By Douglas Upton and Timothy Gustafson

The New York State Department of Taxation and Finance issued an Advisory Opinion concluding that a retail operator of kiosks selling various prepaid telecommunication plans and additional telecommunication rights for existing plans was subject to New York sales and use tax collection and remittance requirements, but was not subject to the additional excise tax on telecommunication service providers imposed by section 186-e.2(a) of the New York Tax Law. Specifically, the Department determined that the sale of the prepaid calling services was the sale of taxable telecommunication services subject to sales and use tax, unless the service charge was expressly for Internet access, either as a standalone charge or a broken-out component of other charges (charges for Internet access were not taxable because the Internet Tax Freedom Act, 47 U.S.C. § 151 n applied). However, the kiosk operator was not a telecommunication service provider subject to the additional excise tax because the kiosk operator was “merely facilitating the sale of telecommunication service between the carrier liable for the telecommunication services being sold, and the customer” and did not furnish or sell the transmission of the telecommunication service. N.Y. Advisory Opinion, TSB-A-16(2)C (Apr. 25, 2016).