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Compensation received from the Federal Communications Commission (FCC) or other governmental agencies for providing Telecommunications Relay Services (TRS) are subject to business and occupation (B&O) tax under the service and other activities classification.
Customers who purchase telecommunications plans that provide TRS are still subject to retail sales tax. This includes purchasing a wireless phone plan with a telecommunications provider that provide TRS free of charge.
Definition
Telecommunications Relay Services (TRS): Is a telephone service that allows people with hearing or speech disabilities to place and receive telephone calls. TRS is available nationwide for local and/or long-distance calls. TRS providers–generally telephone companies–are compensated for the costs of providing TRS from either a state or federal fund. There is no cost to the TRS user.
References
ETA 3205.2017 – Taxability of Telecommunications Support Payments
WAC 458-20-245 – Taxation of competitive telephone service, telecommunications service, and ancillary service
WAC 458-20-15503 – Digital products
FCC website – explanation of TRS
