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Business Taxes Law Guide—Revision 2024
Emergency Telephone Users Surcharge Act
Revenue and Taxation Code
Division 2. Other Taxes
Part 20. Emergency Telephone Users Surcharge Act
Chapter 2. The Surcharges.
Article 1. Imposition of the Surcharges
Section 41028
41028. Surcharge on purchase of prepaid mobile telephone services surcharge. (a) (1) On and after January 1, 2020, the surcharge amounts imposed by Section 41020 on the purchase of prepaid mobile telephony services in this state shall be collected by a seller from each prepaid consumer at the time of each retail transaction in this state. The surcharges shall be imposed at an amount as determined under Article 2 (commencing with Section 41030) on each retail transaction that occurs in this state.
(2) (A) The amount of the surcharges shall be separately stated on an invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.
(B) Notwithstanding subparagraph (A), a seller may elect to combine the 911 and 988 surcharges into a single-line item. If the seller elects to combine the surcharges, the combined surcharge shall be labeled as the "911/988 Surcharge" on the invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction. The seller shall remit the combined surcharges to the department in separate amounts for each surcharge on forms prescribed by the department.
(b) (1) The surcharges that are required to be collected by a seller and any amount unreturned to the prepaid consumer of mobile telephony services that is not owed as part of the surcharges, but was collected from the prepaid consumer under the representation by the seller that it was owed as part of the surcharges, constitutes debts owed by the seller to this state.
(2) A seller that has collected any amount of surcharge in excess of the amount of the surcharges imposed by this part and actually due from a prepaid consumer may refund that amount to the prepaid consumer, even though the surcharge amounts have already been paid over to the department and a corresponding credit or refund has not yet been secured. The seller may claim credit for that overpayment refund against the amount of surcharges imposed by this part that is due upon any other return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.
(c) (1) Every prepaid consumer of prepaid mobile telephony services in this state is liable for the surcharges until they have been paid to this state, except that payment to a seller registered under this part relieves the prepaid consumer from further liability for the surcharges. Any surcharge collected from a prepaid consumer that have not been remitted to the department shall be a debt owed to the state by the person required to collect and remit the surcharges. Nothing in this part shall impose any obligation upon a seller to take any legal action to enforce the collection of the surcharge imposed by this section.
(2) A credit shall be allowed against, but shall not exceed, the surcharge amounts imposed on any prepaid consumer of mobile telephony services by this part to the extent that the prepaid consumer has paid surcharges on the purchase to any other state, political subdivision thereof, or the District of Columbia. The credit shall be apportioned to the charges against which it is allowed in proportion to the amounts of those charges.
(d) A seller is relieved from liability to collect the surcharges imposed by this part that became due and payable, insofar as the base upon which the surcharges are imposed is represented by accounts that have been found to be worthless and charged off for income tax purposes by the seller or, if the seller is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A seller that has previously paid the surcharges may, under rules and regulations prescribed by the department take as a deduction on its return the amount found worthless and charged off by the seller. If any such accounts are thereafter in whole or in part collected by the seller, the amounts so collected shall be included in the first return filed after such collection and the surcharges shall be paid with the return.
(e) For purposes of this section, a retail transaction occurs in the state under any of the following circumstances:
(1) The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).
(2) If paragraph (1) is not applicable, the prepaid consumer's address is in the state (known-address transaction). A known-address transaction occurs in the state under any of the following circumstances:
(A) The retail sale involves shipping of an item to be delivered to, or picked up by, the prepaid consumer at a location in the state.
(B) If the prepaid consumer's address is known by the seller to be in the state, including if the seller’s records maintained in the ordinary course of business indicate that the prepaid consumer’s address is in the state and the records are not made or kept in bad faith.
(C) The prepaid consumer provides an address during consummation of the retail transaction that is in the state, including an address provided with respect to the payment instrument if no other address is available and the address is not given in bad faith.
(3) If an address is not available to the seller to determine whether any of the circumstances in paragraph (2) exist, the transaction will be deemed to be a known-address transaction occurring in this state if the mobile telephone number is associated with a location in this state.
(f) The surcharge amounts imposed under this section shall be remitted by every seller, except a service supplier, as prescribed under Part 1 (commencing with Section 6001), along with a return filed using electronic media. The department shall administer such remittance and returns as prescribed under Part 1 (commencing with Section 6001).
(g) Notwithstanding Article 1.1 (commencing with Section 41060) of Chapter 4, any seller, except a service supplier, required, or that elects, to remit amounts due under Part 1 (commencing with Section 6001) by electronic funds transfer pursuant to Article 1.2 (commencing with Section 6479.3) of Chapter 5 of Part 1 shall remit the surcharge upon prepaid mobile telephony service amounts due under this section by electronic funds transfer.
(h) The purchase in a retail transaction in this state of prepaid mobile telephony services, either alone or in combination with mobile data or other services, by a prepaid consumer is exempt from the surcharges if all of the following apply:
(1) The prepaid consumer is certified as eligible for the state lifeline program or federal lifeline program.
(2) The seller is authorized to provide lifeline service under the state lifeline program or federal lifeline program.
History—Added by Stats. 2019, Ch. 54, effective July 1, 2019. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added second sentence to paragraph (1) of subdivision (a); substituted "a" for "no" before "corresponding credit", added "not" before "yet been secured." in the first sentence of paragraph (2) of subdivision (b); deleted the former second sentence of paragraph (2) in subdivision (b); substituted "that" for "such" before "overpayment", added "refund" before "against the", substituted "that" for "which" before "is due", deleted "quarterly" before "return, providing", and substituted "that" for "such" before "credit is claimed", in third sentence of paragraph (2) in subdivision (b); deleted "prepaid MTS" before "surcharge imposed" in the first sentence of subdivision (d); substituted "department" for "board," after "prescribed by the" in the second sentence of subdivision (d); deleted former subdivision (e); relettered former subdivisions (f), (g) to (e), (f); added subdivision (g); deleted paragraph (3) from subdivision (h). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "amounts" for "amount" and "surcharges" for "surcharge" throughout; relettered paragraph (2) to subparagraph (2) (A) and added subparagraph (B); substituted "surcharges that are" for "surcharge that is" after "The" in paragraph (b)(1); substituted "amounts have" for "amount has" before "already been paid" in the first sentence of paragraph (b)(2); substituted "they have" for "it has" before "been paid to" in the first sentence of paragraph (c)(1); substituted "surcharges are" for "surcharge is" after "upon which the" in the first sentence of subdivision (d). Stats. 2023, Ch. 511 (SB 889), in effect January 1, 2024, substituted "surcharges,", "surcharges" or "surcharges." for "surcharge,", "surcharge" or "surcharge." respectively throughout; substituted "have" for "has" after "consumer that" in second sentence of paragraph (1) of subdivision (c); substituted "amounts" for "amount" before "so collected" in third sentence of subdivision (d).