section .3200 - TELECOMMUNICATIONS AND TELEGRAPH COMPANIES

 

17 NCAC 07B .3201          TELECOMMUNICATIONS AND TELEGRAPH COMPANIES

(a)  Sales to telecommunications and telegraph companies regularly engaged in providing telephone and telegraphic services to subscribers on a commercial basis of central office equipment, switchboard and private branch exchange equipment and prewritten computer programs used in providing telecommunications service to subscribers are subject to the one percent sales or use tax with a maximum tax of eighty dollars ($80.00) per article.  For the purpose of determining the items that may be properly included in the terms central office equipment, switchboard equipment and private branch exchange equipment, reference is made to Accounts 2124, 2211, 2212, 2215, 2220, 2231, 2232, 2311, and 2341 of Title 47‑‑Telecommunication Chapter 1, Part 32, Uniform System of Accounts For Telecommunications Companies, of the Federal Communications Commission's rules and regulations as revised to January 1, 1988, which are hereby incorporated by reference.  This Rule has no application to future changes in the Federal Communications Commission's rules and regulations until such changes are reviewed by the Secretary of Revenue to determine the application of tax to the tangible personal property affected by such changes.  Copies of these Rules and Regulations may be obtained from the Secretary's Office, Room 202, Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554, at a fee of ten cents ($0.10) per page.

(b)  Accounts 2211, 2212, 2215, 2220, 2231 and 2232; Central Office Equipment.  These accounts include switchboards and other equipment, instruments and apparatus necessary to the functions of central offices. Sales to and purchases by the above‑referred to telecommunications and telegraph companies of the items included in Central Office Equipment Accounts, are subject to the one percent sales or use tax with a maximum tax of eighty dollars ($80.00) per article, irrespective of whether the items are classified in the Uniform System of Accounts as capital expenditures or as maintenance expense.  Examples of items contained in Central Office Equipment Accounts 2211, 2212, 2215, 2220, 2231 and 2232 and taxable at the general State rate plus any applicable local rate are:

(1)           aisle‑lighting equipment attached to buildings;

(2)           building alterations when tangible personal property not properly termed central office equipment is affixed or attached to or in any manner becomes a part of a building or structure;

(3)           cable, other than that connecting central office units to each other or to distributing frames;

(4)           covers for transmission power apparatus;

(5)           desks and tables unless equipped with central office equipment when purchased;

(6)           foundations for engines and other equipment when part of building;

(7)           loading coils used outside central office, loud speaker equipment, operators' chairs;

(8)           platforms, rolling ladders, tarpaulins, ticket holders, toll ticket carriers;

(9)           water stills for battery service; and

(10)         tools and portable testing equipment regardless of where used.

(c)  Account 2124 ‑ General Purpose Computers.  This account includes any computer system used to test, diagnose, maintain and control more than one type of telecommunications plant in addition to computers which are used to perform general administrative information processing activities.  Equipment used for the testing, diagnosis, maintenance, or control of more than one type of central office equipment is taxable at the one percent rate subject to the eighty dollar ($80.00) maximum tax per article, whether classified under the Uniform System of Accounts as capital expenditures or as maintenance expense; however, all other equipment in this account is subject to tax at the general State rate plus any applicable local rate.

(d)  Account 2311 - Station Apparatus.  This account includes private branch exchange equipment in addition to station apparatus.  Equipment which is properly included in the term private branch exchange equipment is taxable at the one percent rate subject to the eighty dollar ($80.00) maximum tax per article, whether classified by the Uniform System of Accounts as capital expenditures or as maintenance expense; however, all other equipment in this account is subject to tax at the general state rate plus any applicable local rate.  Examples of items that are contained in Account 2311 and are taxable at the general State rate are desk sets, hand sets, wall sets, mobile telephone equipment, backboards, battery boxes, booths, coil collectors, station wiring, protectors, arresters, ground rods, clamps, wire and similar associated equipment.

(e)  Account 2341 - Large Private Branch Exchange.  This account contains equipment and apparatus necessary to the operation of the above named exchanges.  The equipment and apparatus contained in this account which are properly included in the term private branch exchange equipment are subject to the one percent sales or use tax with a maximum tax of eighty dollars ($80.00) per article, whether classified under the Uniform System of Accounts as capital expenditures or as maintenance expense, but does not include any tangible personal property which is station apparatus.  Examples of items that are included in Account 2341 and are taxable at the general State rate are operators' chairs and equipment.

(f)  Telecommunications Services. - G.S. 105-164.4(a)(4c) and G.S. 105-164.4C govern the taxation of telecommunications services.

(g)  Property Sale or Lease. - A telecommunications company that sells or leases equipment or other tangible personal property is liable for collecting and remitting applicable State and local sales and use taxes on the receipts from the sales or leases.  Tax due on the sale or lease of property by a telecommunications company is payable in the same manner as tax due on the sale or lease of property by any other retailer; it is due monthly, quarterly, or semimonthly in accordance with G.S. 105-164.16.

 

History Note:        Authority G.S. 105‑164.4; 105-164.4A; 105‑164.6; 105‑262;

Eff. February 1, 1976;

Amended Eff. August 1, 2002; April 1, 1999; October 1, 1993; October 1, 1991; October 1, 1990; July 1, 1989.