West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-13B - Telecommunications Tax
Section 110-13B-3 - Tax Imposed On Telecommunications Businesses; Effective Date

3.1.1. Telecommunications business. The tax is imposed solely upon engaging in telecommunications businesses, and not upon persons who may engage in telecommunication activities incidental to the provision of other services such as:

3.1.2. Gross income earned through or as a result of merely leasing or selling telecommunications hardware, devices or equipment is not subject to the tax, even if sold or leased by a telecommunications company.

3.2.1. Its entire gross income from all telecommunications business beginning and ending within this State, regardless of where the signal or pathways may travel; and,

3.2.2. Its gross income apportioned to this State from all telecommunications business that either begins or ends in this State.

3.4.1. The term "wire-mile" is the equivalent of a single metallic telephone or telegraph conductor one mile in length. Wire-mile equivalents is one way in which communication pathways can be measured. After determining the total wire-mile equivalents of the communication pathways, the number of communication channels each communication path is capable of carrying is used as a multiplier to arrive at a figure used in apportionment.

For example, telephone company A has one thousand (1,000) wire-mile equivalents of non-competitive lines throughout West Virginia and two hundred (200) wire-miles of competitive line-mile equivalents in West Virginia. The total non-competitive wire-miles of telephone company A located in the United States, its territories and possessions is twelve thousand (12,000). The total competitive wire-miles of the company located in the United States, its territories and possessions is three thousand (3,000). Five hundred (500) of the wire-mile equivalents located in West Virginia have fifteen (15) channels and the remaining in-state pathways have ten (10) channels. Three thousand five hundred (3,500) wire-mile equivalents of the total pathways of telephone company A located in the United States, its territories and possessions (including the five hundred (500) wire-mile equivalents located in West Virginia) have fifteen (15) channels. The remaining pathways of telephone company A and the remaining of these pathways the telephone company A located in the United States, its territories and possessions (including those located in West Virginia) have ten (10) channels. All competitive lines of telephone company A have fifteen (15) channels.

The apportionment calculation is performed as follows:

(See Table 110-13B-A)

Therefore, 4.641% of telephone company A's single point business will be apportioned to the state of West Virginia for purposes of the telecommunications tax.

After July 31, 1988, the competitive lines will not be taxed and will drop completely out of the equation. The calculation will then be performed as follows:

(See Table 110-13B-B)

3.4.2. Another method by which a taxpayer may apportion single-point business under the telecommunications tax is with a voice grade equivalent-mile, or VGE-mile. A voice grade equivalent is deemed a channel as defined in section 2.3.2. of these regulations. Apportionment may be calculated on a VGE-mile basis.

A VGE-mile is a communication pathway one mile in length capable of carrying one voice grade channel. Every 0 to 4000 Hz of useable band width over the one-mile pathway is a VGE-mile. For example, the Bell L3 System shown below can carry one thousand eight hundred sixty (1860) voice channels, or six hundred (600) voice channels and a television channel.

Twelve (12) telegraph channels = One (1) voice channel (0 to 4 kHz)

Twelve (12) voice channels = One (1) channel group (60 to 80 kHz)

Five (5) channel groups = One (1) supergroup (312 to 552 kHz)

Ten (10) supergroup = One (1) basic mastergroup

Three (3) basic mastergroups occupy the Bell L3 System

A one mile Bell L3 pathway would be one thousand eight hundred sixty (1860) VGE miles. A television channel is the equivalent of one thousand two hundred sixty (1260) channels. A Bell L4 System contains three thousand six hundred (3600) voice channels (forty-three thousand two hundred (43,200) channels if used for telegraph). To calculate the apportionment of single point business for the telecommunications tax, a telephone company first determines its total VGE-miles located in the United States, its territories and possessions. Next, the VGE-miles that company has located in West Virginia is determined.

For example, Telephone Company A serves the following cities: Charleston and Clarksburg, West Virginia, Columbus, Ohio and Richmond, Virginia. Telephone Company A's network resembles the diagram below. (See Table 110-13B-C)

Telephone Company A's noncompetitive single-point business is two million five hundred nineteen thousand dollars ($2,519,000). The apportionment calculation is performed as follows:

Total West Virginia pathways and channels: (See Table 110-13B-D)

Total United States pathways: (See Table 110-13B-E)

Therefore, 21.75668% of Telephone Company A's single point business will be apportioned to the state of West Virginia. The amount subject to the telecommunications tax would be five thousand forty-eight hundred fifty dollars and seventy-six cents ($548,050.76), and the tax would be twenty-one thousand nine hundred twenty-two dollars and three cents ($21,922.03).

3.4.3. If the apportionment provisions used by a taxpayer do not fairly represent the extent of that taxpayer's telecommunications business activities in this State, the taxpayer may petition, or the Tax Commissioner may require, in respect to the taxpayer's telecommunications business activities, a different method of apportionment.