Arizona Legislature establishes New Prepaid Wireless 911 Excise Tax

Tuesday, April 10th, 2012

 
 
Share
Link
Arizona
General

Arizona Governor Jan Brewer recently signed House Bill (HB 2094) into law creating a new prepaid wireless 911 excise tax. Ariz. Sess. Laws ch. 198 (2012). The act, which takes effect on or after December 31, 2013, imposes an excise tax amounting to eight-tenths of one percent (0.8%) of the gross income derived from the retail sale of prepaid wireless telecommunications service.

In 1983 Arizona established the Emergency Telecommunication Services Revolving Fund (TSR Fund) in order to assist Arizona localities with creating, implementing, and operating emergency telecommunications services. Accordingly, Arizona enacted a tax on telecommunications to finance the TSR Fund activities. See Ariz. Rev. Stat. sec. 42-5252. This tax does not currently apply to any prepaid wireless service; instead, it is imposed only on accounts for home phones and cell phones billed on a monthly basis. The new prepaid wireless 911 excise tax enacted by HB 2094 rectifies this discrepancy by imposing a separate but corresponding tax on sales of prepaid wireless telecommunications services that provide access to the 911 system.

The seller will be liable for remitting this tax, but the new law allows the seller to separately state the amount of tax on the invoice provided to the consumer.

The new tax is based on income from retail sales, so what constitutes a retail sale of prepaid wireless telecommunications services is a crucial element of understanding the new tax. According to HB 2094, a retail sale of prepaid wireless telecommunications services occurs in any of the following circumstances:

  • A retail sale is completed in person at a business location in Arizona.
  • The product is delivered to the consumer at an address in Arizona.
  • The seller's business records indicate that the consumer's address is located in Arizona and those records are not made or kept in bad faith.
  • The consumer gives the seller an Arizona address, including a payment instrument, and the address is not given in bad faith.
  • The wireless telephone number is associated with a location in Arizona.

HB 2094 also provides that this new prepaid wireless 911 excise tax will be the only funding obligation for prepaid wireless telecommunications services in the state. Additionally, the seller of prepaid telecommunications may retain 3% of the amount of tax collected before remitting the remaining amount collected to the Arizona Department of Revenue.


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Texas Releases Detailed Guidance on Exempt Organizations

Thursday, October 18th, 2018 -The Texas Comptroller has released a publication that provides detailed information on how sales and use tax a...

Telephone Answering Services Taxable in Arkansas

Tuesday, October 16th, 2018 -The Arkansas Department of Finance and Administration recently ruled that the service of answering calls on be...

Washington Provides Guidance on Lodging Tax for Online...

Friday, October 12th, 2018 -The Washington Department of Revenue released updated guidance that provides tax reporting information for bed...

Economic Nexus in West Virginia

Wednesday, October 10th, 2018 -The West Virginia State Tax Department announced that it will require remote sellers to begin collecting sales...

Idaho Provides Guidance on the Exemption for Medical...

Monday, October 8th, 2018 -The Idaho State Tax Commission recently released guidance that explains Idaho's sales and use tax laws for buy...

Arkansas Does Not Follow Federal Law on Foreign Income

Friday, October 5th, 2018 -The Arkansas Department of Taxation and Finance recently released an opinion that says the state does not conf...