Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.2577 Pay Television Providing Home Terminal Units. Company A is engaged in the pay television business. In return for periodic payments, it contracts with individual retail customers to provide them with television programming.
In order to receive the company's programming, each customer must be a subscriber to a CATV antenna system. Since Company A does not have any CATV antenna system, the customer must separately contract with Company B. Company B is unrelated and it also offers programming of its own. When a customer contracts to receive Company A's programming and is connected to a CATV antenna, Company A attaches its "home terminal unit" to the customer's television receiver. Without the home terminal unit provided by Company A, the normal television receiver will not display Company A's programming. The only possible function of the unit is to unscramble signals which Company A generates in its television studios and transmits over the CATV antenna systems of Company B which connect Company A's studio with the customers' television receivers. Company A charges a refundable deposit and a nonrefundable installation charge when the agreement is initially made with the customer. A single periodic charge is made for programming (including the home terminal unit) provided by the company during that period.
For purposes of the Sales and Use Tax Law, Company A is not renting or leasing the home terminal units to the customers but is using the home terminal units to provide the customer with programming services. 11/18/75.