Telecommunication services company's sales sourced based on costs of performance, operational approach

Sales of telecommunications services to Massachusetts customers should be sourced using the costs of performance associated with a service provider’s integrated telecommunications network rather than costs associated with each individual call, the Massachusetts Appellate Tax Board ruled. Accordingly, because the service provider’s income-producing activity was the provision of a complex and comprehensive, reliable telecommunications network and not the connection of individual transmissions over specifically designated wires, costs of performance were primarily incurred at the taxpayer’s global operations network and not at the location of a customer.

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