34 TAC §3.313
The Comptroller of Public Accounts proposes amendments to §3.313,
concerning cable television service. The proposed amendments implement substantive
changes due to the decision in Sharp v. Clearview Cable TV, Inc., 960 S.W.2d
424 (Tex.App.-Austin 1998, pet. denied) relating to equipment that may be
purchased for resale by a cable television service provider, and due to the
Telecommunications Act of 1996 as it relates to the federal preemption of
local taxes on direct-to-home satellite cable television service. Subsections
(d), (e), and (g) are amended accordingly. Nonsubstantive changes are made
throughout the section to improve clarity and readability.
John Heleman, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. Heleman also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be in providing additional information concerning taxpayer responsibilities.
This rule is adopted under Tax Code, Title 2, and does not require a statement
of fiscal implications for small businesses. There is no significant anticipated
economic cost to individuals who are required to comply with the proposed
rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This amendment is proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
Tax Code, Title 2.
The amendment implements Tax Code §151.0101(a)(2) and §151.0033.
§3.313.Cable Television Service.
(a)
Cable television service. Cable television service is the
distribution of video programming
,
with or without
the
use
of wires
,
to subscribing or paying customers. The term includes
direct broadcast satellite service (DBS), subscription television service
(STV), satellite master antenna television service (SMATV), master antenna
television service (MATV), multipoint distribution service (MDS), and multichannel
multipoint distribution service (MMDS)
,
and any audio portion of
a video program.
(b)
Imposition of tax. The sale of cable television service
and any services or expenses connected to the provision of the service are
subject to the sales and use tax. Taxable charges include:
(1)
(No change.)
(2)
charges for
video programming services;
(3)
charges for
taxable items, such as converters
and descramblers, transferred to customers;
(4) - (6)
(No change.)
(c)
Deposits. A deposit that represents future payment for
cable television service is part of the sales price of the service and is
taxable when the deposit is used to pay for the service. A deposit paid to
receive equipment such as a converter that is returned
to the cable television
service provider
when the
service is terminated
[
customer
returns the equipment
] is not taxable.
(d)
Sales for resale
[
Resale certificate
].
(1)
Taxable services.
A resale certificate may be
used to purchase a taxable service[
,
] tax free if the service will
be transferred as an integral part of a taxable
cable television
service.
For example:
if
a [
seller of
] cable
television
service
provider provides converters to its customers and a converter
is
[
who has a converter
] repaired by a third party
,
the cable television service provider
[
, which converter is returned
to the customer as part of the service,
] may
give a resale certificate
in lieu of paying tax on the purchased
[
purchase the
] repair
service [
tax free
]. See §3.285 of this title (relating to
Resale Certificate; Sales for Resale).
(2)
Tangible personal property.
A resale certificate
may be used to purchase tangible personal property
tax free
if
the care, custody, and control of the property is transferred to the customer
as a part of the cable
television
service.
For example, a
cable television service provider may give a resale certificate to the seller
of converters and remote controls that are provided to customers as part of
the sale of the cable television service. See §3.285 of this title.
(e)
Taxable purchases.
A cable television service provider
owes tax
[
Tax is due
] on equipment and supplies that are
not transferred to the
care, custody, and control of its
customer[
,
] but are used in providing the service. Equipment and supplies purchased
out of state and brought or shipped into Texas for use in providing the service
are subject to
Texas
use tax. See §3.346 of this title (relating
to Use Tax). Credit will be allowed against the [
Texas
] use tax
for any sales or use tax legally imposed and paid to another state. See
§3.338
[
§3.340
] of this title (relating to
Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers
[
Multistate Tax Credits
]). For example
,
[
:
] a
cable television service provider
[
seller
] must pay tax on
the satellite receiving
and transmitting
equipment, cables, and
wiring
that are not located on a customer's premises that are
used
to provide the
[
in providing cable television
] service [
to a customer
].
(f)
Real property rental. An owner of real property
,
such
as an apartment complex or hotel
, that
[
who
] provides
cable television service to
its
[
the
] residents or guests
must collect sales tax on any charge attributable to the cable television
service. If the owner does not charge the residents or guests for the service,
the owner is the consumer of the service and must pay tax on all taxable items
purchased.
(g)
Local tax. The sale of cable television service
occurs
[
takes place
] at the point of delivery to the
customer
[
consumer
].
Cable
[
Companies selling cable
] television service
providers
must collect
local
tax,
if adopted, for the city, county, transit authority,
and any
[
or
] special purpose
districts
[
district
] in which
delivery is made to the
customer
[
consumer
].
However,
direct-to-home satellite cable television service programming transmitted
or broadcast directly to a customer's premises, including a residence, hotel,
or motel, without use of ground receiving or distribution equipment, except
at the subscriber's premises or in the uplink process to the satellite is
not subject to local tax under the Telecommunications Act of 1996, §602.
Equipment used to provide direct-to-home satellite cable television service
is subject to local sales and use taxes, unless otherwise exempted by this
section.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on February 1, 2007.
TRD-200700281
Martin Cherry
General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: March 18, 2007
For further information, please call: (512) 475-0387