Washington Issues Guidance on Dark Fiber Sales.

Friday, November 14th, 2014

Closeup of dark fiber.

The Washington Department of Revenue recently released guidance on taxing dark fiber sales.

Dark fiber is unlit installed fiber optic cable. Without laser illumination, the fiber does not transfer information. Sales of dark fiber include associated services such as repair, installation, and maintenance. Dark fiber is generally sold by non-telephone companies. Dark fiber can be used in multiple locations at the same time.

Telecommunications service is the electronic transmission of any information between points. Competitive telephone service ("CTS") is telecommunications equipment and services that can be provided by a person not regulated as a telephone company. CTS sales are sourced to the place of first use. CTS sales are subject to both retail sales tax and retailing business and occupation taxes.

The sale of dark fiber is CTS because it includes both equipment and services related to telecommunication service. When dark fiber is used for the first time, and that use occurs in multiple locations at the same time, the tax can be allocated to each location proportionately. By the time of the first invoice, the seller and purchaser of the dark fiber must (1) agree to allocate the sale based on a reasonable and consistent method and (2) list the locations of use. Sales tax and business and occupation taxes are apportioned in the same way.


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