34 Tex. Admin. Code § 3.1271 - Prepaid Wireless 9-1-1 Emergency Service Fee

(a) Application of Tax Code, Chapter 151. The statutory provisions, administrative rules, and agency policies applicable to Chapter 151 will apply as deemed necessary by the comptroller for administration of the fee to the extent not addressed expressly in this section.

(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) "Consumer" means a customer, person, purchaser or subscriber of a prepaid wireless telecommunication service or the user of a prepaid wireless telecommunication service.

(2) "Fee" means the prepaid wireless 9-1-1 emergency service fee a seller collects from a consumer in the amount required under Health and Safety Code, § 771.0712.

(3) "Mobile telecommunications service" means the provision of a commercial mobile radio service, as defined in 47 C.F.R.20.3 of the Federal Communications Commission's (FCC) regulations in effect on June 1, 1999 under the Mobile Telecommunications Sourcing Act (4 U.S.C. §§116 - 126). The term includes cellular telecommunications services personal communications services (PCS), specialized mobile radio services, wireless voice over Internet protocol services, and paging services. The term does not include telephone prepaid calling cards or air-ground radio telephone services as defined in 47 C.F.R.22.99 of FCC regulations in effect on June 1, 1999.

(4) "Prepaid wireless telecommunication service" means a mobile telecommunications service that allows a person to access 9-1-1 emergency communication services and is paid for entirely in advance.

(5) "Purchase price" means the total amount paid for a prepaid wireless service, valued in money without a deduction for:

(A) the cost of items sold, leased, or rented with the service;

(B) the materials used, labor or service employed, interest, losses, or other expenses;

(C) the transportation or delivery; or

(D) other charges incident to the performance of a prepaid wireless service.

(6) "Retail transaction" means an individual purchase of a prepaid wireless telecommunication service from a seller for any purpose other than a sale for resale.

(7) "Sale for resale" means a sale of a prepaid wireless telecommunication service to a purchaser who acquires the service for the purpose of reselling it in the United States in the normal course of business either in the form or condition in which it is purchased or as an integral part of a taxable item as defined by Tax Code, Chapter 151.

(8) "Seller" means a person who sells prepaid wireless telecommunication services to any consumer. The term includes "seller" and "retailer" as defined by Tax Code, § 151.008.

(9) "Wireless service provider" means a provider of commercial mobile service under the Federal Telecommunication Act of 1996, §332(d), (47 U.S.C. §151 et seq.), Federal Communications Commission rules, and the Omnibus Budget Reconciliation Act of 1993 (Pub. L. No. 103-66), and includes a provider of wireless two-way communication service, radio-telephone communications related to cellular telephone service, network radio access lines or the equivalent, and personal communication service. The term does not include a provider of:

(A) a service whose users do not have access to 9-1-1 emergency services;

(B) a communication channel used only for data transmission;

(C) a wireless roaming service or other nonlocal radio access line service; or

(D) a private telecommunications service.

(c) Registration.

(1) Every seller must register to collect and remit the fee by completing and submitting to the comptroller Form AP-201, Texas Application for Sales and Use Tax Permit. A seller's registration number for purposes of collecting the fee will be the same as the seller's sales and use tax permit number.

(2) A bond or other security may be required at the comptroller's discretion. If a bond or security is required the provisions of Tax Code, §§ 151.251 - 151.260 will apply. A seller who registers for the prepaid wireless fee may be required to post a bond or security in an amount that is equal to four times the amount of the average monthly tax liability but the minimum amount may not be less than $500 and the maximum cannot exceed $100,000.

(d) Imposition and collection of fee.

(1) Effective June 1, 2010, the fee shall be collected by the seller from the consumer at the time of and with respect to each retail transaction of prepaid wireless telecommunication services in this state.

(2) The fee is 2.0% of the purchase price of each prepaid wireless telecommunication service sold by way of retail transaction or used by a seller in this state.

(3) The amount of the fee shall be separately stated on an invoice, receipt, electronic communication, or other similar document that is provided to the consumer by the seller and is not subject to any other tax or fee imposed by Tax Code, Title 2.

(4) A seller or a wireless service provider is liable for the fee on:

(A) the retail price; or

(B) the value of a prepaid wireless telecommunication service not sold at retail but used by a seller or other person in Texas. Examples of prepaid wireless telecommunication service not sold at retail but used by a person in Texas include:

(i) a seller of prepaid wireless telecommunication service provides free prepaid wireless service to its employees;

(ii) a seller of prepaid wireless telecommunication service provides free of charge prepaid wireless service to participants at a local golf tournament in exchange for the tournament displaying a banner or sign with the retailer's logo or name; and

(iii) a seller of prepaid wireless telecommunication service donates prepaid wireless calling cards to a local high school sports team booster club to be used in a silent action as part of a fund raiser.

(5) If charges for items that are not subject to the fee are combined with and not separately stated from charges subject to the fee on the consumer's invoice, receipt, electronic communication, or similar document for prepaid wireless telecommunication services, the combined charge is subject to the fee unless the seller can identify the portion of the charges that are not subject to the fee through the seller's books and records kept in the regular course of business. If the charges that are not subject to the fee cannot reasonably be identified, all charges related to the sale are subject to the fee. The seller has the burden of proving what charges are not subject to the fee.

(6) Exemptions. The fee imposed by this section may not be imposed on or collected from this state or the federal government. A person operating under a contract with the federal government is not exempt from the fee.

(7) Sales for resale.

(A) Every seller must collect the fee on services sold unless a valid and properly completed resale certificate is received from the purchaser. Evidence that a purchaser is properly registered with the comptroller for the collection of the fee is not sufficient to relieve the seller from the responsibility for collecting the fee without the issuance of a properly completed certificate. A properly completed resale certificate must show:

(i) the name and address of the purchaser;

(ii) the registration number held by the purchaser or a statement that an application for a registration is pending before the comptroller with the date the application for registration was made. If the application is pending, the resale certificate is valid for only 60 days, after which time the resale certificate must be renewed to show the permanent registration number. If the purchaser registered for the 911 prepaid wireless fee, the number must consist of 11 digits that begin with a 1, or 3. Federal employer's identification (FEI) numbers or social security numbers are not acceptable evidence of a purchase for resale;

(iii) the signature of the purchaser or an electronic form of the purchaser's signature authorized by the comptroller and the date; and

(iv) the name and address of the seller.

(B) A seller may accept a resale certificate only from a purchaser who is in the business of reselling the prepaid wireless telecommunication services within the geographical limits of the United States of America, its territories, and possessions.

(C) The seller must act in good faith when accepting the resale certificate. If a seller has actual knowledge that the exemption claimed is invalid, the seller must collect the fee.

(D) A person who intentionally or knowingly makes, presents, uses, or alters a resale certificate for the purpose of evading the fee is guilty of a criminal offense. An offense is:

(i) a Class C misdemeanor if the tax evaded by the invalid certificate is less than $20;

(ii) a Class B misdemeanor if the tax evaded by the invalid certificate is $20 or more but less than $200;

(iii) a Class A misdemeanor if the tax evaded by the invalid certificate is $200 or more but less than $750;

(iv) a felony of the third degree if the tax evaded by the invalid certificate is $750 or more but less than $20,000; and

(v) a felony of the second degree if the tax evaded by the invalid certificate is $20,000 or more.

(e) Sourcing. A retail transaction is deemed to have occurred in this state when the transaction occurs at a business location in this state or when the consumer's primary business address or residential address is in Texas. Each seller must determine the consumer's address for each retail transaction made by telephone and over the Internet. The fee is due when the consumer's primary business address or residential address is in Texas.

(f) Reports and due dates.

(1) All sellers must report collections of the fee on comptroller form 54-104 (Texas Prepaid Wireless 9-1-1 Emergency Service Fee Report). The fact that a seller does not receive the form or does not receive the correct form from the comptroller does not relieve the seller of the responsibility of filing a report and remitting the fees collected.

(2) Each report is due on or before the 30th day of the month following the end of each calendar quarter which is January 30, April 30, July 30, and October 30. The first report is due on or before July 30, 2010 and will cover the calendar month of June. Reports and payments due on Saturdays, Sundays, or legal holidays may be submitted on the next business day.

(A) Reports submitted by mail must be postmarked on or before the due date to be considered timely.

(B) Reports filed electronically must be completed and submitted by 11:59 p.m., central time, on the due date to be considered timely.

(C) Electronic Funds Transfer (EFT) system payments. To be considered timely, a payment submitted through an EFT system must enter into the applicable EFT program by 6:00 p.m., central time, on any day on or before the due date other than a weekend or banking holiday.

(D) A person who files tax reports and makes payments through the electronic data interchange (EDI) system must enter the payment information into the EDI system by 2:30 p.m., central time, to meet the 6:00 p.m. central time requirement that is noted in subparagraph (A) of this paragraph.

(E) If the due date falls on a weekend or banking holiday, payment information must be submitted by the time parameters noted in subparagraphs (A) and (B) of this paragraph on the business date prior to the due date to be considered timely. For more information see § 3.9 of this title (relating to Electronic Filing of Returns and Reports; Electronic Transfer of Certain Payments by Certain Taxpayers).

(3) Extensions due to disasters. The comptroller may grant to a seller or other person whom the comptroller finds to be a victim of a disaster an extension of not more than 90 days to make or file a report or pay the fee. The person owing the fee may file a written request for an extension at any time before the expiration of 90 days after the original due date. If an extension is granted, interest on the unpaid fee does not begin to accrue until the day after the day on which the extension expires and penalties are assessed and determined as though the last day of the extension were the original due date.

(g) Seller compensation. A seller may deduct and retain 2.0% of the fees it collects during each report period to offset its costs in collecting and remitting the fee.

(h) Penalties.

(1) A penalty of 5.0% of the fee due shall be imposed upon a seller who fails to timely remit the fee imposed or file a report required by this section.

(2) If a seller fails to file the report or remit the fee within 30 days after the day on which the fee or report is due, an additional 5.0% penalty shall be imposed.

(3) An additional penalty of 50% of the fee due shall be imposed if it is determined that:

(A) the failure to remit the fee or file a report when due was a result of fraud or an intent to evade the fee; or

(B) the seller alters, destroys, or conceals any record, document, or thing, or presents to the comptroller any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the apparent purpose of affecting the course or outcome of an audit, investigation, redetermination, or other proceeding before the comptroller.

(i) Interest. Interest due on unpaid, unremitted, or delinquent fees shall be imposed as provided by Tax Code, § 111.060.

(j) Records required.

(1) All sellers or other persons subject to collecting and/or remitting the fee must keep adequate records in order to accurately determine the amount of fee due for a period of four years.

(2) The comptroller has the right to examine, copy, and photograph any records or equipment of any seller or other person who is liable for collecting the fee in order to verify the accuracy or any report or to determine the fee liability in the event that no report is filed.

(3) A seller or other person commits a criminal offense by intentionally or knowingly concealing, destroying, entering false information in, or failing to make an entry in, records that are required to be made or kept under this section.

(k) Audits. Records of sellers or consumers may be audited by the comptroller or the comptroller's representative. The audit will be performed by examining any records, books, or other information which are maintained by the seller or consumer. If the records are inadequate or do not accurately reflect the fees due, the auditor will base the audit report on the best available information.

(l) Statute of limitations for assessments.

(1) Unless otherwise provided by this section, the comptroller has four years from the date the fee becomes due and payable in which to assess a liability for unpaid fees. Before the expiration of the statute of limitations, the comptroller and a seller or consumer may agree in writing to an extension. The agreement must comply with the provisions of Tax Code, § 111.203. An extension applies only to the periods specifically mentioned in the agreement. Any assessment or refund request pertaining to periods for which limitations have been extended must be made prior to the expiration date of the agreement. Following expiration of the agreement, the statute of limitations applies to subsequent assessments and refund requests as if no extension had been authorized.

(2) In cases of fraud, or if reports have not been filed, the statute of limitations does not apply and the comptroller may assess and collect fees, penalties, and interest at any time. The statute of limitations does not apply when information contained in the report of a seller contains a gross error and the amount of fee due and payable after correction of the error is 25% or more greater than the amount initially reported.

(3) The statute of limitations does not apply to any period for which a seller has filed a timely claim for a refund. If, while investigating the merits of the refund claim, the comptroller determines that additional fee is due, an assessment may be made for that period until a final decision is made on the claim for refund.

(4) A redetermination proceeding does not toll the statute of limitations, except for the issues contested.

(m) Refund claims by registered sellers.

(1) Fees, penalties, or interest will not be refunded by the comptroller to a registered seller who has collected the fee in error from a consumer until all such fees are first refunded or credited with the consumer's written consent. A registered seller is entitled to claim a credit or request a refund of fees equal to the amount of fees refunded to a consumer when the consumer receives a full or partial refund of the sales price of a returned item subject to the fee.

(2) After the registered seller has refunded or credited the fee to the account of the consumer or when a seller has incorrectly reported the amount of the fee due on a report, the registered seller may then seek reimbursement from the comptroller in accordance with the procedures that are outlined in paragraph (4) of this subsection, or take a credit on a future report filed by the seller in the amount refunded or credited to the account of the consumer.

(3) Reports and documentation. The registered seller must retain all documentation that is necessary to support the refund or credit claimed.

(4) Requirements for refund claims filed with the comptroller.

(A) A registered seller who requests a refund from the comptroller must submit a claim in writing that identifies the period during which the claimed overpayment was made and must state fully and in detail the specific grounds upon which the claim is based, including, at a minimum, each of the following about each transaction upon which a refund is requested:

(i) consumer or seller's name, as appropriate;

(ii) invoice, receipt, electronic communication or similar document, if applicable;

(iii) date of retail transaction;

(iv) description of the services purchased or sold;

(v) specific reason for the refund, such as applicable statutory authority;

(vi) purchase or sale amount subject to refund; and

(vii) total amount of fee refund requested.

(B) A registered seller must submit the claim within the applicable limitations period as provided by paragraph (7) of this subsection.

(C) Supporting documentation required by the comptroller to verify any refund claimed or credit taken must be maintained and made available upon request.

(5) Interest.

(A) Except as provided by subparagraph (B) of this paragraph, in a comptroller's final decision on a claim for refund, interest accrues at the rate that is set in Tax Code, § 111.064, on the amount that is found to be erroneously paid:

(i) beginning on the later of 60 days after the date of payment or the due date of the fee report; and

(ii) ending on, as determined by the comptroller, either:

(I) the date of allowance of credit that results from a final decision that the comptroller has issued, or from an audit; or

(II) a date that is not more than 10 days before the date of the refund warrant.

(B) Credits taken by a fee payer on the fee payer's report do not accrue interest.

(6) Denial of refund.

(A) If the comptroller determines that the claim for refund cannot be granted either partially or fully, then the comptroller will notify the claimant of the denial. Claimant may request a refund hearing within 30 days of the denial.

(B) A person may not re-file a refund claim for the same transaction or item, fee type, period, and ground or reason that was previously denied by the comptroller.

(7) Statute of limitations for refund claims.

(A) A claim for refund must be made within four years from the date on which the fee was due and payable.

(B) A claim for refund for a fee paid pursuant to a jeopardy deficiency determination must be made by the later of:

(i) four years from the date on which the fee was due and payable; or

(ii) six months after the date on which the jeopardy deficiency determination for the periods becomes final, and is subject to the restriction imposed by subparagraph (C) of this paragraph.

(C) A refund claim filed within six months after the date on which a jeopardy deficiency determination becomes final is within the limitations period for all items included in the jeopardy deficiency determination. A refund claim for all other items is subject to the limitations period in subparagraph (A) of this paragraph.

(D) Extension of limitations period. Before the expiration of the statute of limitations, the comptroller and a fee-payer may agree in writing to extend the limitation period in accordance with Tax Code, § 111.203. An extension applies only to the periods specifically mentioned in the agreement and no single extension agreement may be for a period that exceeds 24 months from the date of the expiration of the limitations period being extended. Any refund request pertaining to periods for which limitations have been extended must be made prior to the expiration date of the agreement. Following expiration of the agreement, the statute of limitations applies to subsequent refund requests as if no extension had been authorized.

(E) A refund proceeding does not toll the statute of limitations, except for the issues contested.

(F) Failure to file a claim within the limitations prescribed by this section constitutes a waiver of any demand against the state on account of the overpayment.

(G) The informal review of a refund claim by the comptroller is not a hearing or contested case and does not toll the limitation period for any subsequent claim for refund on the same period and type of fee for which the claim was fully or partially denied.

(n) Payments under protest. A person subject to collecting this fee may file suit under Tax Code, Chapter 112, Subchapter B. A person who intends to file a protest suit must submit to the comptroller a letter of protest with the payment of the fee that is the subject of the protest. See § 3.9(e) of this title. The letter of protest must state fully and in detail every reason that the fee-payer contends that the assessment is unlawful or unauthorized and must accompany the payment. If the payment and letter of protest do not accompany one another, the payment will not be deemed to have been made under protest. For the fee-payer's convenience, the comptroller will advise the fee-payer of the amount of payment under protest that the comptroller has received and the date of the payment.

Notes

34 Tex. Admin. Code § 3.1271

The provisions of this §3.1271 adopted to be effective October 21, 2010, 35 TexReg 9334