SECTION 4. DISTINCTION BETWEEN

LOCAL-ONLY SERVICE AND BUNDLED SERVICE

(a) Technology for transmitting tele- phone call . The method for sending or receiving a call, such as on a landline telephone, wireless (cellular) telephone or some other method, does not affect whether a service is local-only or bundled.

(b) Combined local exchanges . If two or more telecommunications providers combine their resources to expand the geographic area that each treats as “local” service and each bills its customers for that service as local-only service, then that service is local-only service.

(c) Billing method . Section 3(a) of Notice 2006–50 and section 5 of this notice provide that bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Thus, if local and long distance service is billed to a customer on a single bill but the telecommunications company separately states the amount paid for localonly service and the amount paid for long distance service, the amount paid for local-only service is subject to federal communications excise tax.

(d) Examples . The following examples illustrate the application of this section.

Example 1 . Customer A purchases telecommunications service from B, a telecommunications provider. Such service includes both local-only service and long distance service. B’s bill to A states $X for telecommunications service. The bill does not separately state a charge for either local-only service or long distance service. Since the bill does not separately state the charge for local-only service, the service is a bundled service. Thus, the entire amount of A’s telecommunications service is bundled service and thus nontaxable service.

Example 2 . Customer C purchases telecommunications service from D, a telecommunications provider. Such service includes both local-only service and long distance service. D’s bill to C states $X amount for telecommunications service. The bill further states $Y amount for local-only service and $Z amount for long distance service. Since the charges for local-only service and long distance service are separately stated, the service is not bundled service. Accordingly, only the amounts charged for long distance service are for nontaxable service; tax is imposed on the amounts paid for the local-only service.