N.Y. Tax Law § 186-E — Excise tax on telecommunication services

§ 186-e. Excise tax on telecommunication services. 1. Definitions. As\nused in this section, where not otherwise specifically defined and\nunless a different meaning is clearly required:\n (a) (1) "Gross receipt" means the amount received in or by reason of\nany sale, conditional or otherwise, of telecommunication services or in\nor by reason of the furnishing of telecommunication services. Gross\nreceipt from the sale of mobile telecommunications service provided by a\nhome service provider shall include "charges for mobile\ntelecommunications service" as described in paragraph one of subdivision\n(l) of section eleven hundred eleven of this chapter, regardless of\nwhere the mobile telecommunications service originates, terminates or\npasses through. Gross receipt is expressed in money, whether paid in\ncash, credit or property of any kind or nature, and shall be determined\nwithout any deduction therefrom on account of the cost of the service\nsold or the cost of materials, labor or services used or other costs,\ninterest or discount paid, or any other expenses whatsoever except that\nthere shall, however, be allowed a deduction for bad debts with respect\nto charges previously subjected to the tax hereunder when the debt has\nbecome worthless in accordance with generally accepted accounting\nprinciples consistently applied by the taxpayer. "Amount received" for\nthe purpose of the definition of gross receipt, as the term gross\nreceipt is used throughout this article, means the amount charged for\nthe provision of a telecommunication service.\n (2) (A) Any charge for a service or property billed by or for a mobile\ntelecommunications customer's home service provider shall be deemed to\nbe provided by such mobile telecommunications customer's home service\nprovider.\n (B) Charges for mobile telecommunications service that are provided or\ndeemed to be provided by a mobile telecommunications customer's home\nservice provider shall be sourced to the taxing jurisdiction where the\nmobile telecommunications customer's place of primary use is located,\nregardless of where the mobile telecommunications service originates,\nterminates or passes through.\n (b)(1) "Interexchange carrier" means any provider of telecommunication\nservices between two or more exchanges that qualifies as a common\ncarrier. Common carrier means any person engaged as a common carrier for\nhire in intrastate, interstate or foreign telecommunication services.\n (2) "Local carrier" means any provider of telecommunication services\nfor hire to the public, which is subject to the supervision of the\npublic service commission and is engaged in providing carrier access\nservice to a switched network. For the sole purpose of the application\nof the sale for resale exclusion under paragraph (b) of subdivision two\nof this section, a reference to an "interexchange carrier" or "local\ncarrier" shall include a cellular common carrier which is a\nfacilities-based cellular common carrier without regard to a\ndetermination of whether such carrier is providing local or\ninterexchange service as such.\n (c) "Person" means persons, corporations, companies, associations,\njoint-stock companies or associations, partnerships or limited liability\ncompanies, estates, assignee of rents, any person acting in a fiduciary\ncapacity, or any other entity, and persons, their assignees, lessees,\ntrustees or receivers, appointed by any court whatsoever, or by any\nother means, except the state, municipalities, political and civil\nsubdivisions of the state or municipality, public districts and\ncorporations and associations organized and operated exclusively for\nreligious, charitable or educational purposes, no part of the net\nearnings of which inures to the benefit of any private shareholder or\nindividual.\n (d) "Private telecommunication service" means a dedicated\ntelecommunication service that entitles the user or users to the\nexclusive or priority use of a communications channel or group of\nchannels from one or more locations to one or more locations.\n"Exclusive" as used herein means that the user-subscribers have use of a\ncommunications channel to the exclusion of all others who are not\nauthorized to use such channel, and "priority" as used herein means that\nonly authorized user-subscribers, as opposed to unauthorized persons,\nreceive preferential use of a communications channel, but not\nnecessarily a preference to the use of such channel with respect to each\nother.\n (e) "Provider of telecommunication services" means any person who\nfurnishes or sells telecommunications services regardless of whether\nsuch activities are the main business of such person or are only\nincidental thereto. Where a reference is made to a "utility" in this\nchapter in regard to the tax imposed by this section or by this section\nand section one hundred eighty-six-a of this article, such reference to\n"utility" shall be deemed to include a reference to a provider of\ntelecommunication services.\n (f) "Service address" means the location of the telecommunication\nequipment from which the telecommunication is originated or at which the\ntelecommunication is received from the provider of telecommunication\nservices. The foregoing rule is amplified, but not limited, by the\nfollowing special provisions, which are listed in order of priority of\napplication so that only the first applicable special provision will\napply, if more than one potentially applies: (i) if the\ntelecommunication originates or terminates in this state and the service\nis charged to telecommunication equipment which is not associated with\nthe origination or termination of the telecommunication (for example, by\nthe use of a calling card or third party billing) and the location of\nsuch equipment is in this state, the service address of the\ntelecommunication will be deemed to be in this state; (ii) if the\nservice is obtained through the use of a credit or payment mechanism\nsuch as a bank, travel, credit or debit card or if the service is\nobtained by charging telecommunication equipment which is not associated\nwith the origination or termination of the telecommunication (for\nexample, by the use of a calling card or third party billing) and the\nequipment is not located in the state of origination or termination,\nthen the service address is deemed to be the location of the origination\nof the telecommunication; and (iii) if the service address is not a\ndefined location, as in the case of mobile telephones, paging systems,\nmaritime systems, air-to-ground systems and the like, service address\nshall mean the location of the subscriber's primary use of the\ntelecommunication equipment as defined by telephone number,\nauthorization code, or location in this state where bills are sent,\nprovided, however, the location of the mobile telephone switching office\nor similar facility in this state that receives and transmits the\nsignals of the telecommunication will be deemed the service address\nwhere the mobile telephone switching office or similar facility is\noutside the subscriber's assigned service area.\n (g) "Telecommunication services" means telephony or telegraphy, or\ntelephone or telegraph service, including, but not limited to, any\ntransmission of voice, image, data, information and paging, through the\nuse of wire, cable, fiber-optic, laser, microwave, radio wave, satellite\nor similar media or any combination thereof and shall include services\nthat are ancillary to the provision of telephone service (such as, but\nnot limited to, dial tone, basic service, directory information, call\nforwarding, caller-identification, call-waiting and the like) and also\ninclude any equipment and services provided therewith. Provided, the\ndefinition of telecommunication services shall not apply to separately\nstated charges for any service which alters the substantive content of\nthe message received by the recipient from that sent.\n (h) For the purpose of applying the provisions of this section to\nmobile telecommunications service, the following terms when used in\nrelation to mobile telecommunications service shall be defined as such\nterms are defined in section eleven hundred one of this chapter: "mobile\ntelecommunications service," "mobile telecommunications customer," "home\nservice provider," "licensed service area," "reseller," "serving\ncarrier," "place of primary use" and "taxing jurisdiction".\n 2. Imposition. (a) (1) There is hereby imposed an excise tax on the\nsale of telecommunication services, except for the sale of mobile\ntelecommunication services that are subject to tax under subparagraph\ntwo of this paragraph, by any person which is a provider of\ntelecommunication services, to be paid by such person, at the rate of\nthree and one-half percent prior to October first, nineteen hundred\nninety-eight, three and one-quarter percent from October first, nineteen\nhundred ninety-eight through December thirty-first, nineteen hundred\nninety-nine, and two and one-half percent on and after January first,\ntwo thousand of gross receipt from: (i) any intrastate telecommunication\nservices; (ii) any interstate and international telecommunication\nservices (other than interstate and international private\ntelecommunication services) which originate or terminate in this state\nand which telecommunication services are charged to a service address in\nthis state, regardless of where the amounts charged for such services\nare billed or ultimately paid; and (iii) interstate and international\nprivate telecommunication services, the gross receipt to which the tax\nshall apply shall be determined as prescribed in subdivision three of\nthis section.\n (2) There is hereby imposed an excise tax on the sale of mobile\ntelecommunication services, by any person which is a provider of\ntelecommunication services, to be paid by such person, at the rate of\ntwo and nine-tenths percent on and after May first, two thousand fifteen\nof gross receipts from any mobile telecommunications service provided by\na home service provider where the mobile telecommunications customer's\nplace of primary use is within this state.\n (b) (1) Sale for resale exclusion. There shall be excluded from the\ntax imposed by this section the sale of telecommunication services to a\nprovider of telecommunication services where such services are purchased\nby such provider for resale as telecommunication services to its\npurchasers. (i) All gross receipts are deemed taxable to the provider of\ntelecommunication services under this section, unless the provider,\nwithin ninety days after the provision of telecommunication services,\nhas taken from the purchaser a certificate of resale in the form the\ncommissioner has prescribed, to document that the telecommunication\nservices were purchased for resale as telecommunication services. If the\nprovider of telecommunication services obtains a properly completed\ncertificate of resale from the purchaser within ninety days after the\nprovision of telecommunication services, that certificate constitutes\nconclusive proof that the telecommunication services covered by the\ncertificate were sold for resale as telecommunication services, the\nprovider is relieved of liability for the tax due on the sale of those\nservices, and the burden of proving that the gross receipt is not\ntaxable is on the purchaser. Where a certificate of resale is received\nwithin the time prescribed, but is deficient in some material manner,\nand that deficiency is later removed, the receipt of the certificate\nwill be deemed to have satisfied all of the requirements of this clause.\nWhere a certificate of resale is not received within ninety days after\nthe provision of telecommunication services, the provider may, within\nsixty days after a request by the commissioner, either prove that the\ntelecommunication services were sold for resale as telecommunication\nservices, or obtain a fully completed certificate of exemption from the\npurchaser. A certificate of exemption obtained within this sixty day\nperiod constitutes evidence, but not conclusive proof, that the\ntelecommunication services covered by the certificate were sold for\nresale as telecommunication services. The certificate of exemption will\nbe administered in a manner consistent with subdivision (c) of section\neleven hundred thirty-two of this chapter.\n (ii) A certificate of resale is not properly completed if it does not\ninclude the purchaser's certificate of authority number issued pursuant\nto section eleven hundred thirty-four of this chapter, or if the\npurchaser's certificate of authority has expired or is invalid because\nit has been suspended or revoked as provided in section eleven hundred\nthirty-four of this chapter and the commissioner has furnished providers\nof telecommunication services registered under that section with\ninformation identifying those persons whose certificates of authority\nhave expired or have been suspended or revoked.\n (iii) The relief provided by this subparagraph does not apply to a\nprovider of telecommunication services that fraudulently fails to pay\ntax or solicits a purchaser or purchasers to submit one or more unlawful\ncertificates of exemption.\n (iv) Any person who issues a false or fraudulent certificate of resale\nwith intent to evade tax is, in addition to any other penalty imposed,\nsubject to a penalty of one hundred percent of the tax that would have\nbeen due had there not been a misuse of that certificate, plus a penalty\nof fifty dollars for each false or fraudulent certificate.\n (v) For any other sale of telecommunication services by a provider of\ntelecommunication services to a purchaser who resells those services as\ntelecommunication services but does not provide a properly completed\ncertificate of resale to the provider of telecommunication services in\naccordance with the provisions of this subparagraph, the credit allowed\nin subparagraph one of paragraph (a) of subdivision four of this section\nshall be allowed.\n (2) Cable television service exclusion. The sale of cable television\nservice shall in no event constitute a telecommunications service, and\nthe receipts from the sale of such service are without the scope of the\ntax imposed by this section. The provision of such service shall mean\nthe transmitting to subscribers of programs broadcast by one or more\ntelevision or radio stations or any other programs originated by any\nperson by means of wire, cable, microwave or any other means.\n (3) Air safety and navigation exclusion. There shall be excluded from\nthe tax imposed by this section, the sale of telecommunication services\nto air carriers solely for the purpose of air safety and navigation\nwhere such telecommunication service is provided by an organization, at\nleast ninety percent of which (if a corporation, ninety percent of the\nvoting stock of which) is owned, directly or indirectly, by air\ncarriers, and which organization's principal function is to fulfill the\nrequirements of (i) the federal aviation administration (or the\nsuccessor thereto) or (ii) the international civil aviation organization\n(or the successor thereto), relating to the existence of a communication\nsystem between aircraft and dispatcher, aircraft and air traffic control\nor ground station and ground station (or any combination or the\nforegoing) for the purposes of air safety and navigation.\n (4) With respect to services or property described in subparagraph (B)\nof paragraph one of subdivision (1) of section eleven hundred eleven of\nthis chapter and internet access service, a home service provider shall\npay tax on the gross receipt from any charge that is aggregated with and\nnot separately stated from other charges for mobile telecommunications\nservice. Provided, however, if such home service provider uses an\nobjective, reasonable and verifiable standard for identifying each of\nthe components of the charge for mobile telecommunications service, then\nsuch home service provider may separately account for and quantify the\namount of each such component charge. If a home service provider chooses\nto so separately account for and quantify and separately sells the\nsubparagraph (B) property or service or internet access service, then\nthe charge for such property or service shall be based upon the price\nfor such property or service as separately sold. If a home service\nprovider chooses to so separately account for and quantify and does not\nseparately sell such property or service, then the charge for such\nproperty or service shall be based upon the prevailing retail price of\ncomparable property or service sold separately by other home service\nproviders. In any case, the charge for such property or service shall be\nreasonable and proportionate to the total charge to the mobile\ntelecommunications customer. Such charges for such subparagraph (B)\nservices or property or internet access service, as the case may be,\nwill not constitute gross receipts from charges for mobile\ntelecommunications services. Nothing herein shall be construed to exempt\nfrom tax any service or property otherwise subject to tax under this\nsection.\n (c) Federal limitations. The tax imposed by this section shall not be\nmade applicable to the sale of telecommunication services under\ncircumstances which would preclude the application of such tax by reason\nof the United States constitution and the laws of the United States\nenacted pursuant thereto.\n 3. Apportionment for certain private telecommunication services. (a)\nGeneral. With respect to interstate and international private\ntelecommunication services, the gross receipt, if not separately\nascertainable for each use of such service, shall be determined as\nfollows: (1) one hundred percent of the charge imposed at each channel\ntermination point within this state, (2) one hundred percent of the\ncharge imposed for the use of a channel between channel termination\npoints within this state, and (3)(i) if each segment between each\ntermination point is separately billed and the amounts so billed are\nfairly reflective of New York origination and/or termination traffic,\nthen one hundred percent of the charge imposed at each termination point\nin New York and for service in New York between those points and fifty\npercent of the charge imposed for service between a channel termination\npoint outside the state and a point inside the state measured by the\nnearest termination point inside the state to first termination point\noutside the state relative to such point inside the state, or (ii) if\neach segment of the interstate or international circuit between each\nchannel termination point is not separately billed or if such billing\ndoes not fairly reflect the New York origination and/or termination\ntraffic handled by such private telecommunication service, an allocated\nportion of the interstate and international channel charge with respect\nto points in New York and points outside the state based on the ratio\nwhich the number of channel termination points in this state bears to\nthe total number of channel termination points within and without the\nstate.\n (b) Other allocation methods. Where the commissioner decides that,\nwith respect to a certain provider of telecommunication services, the\nmethod prescribed in paragraph (a) of this subdivision does not fairly\nand equitably reflect the private telecommunication services\nattributable to this state, the commissioner shall prescribe methods of\nallocation which fairly and equitably reflect the private\ntelecommunication services attributable to this state. Provided,\nfurther, that the commissioner may require that another allocation\nmethod be used so as to insure that the sum of the allocation factor of\nthis state and the allocation factor of the other jurisdiction involved\nis not greater than one. In making this determination, the commissioner\nmay take into account the reasonableness of the allocation prescribed by\nother states.\n 4. Credits against tax. (a) Allowance of credits. The following\ncredits against the tax imposed under this section shall be allowed:\n (1) Certain resold telecommunication services. A credit equal to the\namount of tax imposed by this section, with respect to the sale of\ntelecommunication services, shall be allowed to the purchaser where such\npurchaser is a provider of telecommunication services, and where the\ntelecommunication service purchased are later resold by such purchaser\nas telecommunication services, and the exclusion in subparagraph one of\nparagraph (b) of subdivision two of this section is not allowed. To\naccomplish the purpose of the credit, it shall be determined as follows:\nthe tax on the resold service shall be computed so that the tax under\nthis section is imposed on the difference between the amount of the\ncharge made by the provider to the purchaser and the amount of the\ncharge made by the purchaser for the resold service.\n (2) Tax paid in another jurisdiction. With respect to the tax on\ninterstate or international telecommunication services imposed under\nthis section, in order to prevent actual multijurisdictional taxation of\na sale of telecommunication services which is the subject of taxation\nunder this section, any provider of telecommunication services or such\nprovider's purchaser, upon proof that such provider or purchaser has\nactually paid a like tax to another state or country, or jurisdiction\nthereof on such telecommunication services, shall be allowed a credit\nagainst the tax imposed under this section. The amount of the credit\nshall be the amount of tax lawfully due and paid to such other state or\ncountry or jurisdiction, provided, however, the amount of the credit\nshall in no event exceed the tax due to this state.\n (b) Refunds-overpayments of tax. In lieu of the credits set forth in\nparagraph (a) of this subdivision, the taxpayer may elect to take a\nrefund. Amounts to be credited or refunded under this subdivision shall\nbe considered overpayments of tax in accordance with the provisions of\nsection one thousand eighty-six of this chapter; provided, however, the\nprovisions of subsection (c) of section one thousand eighty-eight of\nthis chapter notwithstanding, no interest shall be paid on any credit or\nrefund allowed under subparagraph one of paragraph (a) of this\nsubdivision.\n 5. Record keeping. Every provider of telecommunication services\nsubject to tax under this section shall keep such records of its\nbusiness and in such form as the commissioner may require, and such\nrecords shall be preserved for a period of three years, except that the\ncommissioner may consent to their destruction within that period or may\nrequire that they be kept longer.\n 6. Returns. Every provider of telecommunication services subject to\ntax under this section shall file, on or before March fifteenth of each\nyear, for taxable years beginning before January first, two thousand\nsixteen, and on or before April fifteenth of each year, for taxable\nyears beginning on or after January first, two thousand sixteen, a\nreturn for the year ended on the preceding December thirty-first, and\npay the tax due, which return shall state the gross receipts for the\nperiod covered by each such return and the resale exclusions during such\nperiod. Returns shall be filed with the commissioner on a form to be\nfurnished by the commissioner for such purpose and shall contain such\nother data, information or matter as the commissioner may require to be\nincluded therein. Notwithstanding the foregoing provisions of this\nsubdivision, the commissioner may require any provider of\ntelecommunication services to file an annual return, which shall contain\nany data specified by the commissioner, regardless of whether such\nprovider is subject to tax under this section. Every return shall have\nannexed thereto a certification by the head of the provider of\ntelecommunication services making the same, or of the owner or of a\npartner or member thereof, or of a principal officer of the corporation,\nif such business be conducted by a corporation, to the effect that the\nstatements contained therein are true.\n 7. (a) Applicability of article nine. If any provision of this section\nconflicts with any other provision contained in this article, the\nprovision of this section shall control, but the provisions of this\narticle which do not conflict with the provisions of this section shall\napply with respect to the taxes under this section, so far as they are,\nor may be made applicable. The taxes and surcharges imposed by this\nsection and sections one hundred eighty-four, one hundred eighty-four-a,\none hundred eighty-six-a, one hundred eighty-six-c, and one hundred\neighty-eight of this article may be jointly administered with respect to\nyears ending in nineteen hundred ninety-five and thereafter, in the\nmanner established by the commissioner.\n (b) Applicability of Mobile Telecommunications Sourcing Act. The\nprovisions of sections 119(c), 120, 121 and 122 of title 4 of the United\nStates Code as enacted and in effect on July twenty-eighth, two\nthousand, to the extent relevant and to the extent required by\npreemption, shall apply to the provisions of this section in the same\nmanner and with the same force and effect as if the language of such\nsections of such title 4 of the United States Code had been incorporated\nin full into this section and had expressly referred to the tax under\nthis section, with such modifications as may be necessary in order to\nadapt the language of such provisions to the tax imposed by this\nsection.\n 8. Enhanced emergency telephone system surcharge fee and public safety\ncommunications surcharge. Notwithstanding any other provision contained\nin this chapter or any other law, any surcharge collected or any\nadministrative fee retained by any provider of telecommunication\nservices acting as collection agent for a municipality pursuant to the\nprovisions of article six of the county law or acting as a collection\nagent for the state pursuant to the provisions of section one hundred\neighty-six-f of this article will not be considered as, nor included in\nthe determination of gross receipts of the provider.\n 9. Distribution. Seven and six-tenths percent of the monies collected\nfrom the excise tax imposed by this section shall be distributed\npursuant to subdivision three of section two hundred five of this\nchapter.\n