Wireless Private Network Not a Telecommunications Service, Not Subject to Sales Tax
December 23, 2021
This is a letter ruling issued by the Acting Director of Revenue under section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated November 8, 2021.
The facts as presented in your letter ruling request are summarized as follows:
Applicant provides wireless services in Missouri under licenses issued by the Federal Communications Commission (the "FCC"), including voice, messaging, Internet access, and private network services. These services are provided to Applicant's customers through its network of cell sites, mobile telephone switching offices, and other facilities. Applicant's wireless private network services provide customers with machine-to-machine data transport that is segregated from the public Internet and not connected to the public switched telephone network. These services enable secure connections between a customer's internal network systems and wireless-enabled devices that can be located anywhere within the coverage area that is served by Applicant's wireless network. The charges to customers for Applicant's wireless private network service are separately stated on customers' bills.
Is Applicant's wireless private network service described in section 144.010.1(16)(c), RSMo?
Yes. Applicant's wireless private network service is described in section 144.010.1(16)(c), RSMo, which excludes from the "telecommunications service" definition "[p]rivate mobile radio services which are not two-way commercial mobile radio services such as wireless telephone, personal communications services or enhanced specialized mobile radio services as defined pursuant to federal law . . . ." For purposes of this provision, the relevant federal law consists of definitions promulgated by the FCC at 47 C.F.R. § 20.3. Under these definitions, because wireless private network service is not connected to the public switched network, it is not an "interconnected" service and is not "commercial mobile radio service," but is "private mobile radio service." As a private mobile radio service that is not a commercial mobile radio service, the Applicant's wireless private network service is described in section 144.010.1(16)(c), RSMo.
Is Applicant's wireless private network service a "telecommunications service," as defined by section 144.010.1(16), RSMo?
No. Applicant's wireless private network service is not a "telecommunications service," as defined by subsection (16) of section 144.010.1, RSMo. This subsection excludes services described in paragraph (c) of the subsections "if such services are separately stated on the customers' bill." Thus, because charges for wireless private network service are separately stated on customer bills, and because the service is described in paragraph (c), wireless private network service is not a "telecommunications service."
Is the sale of Applicant's wireless private network service subject to Missouri sales tax?
No. The sale of Applicant's wireless private network service is not subject to Missouri sales tax. The sale of a service is not taxable unless a specific statute authorizes taxation of the service. Section 144.020, RSMo. The Applicant's wireless private network service is not taxable because it is not a telecommunications service, and is also not described in any other category of taxable service, as defined by statute.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel Stephen S. Krogmeier, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
With due care,
Joseph G. Plaggenberg