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

New York State

Publication 41

Department of

(12/95)

Taxation

Treatment of Sales-for-Resale

and Finance

Under Section 186-e of the Tax Law

General

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

service.

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

exclusion.

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

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

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