Excell Agent Services, L.L.C. (“Excell”) appealed a judgment from the tax court holding that the sale of certain equipment to Excell was not exempt from theArizona transaction privilege tax (“TPT”). Pursuant to A.R.S. § 42-5061(B)(3), income is exempt from the TPT when derived from the sale of tangible personal property consisting of enumerated telecommunications equipment that is sold to a business classified under the telecommunications classification. To be classified under the telecommunications classification, a business must “transmit[ ] signs, signals, writings, images, sounds, messages, data or other information of any nature by wire, radio waves, light waves or other electromagnetic means if the information transmitted originates and terminates” within Arizona. A.R.S. § 42-5064(E). Based on this statutory definition, the Court of Appeals held that Excell does not qualify as a telecommunications business. Excell provides directory assistance information that is transmitted to telephone customers, but it does not actually transmit the information itself in the sense relevant to the statute. Rather, the companies such as AT&T and Sprint that contract with Excell own the phone lines over which Excell provides directory assistance, and those companies, rather than Excell, are engaged in the telecommunications business. In so holding, the Court rejected Excell’s implicit broad definition of “transmit” because it would encompass any individual or business that provides information by phone, internet or other telecommunications device. Instead, the Court held that only businesses engaged in electromagnetically transmitting information would qualify for the telecommunications classification.
Judge Hall authored the opinion; Presiding Judge Kessler and Judge Barker concurred.