Company May Use IP Addresses to Source Sales of Telecommunications Services

Friday, July 25th, 2014


The Illinois Department of Revenue ("Department") recently released a letter ruling approving a taxpayer's use of customers' internet protocol (IP) addresses to source sales of telecommunications services.

Illinois taxes sales of telecommunications services. Illinois taxes mobile telecommunications services based on the customer's place of primary use. The "place of primary use" is the street address that represents where the customer's use of the service primarily occurs. This address must (1) be the customer's residential street address or primary business street address and (2) be within the licensed service area of the service provider.

The taxpayer provided mobile telecommunications services. Customers could use these services on several devices, including desktop computers, laptops, and mobile devices. Customers were able to use these services anywhere they could connect to the internet. The taxpayer captured its customers' IP addresses when customers registered for the services. The taxpayer did not require customers to provide street addresses to register. It was also unable to verify the accuracy of such addresses when customers chose to provide them. The taxpayer therefore used the physical address associated with a customer's registration IP address to determine the place of primary use.

The Department held that the taxpayer could use registration IP addresses to determine customers' places of primary use. The taxpayer argued that the registration IP address was the best and most appropriate customer location to use. The Department agreed.

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

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