Fixed Monthly Charges for Mobile Voice Services Subject to Tax in New York

Jun 26th, 2014

The New York Division of Tax Appeals ("Division") recently determined that a taxpayer's fixed monthly charges for its mobile voice services were subject to sales tax.

New York taxes receipts from telephone and telegraph services, except for interstate and international services. Mobile voice services sold by home service providers are subject to tax when sold for a fixed periodic charge.

The taxpayer sold both interstate and intrastate mobile voice services for a fixed monthly charge. The taxpayer argued that the charges were not subject to tax because they were for interstate voice services.

The Division determined that the taxpayer's monthly charges were subject to tax. New York expressly taxed mobile voice services sold for a fixed periodic charge. The exception from tax for interstate telephone services did not apply to interstate mobile voice services. It did not matter that part of the fixed monthly charge was for interstate services. The charge was therefore subject to tax.

The Division also ruled that the federal Mobile Telecommunications Sourcing Act did not preempt New York's imposition of tax on interstate voice services. The federal law, the Division ruled, left room for New York to impose tax on these services.