Prepaid Wireless Surcharge FAQs
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.
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What is the prepaid wireless surcharge?
The prepaid wireless surcharge (surcharge) applies to retail sales of prepaid mobile phones, prepaid phone cards, and recharging those prepaid phones or cards. Examples include:
- Selling mobile phones preloaded with a set dollar amount for minutes or units of air time;
- Selling calling cards for mobile phones;
- Recharging mobile phones with additional minutes or units of air time; and
- Recharging calling cards for mobile phones.
How much is the surcharge?
The surcharge remains 5.4% for the period January 1, 2021 through December 31, 2021. The surcharge is based on specific statutory criteria and will be determined and published annually by DOR.
Who must collect the surcharge?
Any retailer or telecommunications provider that sells prepaid mobile phones, prepaid phone cards, or that recharges those prepaid phones or cards must collect the surcharge from the customer and remit it to DOR.
How is the surcharge calculated?
The surcharge is calculated on the gross receipts for the prepaid mobile phones or prepaid phone cards prior to computing sales tax. The surcharge is not part of the tax base on which sales tax is calculated.
For example, a prepaid mobile phone is sold for $50 in a city with a combined state and local sales tax rate of 7%:
- Sale of prepaid mobile phone: $50.00
- Prepaid wireless surcharge (5.4% x $50): $2.70 (The retailer will collect and remit the surcharge of $2.70)
- Sales tax (7% x $50): $3.50 (The retailer will collect and remit the state and local sales tax of $3.50)
The customer's receipt will show:
- Sale of prepaid mobile phone: $ 50.00
- Prepaid wireless surcharge: $2.70
- Sales tax @ 7%: $3.50
- Total: $56.20
When is the surcharge due?
Each retailer must remit the amounts collected to DOR by the 20th of the month following the tax period covered by the return. The reporting period is the same period you use for reporting sales tax collections.
Is the surcharge required to be printed separately on the customer’s receipt?
Yes. The surcharge must be stated separately on the receipt, invoice, or other similar document that is provided, or otherwise disclosed, to the customer.
How do retailers submit the return and remit the surcharge?
Retailers must file the Nebraska Prepaid Wireless Surcharge Return, Form E911N, and submit payment of the surcharge in the same manner as they are required to file and pay their Nebraska and local sales and use tax. The return must be filed and the surcharge remitted to DOR by the 20th of the month following the reporting period. The reporting period is the same period used for reporting sales tax collections. The Form E911N can also be filed online through Nebraska NebFile for Business.
Can a retailer with multiple locations remit the total surcharge amounts collected on one return?
Yes. Retailers will file one return for the entire business entity, reporting the surcharge collected at all Nebraska locations.
Does the surcharge apply to Voice Over Internet Protocol (VoIP) services?
Yes. Sales of prepaid VoIP services are subject to the surcharge.
Is there a collection fee to help retailers offset the costs of collecting and remitting the surcharge?
Yes. Retailers retain 3% of the prepaid wireless surcharge collected and remit only 97%.
Are any sales of prepaid wireless services exempt from the surcharge?
Yes. Prepaid wireless services may be purchased for resale. Purchases for resale are exempt from both sales tax and the prepaid wireless surcharge. The purchaser must provide the seller a properly completed Nebraska Resale or Exempt Sale Certificate for Sales Tax Exemption, Form 13, Section A, documenting that its purchases of prepaid wireless services will subsequently be resold in the purchaser’s normal course of business.
Are retailers required to collect the surcharge on all sales of prepaid wireless services?
No. If the prepaid wireless service is for ten minutes or less, or in an amount of $5 or less, the retailer may elect not to collect the surcharge.
What is the surcharge money used for?
The surcharge will assist Nebraska communities in providing emergency 911 services, a statewide system for specialized telecommunications equipment for qualified hearing impaired persons, and grants to telecommunications service providers for expanding broadband services to unserved and underserved areas in Nebraska.