Treatment Of Sales-For-Resale Under Section 186-E Of The Tax Law


New York State
Publication 41
Department of
Treatment of Sales-for-Resale
and Finance
Under Section 186-e of the Tax Law
the supervision of the Public Service Commission (PSC) and is
engaged in providing carrier access service to a switched network.
Effective January 1, 1995, every provider of telecommunication
services is subject to tax under section 186-e of the Tax Law,
Interexchange carrier means any provider of telecommunication
Excise Tax on Telecommunication Services. Section 186-e
services between two or more exchanges that qualifies as a
imposes a 3.5% excise tax on each charge from: (1) any intrastate
common carrier; in other words, any person engaged as a
telecommunication services; (2) any interstate or international
common carrier for hire in intrastate, interstate or foreign
telecommunication services that originate or terminate in New York
telecommunication services.
State and are charged to a service address in New York State
(regardless of where the amounts charged are actually billed or
Based on information provided by the New York State Public
ultimately paid); and (3) private telecommunication services
Service Commission (PSC), the local carriers, interexchange
attributable to New York State.
carriers, and facilities-based cellular common carriers eligible for
Telecommunication services means telephony or telegraphy, or
the exclusion as of November 1995 are listed below and on the
telephone or telegraph service of any nature, including but not
following pages. Certain companies not on the list may be eligible
limited to any transmission of the following: voice, image, data,
for the exclusion. For example, a company may have exited the
information and paging, through the use of wire, cable, fiber-optic,
market between January 1, 1995 and the date of this publication.
laser, microwave, radio wave, satellite or similar media or any
In addition, new companies may enter the market in the future. To
combination thereof. Telecommunication services also include
recognize these companies, a provider may accept a Certificate of
services that are not telecommunication services as such, but are:
Public Convenience and Necessity issued by the PSC as evidence
(1) ancillary to the provision of telephone service (for example,
that a carrier is eligible for the resale exclusion. Retroactive to
directory information, call forwarding, caller-identification,
January 1, 1995, and thereafter, charges related to
call-waiting and supplementary services) and (2) services (of
sales-for-resale to all of these companies must be excluded from
whatever nature) which are incidental to the provision of
gross receipts subject to tax.
telecommunication services. The charges from equipment
provided in connection with the provision of any
Note: The resale exclusion does not apply if the purchaser does
telecommunication service (e.g., beepers, telephones, fax
not resell the service as a telecommunication service, even if the
machines, modems, etc.) are also subject to tax under section
purchaser is on the list or has a Certificate of Public Convenience
186-e. The term telecommunication services does not apply to
and Necessity. For example, charges for telecommunication
separately stated charges for a service that alters the substantive
services sold to a company which, in turn, provides an online
(information) content of the message transmitted.
entertainment service are not eligible for the exclusion. The
Telecommunication services excludes television or radio
company selling the telecommunication service to the online
programming transmitted to subscribers by cable television
entertainment company must include the charges in gross receipts
subject to tax.
Sale-for-resale Exclusion
Resale Credit
Section 186-e provides that charges for certain sales-for-resale of
Other resellers, functioning as providers of customer owned
telecommunication services are excluded from gross receipts
currency operated telephones (COCOTS), cellular resellers,
subject to tax. For other sales-for-resale not qualifying for the
pagers, hotels, motels, apartment buildings, and hospitals, are not
exclusion, a credit is allowed.
considered interexchange carriers or local carriers for the
Two criteria must be met in order to qualify for the sale-for-resale
purposes of this exclusion. The charges from sales-for-resale to
such resellers may not be excluded. Although not allowed the
1. The purchaser (reseller) must sell the purchased
exclusion when the service is purchased, the net tax effect is the
telecommunication service as a telecommunication service.
same because the reseller is allowed a credit for the amount of
the tax previously paid when the service is actually resold. Thus,
2. The purchaser (reseller) must be an interexchange carrier or
the reseller pays tax on only the difference between the resale
local carrier. A facilities-based cellular common carrier is
price and its cost to purchase the service.
allowed the exclusion for the purposes of this provision.
Section 186-e defines local carrier to mean any provider of
Note: As above, the resale credit is only allowed if the service is
resold as a telecommunication service.
telecommunication services for hire to the public, that is subject to
Local Carriers, Interexchange Carriers, and Facilities-Based Cellular Common
Carriers Eligible for the Sale-for-Resale Exclusion
17. Frontier Communications of Ausable Valley, Inc.
Local Carriers
18. Frontier Communications of New York, Inc.
1. ALLTEL New York, Inc.
19. Frontier Communications of Seneca Gorham, Inc.
2. Armstrong Telephone
20. Frontier Communications of Sylvan Lake, Inc.
3. Berkshire Telephone Corporation
21. Frontier Corporation
4. Cassadaga Telephone Corporation
22. Germantown Telephone Company, Inc.
5. Champlain Telephone Company
23. Hancock Telephone Company
6. Chautauqua and Erie Telephone Corporation
24. Margaretville Telephone Company, Inc.
7. Chazy and Westport Telephone Corporation
8. Citizens Telecommunications Company of New York, Inc.
25. Middleburgh Telephone Company
(formerly GTE/CONTEL NY)
26. New York Telephone Company
9. Citizens Telephone Company of Hammond, New York, Inc.
27. Newport Telephone Company
10. Crown Point Telephone Corporation
28. Nicholville Telephone Company, Inc.
11. Delhi Telephone Company
29. Ogden Telephone Company
12. Deposit Telephone Company, Inc.
30. Oneida County Rural Telephone Company
13. Dunkirk and Fredonia Telephone Company
31. Ontario Telephone Company, Inc.
14. Edwards Telephone Company, Inc.
32. Oriskany Falls Telephone Corporation
15. Empire Telephone Corporation
16. Fishers Island Telephone Corporation
33. Pattersonville Telephone Company


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