Request By:
Mr. Robert F. Barrett
Barrett and Koenig
223 Main Street
P.O. Box 635
Florence, Kentucky 41042
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Alex W. Rose, Assistant Attorney General
In your recent letter to the Attorney General regarding the state utility gross receipts license tax for schools, you asked the following questions:
(1) Whether the gross receipts tax applies to cable television companies operating within the county?
(2) Whether the gross receipts tax applies to telephone companies providing telephonic equipment within the county?
The state utility gross receipts license tax for schools is found in KRS 160.613. KRS 160.613(1) states in part as follows:
"There is hereby authorized a utility gross receipts license tax for schools not to exceed three per cent (3%) of the gross receipts derived from the furnishing, within the county, of telephonic and telegraphic communications services, electric power, water, and natural, artificial, and mixed gas. . . ."
This tax is levied on all gross receipts of the utility company except that such receipts do not include amounts received for furnishing energy or energy-producing fuels used in manufacturing, processing, mining, or refining to the extent that the cost of the energy or energy-producing fuels used exceeds three percent (3%) of the cost of production, and does not include amounts received for furnishing any of the above utilities which are resold.
The answer to your first question depends upon whether services provided by cable television companies come within the scope of KRS 160.613. The statute enumerates the services upon which a utility gross receipts license tax is levied. They are telephonic and telegraphic communications services, electric power, water, and natural, artificial, and mixed gas. Cable television services are not included in the list of taxable services. OAG 67-282 dealt with the question of whether sewerage charges were subject to the utility gross receipts tax. That opinion stated that, since sewerage charges were not included in the list of items to which the tax applied, the utility gross receipts tax did not apply.
Therefore, because cable television is not specifically named in KRS 160.613, the question becomes whether they fall within the meaning of "telephonic and telegraphic communications services". The answer to this question must be in the negative because cable television is not a form of communication as is provided by telephones or telegraphs. Therefore, this tax does not apply to cable television.
The answer to your second question depends upon whether equipment provided by a telephone company can be classified as the furnishing of telephonic communications services. In your letter you stated that private telephonic companies are generally not licensed, although you were of the opinion that they should be included in the general category of "utility" to the extent that they provide services and equipment. Presently, labor and service charges for the installation or maintenance of property are not subject to the tax provided the charges are separately stated on customer billings. The statute specifically relates to telephonic communications services. The telephone company does not receive a message, nor does it transmit and deliver the message in the ordinary acceptation of these words. What the telephone company does provide are facilities for carrying on a communication over a distance. Telephonic communications services encompass telephonic equipment provided to consumers by telephone companies for a periodic fee and would be included in gross receipts subject to the tax. Equipment which is sold to the customer would be subject to sales and use tax under KRS Chapter 139.