Statement of Application of Access Line Tax to PRI and VoIP Services, and to Access Lines with Inbound-Only Capacity and/or No Ability to Call 911
In recent litigation taxpayers have taken positions that are contrary to the law with respect to the application of the Access Line Tax (“ALT”) to Primary Rate Interface (“PRI”) services, Voice over Internet Protocol (“VoIP”) services, services that provide inbound-only service or services that do not include access to 911, and wholesale services. To confirm how the ALT applies to these services and has applied to these services since the voters passed the ALT in 2008:
PRI Services
Business and Tax Regulations Code (“Code”) Section 781(c) defines a High Capacity Trunk Line as “a trunk line with a capacity of at least 24 channels over a high capacity service.” As indicated in a 2009 Notice to Telephone Communications Services Suppliers Regarding Access Line Tax, “[b]ecause ISDN Primary Rate Interface (PRI) and T-1 services have a capacity of 24 channels, these services are defined as ‘high capacity trunk lines’ under the ALT ordinance (San Francisco Business and Tax Regulations Code Section 781(c)).” This is true regardless of whether one of the 24 channels is used for signaling or any other telecommunications purpose, as opposed to directly carrying calls.
VoIP Services
Under Code Section 782, the ALT applies to “each access line within the City’s tax jurisdiction.” Code Section 781(a) defines “access line” as follows:
“Access line” means any connection, whether by wire or by wireless technology, from a customer location to a provider of telephone communications services offered to the public for compensation. “Access line” includes the assignment of a 10-digit telephone number under the North American Numbering Plan for the purpose of providing telephone communications services, including without limitation voice over Internet protocol telephone communications services, using such telephone number.
Unless and until the law is changed, this language plainly requires that the ALT be collected and remitted on the assignment of each phone number provided in connection with the provision of VoIP services. Any contrary practice, including collecting and remitting the ALT based on concurrent call capacity or some other metric, is not consistent with the plain language of the ALT.
Inbound-Only Access Lines and Access Lines with No Access to 911
The ALT ordinance contains no language limiting it to access lines with outbound calling capacity or with the ability to dial 911. The definition of “access line” expressly includes “any connection…from a customer location to a provider of telephone communications services offered to the public for compensation” and “includes the assignment of a 10-digit telephone number…for the purpose of providing telephone communications services” without limitation. The only exception to this is the definition of “trunk line,” which expressly provides that it “shall not include any such line which is marketed to customers and configured by the service supplier to deliver only calls to the subscriber location and cannot be used by the subscriber to originate outgoing calls from the subscriber location (e.g., direct inward dial lines).”
Wholesale Services
Taxpayers have argued that wholesalers that sell access lines to resellers are categorically exempt from collecting and remitting ALT with respect to such sales. There is no such categorical exemption for wholesalers. See, e.g., Code §§ 6.2-13(e), 6.7-1(a), 781(i) and (j), 783(b), 785.