Sellers of Prepaid Mobile Telephony Services (MTS)

Sellers of prepaid wireless services are persons that sell prepaid mobile telephony services (MTS) to a consumer in a retail transaction.

Beginning January 1, 2023, the Emergency Telephone Users Surcharge Act is being expanded to include a 988 surcharge in addition to the 911 surcharge. These surcharges are imposed on purchasers (consumers) of prepaid mobile telephony services (MTS) at a flat rate.  Sellers of prepaid MTS will be required to collect, report, and pay the 911 and 988 Surcharge on each purchase made by a prepaid MTS consumer.  The 911 and 988 surcharges will be due on each retail transaction that involves a sale of prepaid MTS.

In addition to the 911 and 988 surcharges, sellers of prepaid MTS may also have a collection requirement for local charges. This collection requirement was extended by legislation through December 31, 2025.  If you are a seller of prepaid MTS, you must collect, report, and pay any applicable local charges.^*  The rate is based either on your retail location(s) or the location of your customer if you make sales online or remotely to California customers.  Local charges are imposed on consumers of prepaid MTS as a percentage of the sales price of each retail transaction of prepaid MTS. 

The amount of the 911 Surcharge, 988 Surcharge, and local charges (if applicable) must be separately stated on an invoice, receipt, or other similar document provided to the prepaid consumer of MTS by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.

^* Certain sellers are not required to collect local charges. See heading below, Certain Small Sellers Are Not Required to Collect Local Charges.

Collecting the 911 Surcharge, 988 Surcharge, and local charges

To determine whether local charges apply to your sales of prepaid MTS made at your retail location(s) and/or sales made online or remotely to California customers, please see the 911 Surcharge, 988 Surcharge, and Local Charge Rates section of this guide.

Unless the sale of prepaid MTS is otherwise exempt, the 911 Surcharge, 988 Surcharge, and local charges (if applicable) apply to the retail sale. The 911 and 988 Surcharges apply to the transaction even if sold in combination with itemized non-prepaid MTS items.   

Local charges apply to the entire sale unless the seller can identify the portion attributable to prepaid MTS from its books and records kept in the ordinary course of business (except cell phones). Local charges apply to the combined selling price of prepaid MTS sold with a cell phone, unless the price of the cell phone is disclosed to the prepaid MTS consumer on a receipt, invoice, or other written documentation provided to the prepaid MTS consumer. 

The 911 Surcharge, 988 Surcharge, and local charge generally apply to amounts charged for:

• Prepaid wireless airtime cards.
• Prepaid wireless cards compatible with pay-as-you-go cell phones.
• Prepaid wireless minutes.
• Prepaid wireless plans.
• Prepaid wireless refill or top-off cards.
• Prepaid wireless 'e-Cards.'
• Prepaid mobile data or any other services when sold with any of the above.  If local charges apply, they must be collected on the total combined selling price unless the seller can identify the price of the mobile data services and other services from its books and records.
• Any product (except a cell phone) or service when sold with prepaid MTS for a single price.  If local charges apply, they must be collected on the total combined selling price unless the seller can identify the price of the product or service from its books and records.
• A cell phone sold with prepaid MTS for a single non-itemized price.  If local charges apply, they must be collected on the total bundled selling price of the cell phone and prepaid MTS unless:
  1. Only a minimal amount of prepaid MTS is transferred (a minimal amount of prepaid MTS is $5 or less, or 10 minutes or less), or
  2. The price of the cell phone component of the bundled charge is disclosed to the prepaid MTS consumer on a receipt, invoice, or other written documentation provided to the prepaid MTS consumer.

Please note:  Telecommunication Service suppliers (service suppliers) have different collection requirements than sellers of prepaid MTS.  Please see our Telecommunication Service Supplier section for additional information about the collection requirements of the 911 and 988 Surcharge by service suppliers.

Registration

A seller of prepaid MTS is anyone making retail sales of prepaid MTS.  All sellers of prepaid MTS must register with the CDTFA as a prepaid MTS seller to obtain a prepaid MTS account number.

If your business is a service-only business and you do not sell merchandise (tangible personal property), you must still register with the CDTFA as a prepaid MTS seller to obtain a prepaid MTS account number if you sell prepaid MTS and do not currently hold a CDTFA seller's permit.

To register with the CDTFA, visit our Taxpayer Online Services Portal

The online registration for the prepaid MTS account will ask you to enter your seller's permit number, and in most instances you can transfer your seller's permit information to your prepaid MTS account, including sub location information.

Certain sellers are not required to collect local charges

Certain prepaid MTS sellers (other than a service supplier) with less than $15,000 of sales of prepaid MTS in the previous calendar year are not required to charge and collect the local charges from their customers. However, these sellers are still required to collect the 911 and 988 Surcharge on their sales of prepaid MTS made to a consumer even when sales of prepaid MTS are below the threshold requiring them to collect local charges.

Sellers (other than service suppliers) of prepaid MTS are responsible for annually determining if they are required to collect the local charges from their customers based on their sales of prepaid MTS in the prior calendar year.  Currently, the annual sales threshold is $15,000; however, the threshold is subject to annual adjustment.  Small sellers must maintain adequate records to show that their annual prepaid MTS sales are less than the current annual threshold.  For sellers that have more than one location, the sales of prepaid MTS from all locations must be used to determine annual sales.  However, because consumers are responsible for the local charges, sellers who are not required to collect local charges may voluntarily continue to charge and collect the local charges and report and pay the amounts to the CDTFA as a courtesy to their customers.

If you are a seller (and are not a service supplier) with sales under the $15,000 threshold and you do not want to continue to voluntarily collect the local charges from your customers, you must still have a prepaid MTS account to collect, report, and pay the 911 and 988 Surcharge on each transaction involving a sale of prepaid MTS.

Agency agreements

In certain instances, a retail store owner or operator may act as an agent for a service supplier with respect to retail sales of prepaid MTS.  An agent is defined as one who represents another, called the principal, in dealing with third parties.  Such representation is called agency.

When a retail sale of prepaid MTS occurs in person at a retail store location, the store owner or operator is generally considered the seller of the prepaid MTS.  If the service supplier wishes to establish itself instead of the retail store owner or operator as the seller of prepaid MTS, they are responsible for entering into an agency agreement with the retail store owner/operator.  The agency agreement must be signed by both parties, and must establish an agency relationship for purposes of selling prepaid MTS. The agreement must make it clear the service supplier is the seller of the prepaid MTS, and the store owner or operator is acting as an agent of the service supplier in selling prepaid MTS and collecting, reporting, and paying any applicable taxes or fees imposed on such services from customers, including the 911 Surcharge, 988 Surcharge, and local charges. Unless there is a valid agency agreement, the retail store owner/operator must register and collect, report, and pay the surcharge amount from their customer on their retail sales of prepaid MTS to the CDTFA.

Prepaid MTS sellers must collect and separately state the 911 Surcharge, 988 Surcharge, and local charge amount (if applicable) on an invoice, receipt, or other document provided to the customer at the time of the sale, even if the prepaid MTS is sold for a flat charge or is sold by an agent on behalf of a service supplier.  The invoice, receipt, or other document may be provided electronically at the time of the sale.

Charging the correct 911 Surcharge, 988 Surcharge, and local charge rates

The 911 and 988 surcharges are subject to change each year (see the 911 Surcharge, 988 Surcharge, and Local Charge Rates section).  As with changes in the sales tax rate for different cities and/or counties, you will be responsible for knowing and charging the correct 911 Surcharge flat rate and local charges (if local charges apply) on your retail sales of prepaid MTS.  We will post the annually determined flat rate for the 911 and 988 surcharges and the percentage rates for local charges to our website by December 1 of each year on our 911 Surcharge Rate, 988 Surcharge Rate, and Local Charge Rates for Sellers of Prepaid Mobile Telephony Services (MTS) webpage.

Filing returns

Sellers of prepaid MTS are required to file returns with the CDTFA electronically.  You must electronically file your prepaid MTS return separately from any other reports or returns you are required to file with the CDTFA.

Seller reimbursement for local charges

A seller of prepaid MTS (other than a service supplier), may retain two percent (2%) of the local charges collected, reported, and paid as reimbursement for collecting the local charges.

This amount is claimed on your prepaid MTS return and reduces your overall local charge liability.

The electronic prepaid MTS return will include instructions for sellers on how to claim the 2% reimbursement.

The 2% reimbursement does not apply to amounts collected, reported, and paid for the 911 Surcharge.