Prepaid MTS Sellers to Stop Collecting State MTS Surcharge, Begin Collecting 911 Surcharge in California

On November 15, 2018, a federal district court issued an injunction against the enforcement of California’s state-level surcharge on retail sales of prepaid mobile telephony services (MTS). As a result, sellers of prepaid MTS must immediately stop charging and collecting the state portion of the MTS surcharge from customers. Sellers must only collect the local MTS surcharge. Sellers must continue to file their prepaid MTS report and remit all surcharge amounts collected from customers. Sellers should not refund any prepaid MTS surcharges collected from customers. The state will send a separate notice and post any new information online as it becomes available.

Effective January 1, 2019, sellers of prepaid MTS must begin collecting and remitting the state’s Emergency Telephone Users (911) surcharge that is imposed on in-state telephone communication services. Sellers must collect and remit the 911 surcharge on all charges for prepaid and postpaid intrastate telecommunication service including VoIP and wireless services, in the same manner as they did prior to January 1, 2016. The Emergency Telephone Users Surcharge Return will have updated filing instructions for reporting periods beginning January 2019. (L-592 and L-593, California Department of Tax and Fee Administration, December 2018)

Posted on January 10, 2019