§ 105-164.4C. Telecommunications service and ancillary service. - North Carolina Statutes

§ 105‑164.4C. Telecommunications service and ancillary service.

(a)        General. – Thegross receipts derived from providing telecommunications service or ancillaryservice in this State are taxed at the rate set in G.S. 105‑164.4(a)(4c).Telecommunications service is provided in this State if the service is sourcedto this State under the sourcing principles set out in subsections (a1) and(a2) of this section. Ancillary service is provided in this State if thetelecommunications service to which it is ancillary is provided in this State.The definitions and provisions of the federal Mobile TelecommunicationsSourcing Act apply to the sourcing and taxation of mobile telecommunicationsservices.

(a1)      General SourcingPrinciples. – The following general sourcing principles apply totelecommunications services. If a service falls within one of the exceptionsset out in subsection (a2) of this section, the service is sourced inaccordance with the exception instead of the general principle.

(1)        Flat rate. – A telecommunicationsservice that is not sold on a call‑by‑call basis is sourced to thisState if the place of primary use is in this State.

(2)        General call‑by‑call.– A telecommunications service that is sold on a call‑by‑call basisand is not a postpaid calling service is sourced to this State in the followingcircumstances:

a.         The call bothoriginates and terminates in this State.

b.         The call eitheroriginates or terminates in this State and the telecommunications equipmentfrom which the call originates or terminates and to which the call is chargedis located in this State. This applies regardless of where the call is billedor paid.

(3)        Postpaid. – Apostpaid calling service is sourced to the origination point of thetelecommunications signal as first identified by either the seller'stelecommunications system or, if the system used to transport the signal is notthe seller's system, by information the seller receives from its serviceprovider.

(a2)      Sourcing Exceptions.– The following telecommunications services and products are sourced inaccordance with the principles set out in this subsection:

(1)        Mobile. – Mobiletelecommunications service is sourced to the place of primary use, unless theservice is prepaid wireless calling service or is air‑to‑ground radiotelephoneservice. Air‑to‑ground radiotelephone service is a postpaid callingservice that is offered by an aircraft common carrier to passengers on itsaircraft and enables a telephone call to be made from the aircraft. Thesourcing principle in this subdivision applies to a service provided as anadjunct to mobile telecommunications service if the charge for the service isincluded within the term "charges for mobile telecommunicationsservices" under the federal Mobile Telecommunications Sourcing Act.

(2)        Prepaid. – Prepaidtelephone calling service is sourced in accordance with G.S. 105‑164.4B.

(3)        Private. – Privatetelecommunications service is sourced in accordance with subsection (e) of thissection.

(b)        Repealed by SessionLaws 2006‑33, s. 4, effective January 1, 2007.

(c)        (1)‑(10)Repealed by Session Laws 2006‑33, s. 4, effective January 1, 2007.

(11)      Repealed by SessionLaws 2005‑276, s. 33.7, effective October 1, 2005.

(12)‑(16) Repealed bySession Laws 2006‑33, s. 4, effective January 1, 2007.

(d)        Recodified as G.S.105‑164.4D by Session Laws 2006‑151, s. 4, effective January 1,2007.

(e)        Private Line. – Thegross receipts derived from private telecommunications service are sourced asfollows:

(1)        If all thecustomer's channel termination points are located in this State, the service issourced to this State.

(2)        If all thecustomer's channel termination points are not located in this State and theservice is billed on the basis of channel termination points, the charge foreach channel termination point located in this State is sourced to this State.

(3)        If all thecustomer's channel termination points are not located in this State and theservice is billed on the basis of channel mileage, the following applies:

a.         A charge for achannel segment between two channel termination points located in this State issourced to this State.

b.         Fifty percent (50%)of a charge for a channel segment between a channel termination point locatedin this State and a channel termination point located in another state issourced to this State.

(4)        If all thecustomer's channel termination points are not located in this State and theservice is not billed on the basis of channel termination points or channelmileage, a percentage of the charge for the service is sourced to this State.The percentage is determined by dividing the number of channel terminationpoints in this State by the total number of channel termination points.

(f)         Call Center Cap.The gross receipts tax on telecommunications service that originates outsidethis State, terminates in this State, and is provided to a call center that hasa direct pay permit issued by the Department under G.S. 105‑164.27A maynot exceed fifty thousand dollars ($50,000) a calendar year. This cap appliesseparately to each legal entity.

(g)        Credit. – Ataxpayer who pays a tax legally imposed by another state on atelecommunications service taxable under this section is allowed a creditagainst the tax imposed in this section.

(h)        Definitions. – Thefollowing definitions apply in this section:

(1)        Ancillary service. –Defined in G.S. 105‑164.3.

(1a)      Call‑by‑callbasis. – A method of charging for a telecommunications service whereby theprice of the service is measured by individual calls.

(2)        Call center. – Definedin G.S. 105‑164.27A.

(3)        Mobiletelecommunications service. – Defined in G.S. 105‑164.3.

(4)        Place of primaryuse. – Defined in G.S. 105‑164.3.

(5)        Postpaid callingservice. – A telecommunications service that is charged on a call‑by‑callbasis and is obtained by making payment at the time of the call either throughthe use of a credit or payment mechanism, such as a bank card, travel card,credit card, or debit card, or by charging the call to a telephone number thatis not associated with the origination or termination of the telecommunicationsservice. A postpaid calling service includes a service that meets all therequirements of a prepaid wireline telephone calling service, except theexclusive use requirement.

(6)        Prepaid telephonecalling service. – Defined in G.S. 105‑164.3.

(7)        Privatetelecommunications service. – Telecommunications service that entitles asubscriber of the service to exclusive or priority use of a communicationschannel or group of channels.

(8)        Telecommunicationsservice. – Defined in G.S. 105‑164.3. (2001‑430, s. 6; 2001‑487, ss. 67(a), (c),69(b); 2002‑16, s. 10; 2002‑16, ss. 6, 7, 8, 9, 11, 14; 2003‑416,s. 16(a); 2005‑276, ss. 33.6, 33.7; 2006‑33, s. 4; 2006‑151,s. 4.)