1. (a) Cable television service. Cable television service is the distribution of video programming, with or without the use of wires, to subscribing or paying customers. The term includes direct broadcast satellite service (DBS), subscription television service (STV), satellite master antenna television service (SMATV), master antenna television service (MATV), multipoint distribution service (MDS), and multichannel multipoint distribution service (MMDS), and any audio portion of a video program.

2. (b) Imposition of tax. The sale of cable television service and any services or expenses connected to the provision of the service are subject to the sales and use tax. Taxable charges include:

   1. (1) service connection fees. The term "service connection fee" includes terms such as installation, connect, or reconnect;
   2. (2) charges for video programming services;
   3. (3) charges for taxable items, such as converters and descramblers, transferred to customers;
   4. (4) amounts billed to customers for taxable repairs or maintenance;
   5. (5) municipal franchise fees; and
   6. (6) any licensing fees for the right to receive or distribute a satellite signal. No tax is due on separate charges for FM radio service.
3. (c) Deposits. A deposit that represents future payment for cable television service is part of the sales price of the service and is taxable when the deposit is used to pay for the service. A deposit paid to receive equipment such as a converter that is returned to the cable television service provider when the service is terminated is not taxable.

4. (d) Sales for resale.

   1. (1) Taxable services. A resale certificate may be used to purchase a taxable service tax free if the service will be transferred as an integral part of a taxable cable television service. For example: if a cable television service provider provides converters to its customers and a converter is repaired by a third party, the cable television service provider may give a resale certificate in lieu of paying tax on the purchased repair service. See §3.285 of this title (relating to Resale Certificate; Sales for Resale).
   2. (2) Tangible personal property. A resale certificate may be used to purchase tangible personal property tax free if the care, custody, and control of the property is transferred to the customer as a part of the cable television service. For example, a cable television service provider may give a resale certificate to the seller of converters and remote controls that are provided to customers as part of the sale of the cable television service. See §3.285 of this title.
5. (e) Taxable purchases. A cable television service provider owes tax on equipment and supplies that are not transferred to the care, custody, and control of its customer but are used in providing the service. Equipment and supplies purchased out of state and brought or shipped into Texas for use in providing the service are subject to Texas use tax. See §3.346 of this title (relating to Use Tax). Credit will be allowed against the use tax for any sales or use tax legally imposed and paid to another state. See §3.338 of this title (relating to Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers). For example, a cable television service provider must pay tax on the satellite receiving and transmitting equipment, cables, and wiring that are not located on a customer's premises that are used to provide the service.
6. (f) Real property rental. An owner of real property, such as an apartment complex or hotel, that provides cable television service to its residents or guests must collect sales tax on any charge attributable to the cable television service. If the owner does not charge the residents or guests for the service, the owner is the consumer of the service and must pay tax on all taxable items purchased.
7. (g) Local tax. The sale of cable television service occurs at the point of delivery to the customer. Cable television service providers must collect local tax, if adopted, for the city, county, transit authority, and any special purpose districts in which delivery is made to the customer. However, direct-to-home satellite cable television service programming transmitted or broadcast directly to a customer's premises, including a residence, hotel, or motel, without use of ground receiving or distribution equipment, except at the subscriber's premises or in the uplink process to the satellite is not subject to local tax under the Telecommunications Act of 1996, §602. Equipment used to provide direct-to-home satellite cable television service is subject to local sales and use taxes, unless otherwise exempted by this section.

Source Note:The provisions of this §3.313 adopted to be effective December 12, 1984, 9 TexReg 6089; amended to be effective June 25, 1991, 16 TexReg 3195; amended to be effective August 12, 2007, 32 TexReg 4765.