Tax Type
Retail Sales and Use Tax
Description
Facsimile transmission service
Topic
Taxability of Persons and Transactions
Date Issued
05-30-1984
May 30, 1984
Re: Request for Ruling/Sales and Use Tax
Dear ********************
This responds to your letter of December 28, 1983, requesting a ruling concerning the sales and use tax application to a new facsimile transmission service for high-priority business documents using an electronic image- processing system.
FACTS
The new service will be an extension of the taxpayer's current business, which involves the movement of high-priority goods and documents through an integrated air and ground network throughout the United States and in Canada and Puerto Rico. The facsimile transmission service will be introduced to the market in two phases.
Phase I will involve the physical pick-up of an original document at the customer's place of business by the taxpayer's courier or the drop-off of such document at one of the taxpayer's stations by the customer. Documents will then be electronically transmitted by means of facsimile machines over the taxpayer's network to the receiving station near the recipient's address. The document will then be delivered to the recipient by courier or picked up by the recipient at the taxpayer's station. The method of pricing will be based on the number of pages transmitted.
Phase II of the new service will involve the same basic service as in Phase I, except that smaller versions of facsimile transmission machines will be installed in the customer's place of business. Customers will initiate and transmit documents directly to or receive documents directly from taxpayer's stations or other customer-premise machines. Customer transmission thus will eliminate the necessity for courier service on one or both sides of the document delivery.
RULING
§ 58-441.6(a), Code of Virginia, provides an exemption from sales and use taxation for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made...." We find under this provision that the transactions occurring between the taxpayer and the customer in Phases I and II are nontaxable personal service transactions. Simply changing the mode of delivery of documents from courier to facsimile transmission machines does not alter the nontaxable nature and true object of the transaction, i.e., delivery of a customer-supplied document. In Phase II, we note especially that installation of the taxpayer-owned machines in a customer's place of business is an inconsequential tangible element of the total service transaction.
Finally, although you have not in your request for ruling addressed the question of the taxpayer's purchase or lease of equipment, we feel it necessary to state that when the taxpayer buys or leases equipment for use in Virginia, the sales and use tax will, of course, apply to the cost price of the equipment.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner