Kentucky Tax Due by Pay Phone Operator

The Kentucky Board of Tax Appeals held that a company that operated pay phones was providing communications services subject to Kentucky sales tax. The company’s products, including: 1) a dialing mechanism to allow consumers to direct signals of their voices to a specific location, 2) a device that could transmit and receive voice communications, and 3) an outlet for the dial tone, were taxable intrastate telephonic communication services. The fact that the company did not provide the entire service, because it had to obtain dial tones from a phone company and might route calls to an operator or through a long distance company’s computers, did not change the fact that the company was providing communication service. (Phone-Tech, Inc. v. Finance and Administration Cabinet, Department of Revenue, Kentucky Board of Tax Appeals, File NO. K05-R-33)

Posted on March 31, 2008