" only if both the points of origination and termination of the
				communication are within the borders of Iowa. Communication service between any
				other points is "interstate" in nature and not subject to tax.
c. "Gross receipts" from the sale of
				communication service in this state shall mean all charges to any person which
				are necessary for the ultimate user to secure the service, except those charges
				which are in the nature of a sale for resale (see subrule 18.20(4)). Such
				charges shall be taxable if the charges are necessary to secure communication
				service in this state even though payment of the charge may also be necessary
				to secure other services. Any charge necessary to secure only interstate
				communication service shall not be subject to tax if the nature of the service
				is separately stated and the charge for the service separately billed. For the
				present, the charges imposed by the Federal Communications Commission and
				referred to as "access charges for interstate or foreign access services" to an
				"end user" shall not be subject to tax if separately stated and billed.
Charges imposed or approved by the utilities division of the
				  department of commerce which are necessary to secure long distance service in
				  this state, for example, "end user intrastate access charges," are taxable.
				  Such charges are taxable whether they result from an expense incurred from
				  operations or are imposed by the mandate of the utilities division and
				  unrelated to any expense actually incurred in providing the service.
If company A collects gross receipts from ultimate users for
				  communication services performed in this state by company B, company A shall
				  treat those gross receipts as its own, collect tax upon them, and remit the tax
				  to the department. The situation is similar to a consignment sale of tangible
				  personal property, and tax must be remitted by the company collecting the gross
				  receipts from the users of the communication services.
d. Paging services. A one-way paging service
				is not a taxable enumerated service in Iowa because one-way paging only
				receives information and is not capable of transmitting information. As a
				result, this type of pager service is not a two-way transmission.