Regardless of the discount, all telecommunications carriers that sell cellular phones must charge sales tax based on the actual price to their customers, even if less than the carrier’s cost. The remainder of the phone’s cost is considered to be factored into the service charge and taxed accordingly. Furthermore, when carriers give cellular phones free of charge, as an inducement to customers to join the service, there is no sales or use tax. Again, the cost of the phone is considered to be factored into the service and, thus, tax will only apply to the service itself. Carriers are reminded that the tax rate for non-cellular service is based upon the service address. (Letter Ruling No. LR3758, Missouri Department of Revenue, April 18, 2007).