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exemptions

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									                                           TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                 Applicable Exemptions for Governmental Entities
                   Facts about Services That Require a Contract, such as, Wireless, Long Distance, or Pager Services
                                                                 Issue Date: 07/08/03

1. As state agencies all providers should acknowledge that the account is tax exempt. The assessment of taxes, state, federal or local,
    indicates that the provider has not coded the account as tax exempt. You should contact the provider and question the assessment
    of taxes.

2. There are certain fees based on taxable receipts, such as the Texas Infrastructure Fund, that will appear on the bill if the account
   is being assessed taxes. Once the account has been coded as tax exempt, these fees will not appear.

3.   Even after a contract has been signed, the provider may implement new additional fees and surcharges,
     if the contract includes a phrase that the customer will be responsible for any new fees/surcharges.

 4. Be sure to check the contract for any mention of existing fees/surcharges or any phrase
    concerning the implementation of new fees/surcharges. DIR will have this information for TEX-AN contracts.
                                                       TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                           Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                              Issue Date: 07/08/03
     Category                  Also Labeled As:                      Pay ?                          Legal Citation                                  Comments
FCC Subscriber Line    FCC-Approved Customer Line
Charge (SLC)           Charge, Interstate Subscriber
                       Line Charge, Customer
                       Subscriber Line Charge,                                                                                 The purpose of the SLC is for the LEC to recover
                       Federal Line Fee, Easy Access                                                                           part of the booked cost of common lines. It is a
                       Dialing, End User Access                                            FCC 97-158 ¶¶ 72-87 (CC
                                                                      Yes                                                      federally mandated fee. Appears on the local
                       Charge, FCC End User Charge,                                        Docket No. 96-262)
                                                                                                                               service portion of the bill and is assessed on a
                       Interstate Access Surcharge,                                                                            per line basis.
                       FED Primary Carrier Multi-Line
                       Charge (Verizon)

Telecommunications
                                                                                                                               Enables telephone communications between
Relay Service                                                                              47 CODE OF FEDERAL
                                                                                                                               persons who are hearing and persons with
                        Federal TRS Charge                            Yes                  REGULATIONS § 64.601 -
                                                                                                                               hearing or speech disabilities. Originally required
                                                                                           64.605
                                                                                                                               by the Americans with Disabilities Act.

                                                                                                                               LECs have traditionally recovered the Utility
                                                                                                                               Gross Receipts Assessment in base rates.
                                                        Yes – State and Pol. Subs. are
                                                                                                                               However, long distance carriers are allowed to
                                                        required to pay it.                TEX. UTIL. CODE § 16.001
                                                                                                                               recover it as a line-item on customer bills. The
Utility Gross Receipts Public Utility Gross Receipts    Exempt if directly imposed on      Tex Att'y Gen Op. H-1265
                                                                                                                               fee goes to pay for the expense of implementing
Assessment             Tax                              State, but not exempt if a pass-   (1977). Verizon Bill - It is line
                                                                                                                               the Public Utility Regulatory Act. Govenmental
                                                        through as part of the rate or     itemizing its pass through
                                                                                                                               entities should only expect to see this fee in bills
                                                        price, which is the usual.
                                                                                                                               from long distance carriers. TEX-AN users will
                                                                                                                               avoid it. State is liable for its charges for service.

                                                                                                                               Texas courts have determined that municipal
                                                                                                                               franchise fees are not taxes, but rather user fees
Municipal Franchise
                       Municipal Phone Service Fee                    Yes                  Tex. Att'y. Gen. Op. H-1265.        for city streets. State, Pol. Subs., & non-profit
Fee
                                                                                                                               schools pay them as part of utility’s cost of
                                                                                                                               service.
                                                 TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                       Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                        Issue Date: 07/08/03
       Category            Also Labeled As:                     Pay ?                      Legal Citation                             Comments

                                                                                                                 Pursuant to HB11, 72th Leg., 1st Called Session,
                                                                                                                 the methodology changed for state franchise tax.
                                                                                                                 Telecom utilities are allowed to pass the portion
                                                                                   PURA §53.202, Tex. Util. Code
                                                                                                                 of the tax due to the change in methodology of
                                                                                   Ann. SWB v. PUC, 863 S.W.2d
                                                                                                                 the fee to customers as the cost of service.
Cost of Service                                     Yes, except SWB. See           754 GTE v. PUC, 978 S.W.2d
                                                                                                                 Verizon is not allowed to increase the HB 11 cost
Surcharge                                           comment on Verizon             161
                                                                                                                 of service from the amount applicable at the date
                                                                                   Tex. Att'y Gen. Op. H-1265
                                                                                                                 of their incentive regulation election. SWB is not
                                                                                   (1977).
                                                                                                                 allowed to take advantage of this provision
                                                                                                                 because their rates are and have been frozen.


Expanded Local                                                   Yes                                               No exemption. It's a rate
Calling Service                                                                                                    element.
(ELCS) Surcharge
Extended Area                                                    Yes                                               No exemption. It's a rate
Service (EAS)                                                                                                      element.
                                                                                                                   No exemption. It's a rate
Rural Zone Mileage                                               Yes                                               element.
                                                                                                                   SBC customers will see this surcharge appear on
Tx Rate Grp Reclass                                                                                                bills for the first time in October 2003
                                                    Yes, except TEX-AN customers
Surcharge

                                                                                                                   Recent FCC orders allow LECs to pass through
Federal Universal
                                                                                                                   this fee on local bills. It should be paid absent a
Service Fund (FUSF) Universal Connectivity Fee      Yes. Effective September 1,    FCC 00-193 ¶ 58, 82 FCC DA
                                                                                                                   contrary contractual agreement. Balances which
Charge appearing on (AT&T)                          2001                           01- 1429
                                                                                                                   may have been due prior to 09/01/01 are to be
the local service bill.
                                                                                                                   negotiated with the carrier.
                                                                                                                   The Number Portability charge is not federally
Local Number                                                                                                       mandated; however it is allowed to be a company
Portability (LNP)                                   Yes. Effective September 1,    FCC 99-72 ¶ 32 FCC 98-82 ¶¶     specific tariffed charge. It should be paid absent
Charge appearing on                                 2001                           9, 139                          a contrary contractual agreement. Balances
the local service bill.                                                                                            which may have been due prior to 09/01/01 are to
                                                                                                                   be negotiated with the carrier.
                                                   TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                          Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                             Issue Date: 07/08/03
      Category               Also Labeled As:                       Pay ?                          Legal Citation                            Comments
                                                                                                                          The State, Pol. Subs. & non-profit schools are
                                                                                                                          exempt from paying federal excise tax. The
                                                       No -- State, Pol. Subs. & non-                                     assessment of taxes is an indication that the
Federal Excise Tax
                       Federal Tax                     profit schools are tax-exempt.     26 U.S.C § 4253 (i) & (j).      account is not recognized by the provider as a tax
                                                                                                                          exempt. You should contact the provider to
                                                                                                                          ensure that the account is coded as a tax exempt
                                                                                                                          account.

                                                       No -- State, Pol. Subs. & non-     TEX. TAX CODE §§ 151.309 & State agencies, Pol. Subs., & non-profit schools
State Sales Tax
                                                       profit schools are exempt.         151.310                    are exempt from paying state sales tax.

                                                                                          Maverick County WCI Dist. No.
                                                                                                                        State agencies are exempt from paying county
                                                       No -- State is exempt.             1 v. State, 456 S.W. 2d 204;
County Sales Tax                                                                                                        taxes or “special assessments.”
                                                                                          and Tex. Atty. Gen. Op. MW-
                                                                                          551 (1982)
                                                                                          Maverick County WCI Dist. No.
                                                                                                                          State agencies are exempt from paying local or
                                                       No -- State is exempt.             1 v. State, 456 S.W. 2d 204;
Local/City Sales Tax                                                                                                      city taxes or “special assessments.”
                                                                                          and Tex. Atty. Gen. Op. MW-
                                                                                          551
                                                                                          Maverick County WCI Dist. No.
                                                                                                                          State agencies are exempt from paying Metro
Metro Transit                                                                             1 v. State, 456 S.W. 2d 204,
                                                       No -- State is exempt.                                             Transit Authority taxes or “special assessments.”
Authority (MTA) Tax                                                                       and Tex. Atty. Gen. Op. MW-
                                                                                          551
Property Tax           Federal Regulatory Fee (AT&T)                                                                      This is a surcharge created by the providers to
                                                       No - State is exempt from                                          recover property taxes paid to various state and
                                                       payment of property tax and is                                     local taxing authorities. This charge should not
                                                                                           Would be a term of contract.
                                                       prohibited from paying non-                                        be paid absent a contractual obligation to do so.
                                                       mandatory fees.

                                                       Depends on terms of contract.
                                                       If a contract allows or requires   FCC 97-420 ¶ 284 FCC 97-157
Federal Universal
                                                       the payment of these charges,      ¶¶ 800, 855 FCC 98-67 ¶ 138
Service Fund (FUSF) Universal Connectivity Fee
                                                       they should be paid. A             (CC Docket No. 96-45) FCC 99-
Charge Appearing on (AT&T)
                                                       contractual agreement to pay       72 ¶ 32 (CC Docket No. 98-
the long distance bill.
                                                       the charge is not considered       170)
                                                       illegal.
                                                    TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                          Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                             Issue Date: 07/08/03
      Category               Also Labeled As:                       Pay ?                         Legal Citation                            Comments
                                                                                                                          The TUSF is assessed against
                                                                                                                          telecommunications providers based on “taxable
Texas Universal                                                                           PUC Subst. R. 26.401 PUC
                                                       No – State, Pol. Subs. & non-                                      telecommunications receipts.” PUC ruled in
Service Fund (TUSF)                                                                       Docket No. 20616, Declaratory
                                                       profit schools are tax-exempt.                                     Docket 20616 that LECs cannot recover any
Charge                                                                                    Order, April 6, 1999.
                                                                                                                          portion of the TUSF assessment from tax-exempt
                                                                                                                          entities.

                                                       No -- State, Pol. Subs. & non-
                                                                                                                          The TIF is assessed against telecom utilities
                                                       profit schools are tax-exempt.     34 Tex. Admin. Code § 3.110
                                                                                                                          providers based on taxable telecommunication
Texas Infrastructure                                   No, if purchasing on the current   Tex. Util Code Ann. §57.043
                       Texas State Special Fee or                                                                         receipts. Since State, pol. subs. & non-profit
Fund (TIF)                                             state contract or any other        Tex. Tax Code § 151.309
                       Special Tax                                                                                        schools are exempt from sales tax, they need not
Assessment                                             contract that precludes rate       Tex. Att'y Gen. Op. H-1265
                                                                                                                          pay the TIF fee.
                                                       changes or TIF assessment as       (1977)
                                                       part of contract.

                      Carrier Access Fee (MCI),        Depends on terms of contract.
                      Carrier Line Charge (AT&T),      If a contract allows or requires
Presubscribed         Pre-Subscribed Line Charge       the payment of these charges,      FCC 99-72 ¶ 32 FCC 97-158 ¶¶
                                                                                                                       This surcharge has been phased out for most
Interexchange Carrier (Sprint), Regulatory Related     they should be paid. A             55, 90 FCC Form No. CCB-
                                                                                                                       customers
Charge (PICC)         Charge (Sprint Long Distance),   contractual agreement to pay       FS012
                      Federal Line Fee, Easy Access    the charge is not considered
                      Dialing                          illegal.

                                                       Depends on terms of contract.
                                                       If a contract allows or requires
Local Number
                                                       the payment of these charges,
Portability (LNP)                                                                         FCC 99-72 ¶ 32 FCC 98-82 ¶¶
                                                       they should be paid. A
Charge appearing on                                                                       9, 139
                                                       contractual agreement to pay
a long distance bill
                                                       the charge is not considered
                                                       illegal.
                                                       Depends on terms of contract.
                                                       If a contract allows or requires
                                                       the payment of these charges,
Number Pooling                                         they should be paid. A
                                                       contractual agreement to pay
                                                       the charge is not considered
                                                       illegal.
                                                     TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                           Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                            Issue Date: 07/08/03
      Category               Also Labeled As:                      Pay ?                        Legal Citation                             Comments
Administrative                                                                                                          AT&T has agreed that the state agency accounts
                      AT&T                            No
Expense Fee                                                                                                             will not pay this fee.
                                                                                                                        FCC established a rate of $0.24 as default per-
                                                                                                                        call compensation to payphone providers for 800
800 calls from
                                                      No --TEX-AN exempt.               Fixed price contract            subscriber calls made from payphones, but DIR
payphones surcharge
                                                                                                                        has extended fixed price contract with AT&T for
                                                                                                                        800 service.
9-1-1 Emergency       USA Regulatory Obligation &                                                                       The law prohibits the imposition of fee on any
Service Fee           Fees, Emergency Service                                                                           state agency or university, but specifically
                      Charge (Verizon)                No -- State is exempt.                                            excludes junior and community colleges from the
                                                      Yes – Pol. Subs. not exempt       Tex. Health & Safety Code §     prohibition.
                                                      No, for Chapter 771 fees (e.g.,   771.074                         May not be imposed on or collected from the
                                                      50 cents).                                                        state. Exemption does not apply to lines in use
                                                                                                                        by students at dormitories, as they are not lines
                                                                                                                        in official state use.
9-1-1 Equalization    Texas Equalization Surcharge                                                                      The law prohibits the imposition of fee on any
Surcharge             (AT&T)                                                                                            state agency or university, but specifically
                                                                                                                        excludes junior and community colleges from the
                                                                                        Tex. Health & Safety Code       prohibition.
                                                      No -- State is exempt.
                                                                                        § 771.074 Exemption             May not be imposed on or collected from the
                                                      Yes -- Pol. Subs. not exempt
                                                                                                                        state. Exemption does not apply to lines in use
                                                                                                                        by students at dormitories, as they are not lines
                                                                                                                        in official state use.

                                                                                                                        The law prohibits the imposition of fee on any
                                                                                                                        state agency or university, but specifically
Poison Control                                        No -- State is exempt.            Tex. Health & Safety Code
                      Telephone Tax (AT&T)                                                                              excludes junior and community colleges from the
Surcharge                                             Yes -- Pol. Subs. not exempt      § 771.074 Exemption
                                                                                                                        prohibition.

                                                                                                                      A “telecommunications utility” may not impose a
                                                                                                                      fee, penalty, interest, or any other charge for
                                                                                        PURA §55.010, Tex. Util. Code
                                                      No -- State is exempt.                                          delinquent payment of a bill for services to the
                                                                                        Ann. (Vernon 1998) TEX.
                                                      Yes -- Pol. Subs. not exempt,                                   “state,” including any state agency. Definition of
Late Charges                                                                            GOV’T CODE § 2251.001 et.
                                                      but should turn to Prompt                                       “telecommunications utility” does not include
                                                                                        seq. PUC Subst. R. 26.27
                                                      Payment Act                                                     wireless providers. Pol. Subs. should turn to
                                                                                        Tex. Rev. Civ. Stat. Ann.art.
                                                                                                                      Prompt Payment Act for calculation of interest on
                                                                                                                      overdue payment.
                                                 TELECOMMUNICATIONS FEES, TAXES AND SURCHARGES
                                                       Applicable Exemptions for Governmental Entities
This chart is directed at tariffed telecommunication services. You should consult your contract (TEXAN or other agreement) for services such as, wireless, long
                    distance, or pager, for language addressing pass thru fees and surcharges. See the attached Fact Sheet on these services.
                                                                         Issue Date: 07/08/03
      Category             Also Labeled As:                     Pay ?                      Legal Citation                          Comments
Minimum Usage                                                                                                    Governmental entities should take long-distance
Charge on a long                                    Yes, if not on TEX-AN.         Term of Contract.             service from TEX-AN to avoid this type of
distance bill                                                                                                    charge.

								
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