Sales Tax Refund for Providers of Cable Television, Internet Access or Telecommunications Services Frequently Asked Questions

You must report and pay state and local sales and use tax before you can apply for a refund. The law provides for a refund of taxes paid on qualifying items, not a credit. The law also requires payment of the tax and not merely an accrual.

The refund applies only to Texas state tax. Local tax will not be refunded.

Interest will not be paid on the refunds because the tax being refunded is not tax paid in error.

A subsidiary of a provider is a subsidiary for which a cable television provider, internet access provider, or telecommunications provider is the parent.

A qualifying purchase is tangible personal property (TPP) purchased, leased or rented by a provider or its subsidiary, and that is used or consumed by the provider or its subsidiary directly in, or during the process of:

• distributing cable television services;
• providing internet access services; or
• transmitting, conveying, routing or receiving telecommunications services.

In general, the TPP must directly carry the signal for the service provider. Some examples of qualifying purchases are:

• switches
• multiplexers
• routers
• modems
• transmitters
• converters
• antennas

The provider or its subsidiary must have paid Texas sales and use tax on the qualifying purchase in the calendar year immediately prior to the calendar year that the refund request is submitted.

The requestor must provide the following information for each transaction in their refund request:

• the requestor's name, address, and taxpayer identification number;
• if the requestor is a subsidiary of a provider, the parent provider's name, address, and taxpayer identification number;
• identification of the provider's industry as cable television service, internet access service, or telecommunications service;
• the name, address, and taxpayer identification number of the seller of the qualifying purchase for each identified transaction;
• the invoice number, if applicable, for each identified transaction;
• the amount of sales and use tax paid on the qualifying purchase and the manner in which the tax was paid, such as accrued and paid by the provider or paid to the seller;
• the date of each transaction;
• a description of each item, or like items, purchased;
• an explanation of each item’s intended use;
• the exact amount of installation charges associated with each individual item;
• the purchase amount of each item subject to refund; and
• the total amount of sales and use tax refund requested per item identified.

See Sales Tax Rule 3.345, Annual Refund Program for Providers of Cable Television, Internet Access, or Telecommunications Services.

Common reasons why refund requests are denied:

• Information or documentation fails to identify:
  • the equipment’s description, type and use;
  • the exact amount of installation charges associated with each individual item sold by the installer; or
  • whether the installation labor charge is for the installation of tangible personal property or real property.
• The request includes comingled charges that do not separately state the qualifying equipment or labor charges.

Purchases that do not qualify include:

Tangible personal property (TPP) that does not directly carry the signal. Some examples are:

• boxes, ducts, enclosures, frames, housing, shelter, vaults, conduit/pipes that hold wires and equipment
• cable lashing wires
• clamps
• faceplates
• guy wires
• grounding equipment
• mounting brackets
• nuts and bolts
• pedestals
• racks
• splice trays
• tools
• tower, telephone poles

Tangible personal property used for supporting or ancillary functions. Some examples are:

• testing equipment
• monitoring equipment
• data storage
• cell phones
• laptops

Installation labor for real property improvements. Some examples are:

• telephone poles placement
• underground boring and fiber placement
• hand holes placement
• ground rod placement (including site surveys)
• conduit placement
• set poles and strand placement
• fiber splicing and repair

Installation labor performed by someone other than the qualifying equipment seller.

The refund available to providers or their subsidiaries for a qualifying purchase is based on the sales price. The sales price is the total dollar amount for which tangible personal property is sold, leased, or rented. See Texas Tax Code Section 151.007.

For a qualifying purchase invoiced at the end of one calendar year, with the tax paid in the following calendar year, the refund request should be submitted for the calendar year when the tax was paid.

In your situation, because the tax was paid in January, the purchase should be included in the following year’s refund claim covering these purchases.