Tax Type
E-911 Tax
Description
Prepaid phone cards used for both landline and mobile phones subject to E-911 tax
Topic
Clarification
Date Issued
06-21-2011
June 21, 2011
Re: Ruling Request: Prepaid Wireless E-911 Fee
Dear *****:
This is in response to your request for clarification regarding the Department of Taxation's ("TAX's") policy on the application of the Prepaid Wireless E-911 Fee on prepaid phone cards that can be used for both landline and mobile phones.
FACTS
You represent approximately 48 clients who sell prepaid phone cards at retail. According to your letter, these prepaid phone cards can be used for both landline and mobile phones. You contend that as the prepaid phone cards are not specifically for wireless calling service, the phone cards are not subject to the prepaid wireless E-911 fee.
You request a ruling regarding the application of the Prepaid Wireless E-911 Fee on such prepaid phone cards.
DETERMINATION
Effective January 1, 2011, House Bill 754 (Acts of Assembly 2010, Chapter 566) and Senate Bill 441 (Acts of Assembly 2010, Chapter 466) repealed the E-911 fee on prepaid wireless service and imposed a new prepaid wireless E-911 fee of $0.50 on each retail purchase of prepaid wireless calling service. The fee is collected at the point of sale by retail merchants or the service provider. Each wireless service carrier and reseller continues to collect a surcharge of $0.75 per month from each of its postpaid customers through its regular billing. On December 27, 2010, TAX issued Guidelines and Rules for the Prepaid Wireless E-911 Fee ("Guidelines"), Public Document 10-284, to provide guidance to taxpayers regarding the new law.
Virginia Code § 56-484.17:1 provides that a $0.50 prepaid wireless E-911 charge shall be collected by the dealer from the end user on each purchase of "prepaid CMRS" from a dealer for any purposes other than resale. "Prepaid CMRS" is defined as CMRS, or mobile telecommunications service, that allows a caller to dial 911 to access the 911 system, which CMRS service is required to be paid for in advance and is sold in predetermined units or dollars of which the number declines with use in a known amount.
The Guidelines provide in the "Imposition of the Fee" section that "Prepaid wireless calling service subject to the Prepaid Wireless E-911 Fee purchased along with tangible personal property or services not subject to the Prepaid Wireless E-911 Fee sold for one nonitemized charge are subject to the Prepaid Wireless E-911 Fee." From the facts presented in your letter, your clients sell prepaid phone cards that provide both prepaid wireless calling service that is subject to the Prepaid Wireless E-911 Fee and calling service that is not subject to the Prepaid Wireless E-911 Fee for one nonitemized charge. Accordingly, such phone cards would be subject to the Prepaid Wireless E-911 Fee.
CONCLUSION
I have enclosed a copy of the Guidelines which provide more guidance regarding the registration of dealers for the purposes of the Prepaid E-911 Fee and the collection and remittance of the Prepaid E-911 Fee. The Va. Code section cited and the Guidelines are also available on-line in the Tax Policy Library section of TAX's web site, located at www.policylibrary.tax.virginia.gov.
If you have any questions about this determination, you may contact ***** in the Office of Tax Policy, Policy Development Division, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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PD/1-4638362961
Rulings of the Tax Commissioner