taxes

9-1-1 Prepaid Wireless Emergency Service Fee Frequently Asked Questions

When was the 9-1-1 prepaid wireless emergency service fee created?

House Bill 1831, enacted by the 81st Legislature in 2009, created the 9-1-1 Prepaid Wireless Emergency Service Fee.

What is a prepaid wireless telecommunications service?

A "prepaid wireless telecommunications service" means a mobile telecommunication service that is paid for in advance and allows a person to access 9-1-1 emergency communication services.

Examples include:

  • Cellular phones preloaded with minutes or units of air time, or sold with rebates for airtime.
  • Calling cards for cellular phones preloaded with minutes or units of airtime.
  • The recharging of a reusable cellular phone calling card or the cellular phone itself with additional minutes or units of airtime.
Who is required to register to collect and remit the fee?

If you make retail sales of prepaid wireless telecommunications services for use in Texas, you must register to collect the fee from customers at the time of each retail transaction of prepaid wireless telecommunications services occurring in Texas.

A prepaid wireless telecommunications service does not include the sale of a service in which the consumer enters into a written contract with the seller that obligates the consumer to use the service for a specified period of time, and there may be severability penalties associated with the consumer's failure to meet the requirements of the contract. This service is subject to the wireless 9-1-1 emergency service fee.

The requirement to register as a retail seller of prepaid wireless telecommunications services applies to individuals as well as corporations, firms, partnerships and all other legal entities.

How do I register to collect and remit the fee?

Complete and submit Form AP-201, Texas Application for Sales and Use Tax Permit (PDF). The seller's registration number for collecting the fee will be the same as the seller's sales and use tax permit number. You can also obtain an application by calling toll-free 1-800-252-5555.

How much is the fee?

The fee is 2 percent of the purchase price of each prepaid wireless telecommunications service purchased in person, by telephone, over the Internet or by any other method, or used by a seller in Texas.

Who is required to file the Texas Prepaid 9-1-1 Wireless Emergency Service Fee Report?

Any person who sells prepaid wireless telecommunications services, or who uses their own prepaid wireless telecommunications services, must file Form 54-104, Texas Prepaid 9-1-1 Wireless Emergency Service Fee Report (PDF), and remit the fees due.

When do I file the report?

The report is filed quarterly and is due on the 30th day following the end of the quarter in which the fee was collected.

If I do not owe any fee, do I still file a report?

Yes. You must file a report even if you have no sales of prepaid wireless service, or use for the reporting period, or if all your sales are nontaxable.

What if I am buying the prepaid wireless telecommunications services for resale?

Provide the seller with a properly completed Form 01-339, Texas Sales and Use Tax Resale Certificate (PDF).

If you sell a taxable prepaid wireless telecommunications service to a customer, you must collect the fee unless you accept a properly completed resale certificate. The resale certificate is proof that the taxable service was purchased for resale. Evidence that a purchaser is registered with the Comptroller's office to collect the fee is not sufficient to relieve the seller from the responsibility for collecting the fee. The certificate must include specific information.

Which consumers are exempt from the fee?

The fee is not collected from agencies and departments of the United States government or the state of Texas. A person operating under a contract with the federal government or state of Texas is not exempt from the fee.

Am I required to show the fee on the sales invoice that I give the consumer?

Yes. The amount of the fee must be separately stated on the invoice, receipt or other similar document the seller provides to the consumer.

What types of sales are subject to the fee?
Sales Subject to the Fee
Type of sale Fee charged Explanation
Telephone prepaid calling card No A "telephone prepaid calling card" is a card or other item, including an access code, that represents the right to access certain telecommunications services through multiple devices, regardless of the network providing direct service to the device (for example, calling cards for discount long distance services). A telephone prepaid calling card can be used with a pay phone, landline phone or a cell phone. Sales tax applies.
Initial purchase of a cell phone activated in the store for prepaid service (such as Cricket, Boost or Virgin Mobile) Yes If the transaction is a lump sum amount, the entire amount is subject to the fee. If the charge for the phone is separated from the charge for the prepaid wireless service, only the charge for the prepaid wireless service will be subject to the fee. Sales tax applies to both transactions.
Airtime associated with the purchase of a cell phone activated in the store for prepaid service Yes
Activation fee associated with the purchase of a prepaid phone Yes
Accessories (such as chargers, cases, memory cards and cables) No If these items are included in the price of the prepaid wireless service, they are subject to the fee. Otherwise, sales tax applies.
Purchase of a phone not activated but capable of prepaid service No The sale of a phone with no minutes and not activated is not subject to the fee. Sales tax applies.
Replacement phone sold to a person and activated on their existing prepaid service No As long as no additional prepaid minutes are added, this type of purchase is not subject to the fee. Sales tax applies.
Prepaid service airtime refill cards (such as those sold at gas stations, grocery stores and other retail outlets) Yes
Prepaid monthly service plans (such as Cricket, Boost or Virgin Mobile) Yes The fee applies when a customer pays his or her bill.

Special situations

Is the fee due if a retailer of prepaid wireless telecommunications services provides free wireless service to its employees?

Yes. While the prepaid wireless service is not actually sold at retail, the service is used by a person in Texas, and the retailer is liable for paying the fee when the prepaid service is removed from inventory for use by an employee.

If a consumer purchases a prepaid wireless calling card at a retail outlet and then donates the card to a high school booster club that in turn sells the card to the highest bidder at auction, is the fee due more than once?

A retail sale occurs when the prepaid calling card is purchased from the retailer. The fee is collected by the retailer from the purchaser. When the card is donated to the booster club there is no sale, and the fee is not applicable. When the booster club auctions the prepaid calling cards to the highest bidder, a retail sale has not occurred and the fee is not applicable.

For purposes of sales tax, a second sales transaction has occurred when the booster club sells the card to the highest bidder at the auction and applicable sales tax is due on the sale.