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Taxation: Charges for Interstate and International Telecommunications Services Are Not Part of Sale Price

During an audit, Maine Revenue Services assessed a service provider tax on property tax recovery charges and carrier cost recovery charges that our client, a telecommunications company, charged its customers on calls that originated or terminated out of state. The tax statutes excluded or exempted (depending on the time period) charges in connection with interstate or international service. The State argued that the charges themselves were not telecommunications services and were neither interstate nor international in nature. The Law Court upheld the Bureau of Tax Appeals’ decision vacating the assessment, finding that anything that is part of the “sale price” of international or interstate telecommunications services is also part of the “sales of” those services, which clearly falls within the scope of the provisions excluding or exempting the sales from the service provider tax. State Tax Assessor v. MCI Communications Services, Inc., 2017 ME 119

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