The Washington State Department of Revenue recently released guidance discussing the taxability of telephone answering services. Some telephone answering services use people to provide services such as telephone answering, message taking, call screening, call evaluation, logging of times, logging messages and similar services. These services are taxed under the "services and other activities" classification of the business and occupation (B&O) tax.
Modern technology and rapid innovation in the telephone industry have resulted in business activities that involve call management, but do not otherwise fall within the description of a telephone answering service. These are "ancillary services," and they include detailed telecommunications billing, directory assistance, vertical services, and voice mail services. Rather than being taxed under the "services and other activities" classification of the B&O tax, ancillary services are taxed under the retail sales tax and the retailing B&O tax.