1. (a) Definitions. For purposes of this chapter (Local Charges on Prepaid Mobile Telephony Services Regulations, commencing with Regulation 2460), the following terms shall have the following meanings:

   1. (1) “Account” means an account issued and maintained by the Department to uniquely identify a seller that is registered with the Department pursuant to Regulation 2437 or this regulation.

      1. (A) An “emergency telephone account” shall be issued and maintained for a direct seller that is registered with the Department pursuant to Regulation 2437 or this regulation.
      2. (B) A “prepaid MTS account” shall be issued and maintained for a seller, other than a direct seller, that is registered with the Department pursuant to Regulation 2437 or this regulation.
      3. (C) Each account shall have its own unique emergency telephone account or prepaid MTS account number.
   2. (2) “Business information” means information the Department deems necessary to determine if a person is required to register with the Department under Regulation 2437 or this regulation, determine if the person is required to remit the 911 and 988 surcharges and local charges it collects by electronic funds transfer, assign the person a reporting period, and determine how to obtain access to the person's books and records. Such information includes, but is not limited to, the name of the person's business, the addresses of the person's business locations, the date the person's business started or will start, the business's business activities, the business's projected revenue, the name and branch location of the bank or other financial institution where the business maintains its accounts, and the name and contact information of at least one individual the Department may contact to obtain access to the business's books and records.
   3. (3) “Contact information” means information the Department deems necessary to contact and communicate with a person registering under Regulation 2437 or this regulation and with that person's authorized representative(s), if any. Such information includes, but is not limited to, a current mailing address, email address, and telephone number.
   4. (4) “Department” means the California Department of Tax and Fee Administration.

   5. (5) “Direct seller” means a prepaid MTS provider or service supplier, as defined in Revenue and Taxation Code section 41007, that makes a sale of prepaid MTS directly to a prepaid consumer for any purpose other than for resale in the regular course of business.

      1. (A) A telephone corporation, as defined by section 234 of the Public Utilities Code.
      2. (B) A person that provides “interconnected Voice over Internet Protocol (VoIP) service,” as that term is defined in section 285 of the Public Utilities Code.
      3. (C) A “retailer engaged in business in this state,” as defined by Revenue and Taxation Code section 6203, that is a member of the same commonly controlled group, as defined in Revenue and Taxation Code section 25105, or that is a member of the same combined reporting group, as defined in paragraph (3) of subdivision (b) of section 25106.5 of title 18 of the California Code of Regulations, as an entity described in subparagraph (A) or (B).

      A direct seller includes, but is not limited, to any of the following:

   6. (6) “Identifying information” means information the Department deems necessary to specifically identify a person registering with the Department under Regulation 2437 or this regulation. Such information includes, but is not limited to, the person's name, the person's type (e.g., individual, partnership, limited liability company, corporation, etc.), and the person's federal Employer Identification Number, and may also include, but is not limited to, the person's driver's license number or other government-issued identification card number or entity number issued by the California Secretary of State.
   7. (7) “In this state” means within the exterior limits of the State of California and includes all territory within those limits owned by or ceded to the United States of America.
   8. (8) “Local charge” or “local charges” means the utility user taxes on the consumption of prepaid MTS, as described in Revenue and Taxation Code section 42102, and charges that apply to prepaid MTS for access to communication services or to local “911” emergency telephone systems, as described in Revenue and Taxation Code section 42102.5.
   9. (9) “Local jurisdiction” or “local agency” means a city, county, or city and county, which includes a charter city, county, or city and county.
   10. (10) “Mobile data service” has the same meaning as defined in section 224.4 of the Public Utilities Code.
   11. (11) “Mobile telephony service” or “MTS” has the same meaning as defined in section 224.4 of the Public Utilities Code.
   12. (12) “988 surcharge” means the 988 surcharge imposed under chapter 2 of the Emergency Telephone Users Surcharge Act (commencing with Revenue and Taxation Code section 41020).
   13. (13) “911 surcharge” means the 911 surcharge imposed under chapter 2 of the Emergency Telephone Users Surcharge Act (commencing with Revenue and Taxation Code section 41020).
   14. (14) “Ordinance” refers to an ordinance of a local jurisdiction or local agency imposing a local charge, including any local enactment relating to the filing of a claim for refund or other claim arising under the ordinance.
   15. (15) “Ownership information” means information the Department deems necessary to identify the owners of an entity or business. Such information may include, but is not limited to, the owners' names and contact information.
   16. (16) “Person” includes any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, assignee for the benefit of creditors, trustee, trustee in bankruptcy, syndicate, the United States, this state, any city, county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit.
   17. (17) “Prepaid consumer” means a person who purchases prepaid MTS in a retail transaction.

   18. (18) “Prepaid mobile telephony services” or “prepaid MTS” means the right to utilize a mobile device for mobile telecommunications services or information services, including the download of digital products delivered electronically, content, and ancillary services, or both telecommunications services and information services, that must be purchased in advance of usage in predetermined units or dollars.

       For these purposes, “telecommunications service” and “information service” have the same meanings as defined in section 153 of title 47 of the United States Code.

   19. (19) “Prepaid MTS provider” means a telephone corporation, as defined in section 234 of the Public Utilities Code, that provides prepaid MTS.
   20. (20) “Regulation” means a section in title 18 of the California Code of Regulations.
   21. (21) “Representative information” means information the Department deems necessary to verify that the individual submitting an application for registration is the person registering with the Department or that the individual or individuals submitting an application for registration on behalf of another person is or are authorized to register such person. Such information includes, but is not limited to, each individual's name, title, and contact information.
   22. (22) “Retail transaction” means the purchase of prepaid MTS, either alone or in combination with mobile data or other services, from a seller for any purpose other than resale in the regular course of business. For these purposes, a “purchase” means any transfer of title or possession, exchange, or barter, conditional or otherwise of prepaid MTS for a consideration, including a transfer of more than a minimal amount of prepaid MTS, as defined in Revenue and Taxation Code section 42101.9, sold for a single, nonitemized price, with a mobile telephony service communications device. Multiple items of prepaid MTS may be purchased at one time in a single retail transaction.

   23. (23) A “retail transaction occurs in the state” under any of the following circumstances:

       1. (A) The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).

       2. (B) If subdivision (a)(23)(A) 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:

          1. (i) 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.
          2. (ii) 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.
          3. (iii) 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. (C) If an address is not available to the seller to determine whether any of the circumstances in subdivision (a)(23)(B) 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.
   24. (24) “Sale” means any transfer of title, possession, exchange, or barter, conditional or otherwise of prepaid MTS for a consideration, including such a transfer of a mobile telephone service communication device when sold with prepaid MTS for a single, nonitemized price, and for other than a minimal amount of prepaid MTS.
   25. (25) “Seller” means a person, including a direct seller, that sells prepaid MTS to a person in a retail transaction.
   26. (26) “Surcharges” or “911 and 988 surcharges” means the 911 surcharge related to 911 service for periods prior to January 1, 2023, and means two separate charges, the 911 surcharge related to 911 service and the 988 surcharge related to 988 service, for periods on and after January 1, 2023.

2. (b) Registration.

   1. (1) Every seller in this state shall register with the Department under Regulation 2437.
   2. (2) Except as provided in subdivision (b)(3), a seller that is not in this state shall register with the Department under this regulation by completing an application for registration with the Department. Every application for registration shall provide the seller's identifying information, contact information, business information, ownership information, and representative information.
   3. (3) A seller, other than a direct seller, that is not in this state and is not required to collect local charges pursuant to subdivision (e) of Regulation 2461 is not required to register with the Department. However, such a seller may voluntarily register with the Department by completing an application for registration with the Department.
3. (c) Payment of Local Charges by Purchasers. Every consumer of prepaid MTS in this state is liable for any local charges subject to collection under this chapter until those amounts are paid to the Department, unless a receipt, as provided by subdivision (d), is obtained from a registered seller.

4. (d) Receipts. Each seller required to collect local charges from a prepaid consumer under this chapter must give a receipt to each prepaid consumer at the time of the retail transaction with a separate statement of any local charges, even if the prepaid MTS is sold for a price that includes all applicable taxes and fees. For purposes of this subdivision, prepaid MTS is sold on a tax-included basis if the seller discloses to the consumer in the receipt that the price of the prepaid MTS includes applicable taxes and fees.

   1. (1) The name and place of business of the seller.
   2. (2) The date on which the prepaid MTS was sold.
   3. (3) The amount of any local charges collected from the prepaid consumer, unless otherwise disclosed electronically to the prepaid consumer at the time of the retail transaction.

   For the purposes of this regulation, a receipt need not be in any particular form and may consist of an invoice, receipt, or other similar document provided to the prepaid consumer, but must show the following:

5. (e) Payment and Returns.

   1. (1) Payment. Except as otherwise provided in subdivision (e)(4) and (e)(6), the local charges subject to collection under this chapter are due and payable to the Department quarterly on or before the last day of the next month following each calendar quarter.
   2. (2) Returns. Notwithstanding Revenue and Taxation Code section 55040, and except as otherwise provided in subdivision (e)(6), every person liable for local charges under this chapter must file a return with the Department through the Department's website quarterly, on or before the last day of the next month following each calendar quarter.
   3. (3) Reporting Periods. Notwithstanding subdivisions (e)(1) or (2), the Department, if it deems it necessary in order to insure payment to or facilitate the collection by the state of the amount of taxes, may require returns and payments of local charges required to be reported to the Department pursuant to the Local Prepaid MTS Collection Act, for quarterly periods other than calendar quarters, or for reporting periods other than quarterly periods.

   4. (4) Seller Reimbursement Retention. A seller that is not a direct seller may deduct and retain a reimbursement amount equal to two percent of the amounts it collects from prepaid consumers for local charges.

      Such reimbursement is to be taken on the return for the corresponding reporting period in which the sale of the prepaid MTS occurs. If a seller claims only some or none of the reimbursement amount during the corresponding reporting period in which the sale occurred, the seller is not allowed to claim a credit for the remaining unclaimed reimbursement on a subsequent return. Rather, the seller must file a claim for refund.

   5. (5) Electronic Funds Transfer. Notwithstanding Revenue and Taxation Code section 55050, any person required, or that elects, to remit its sales and use tax liabilities due by electronic funds transfer (pursuant to Revenue and Taxation Code section 6479.3), other than a direct seller, must also remit local charges by electronic funds transfer.

      For purposes of this section, “electronic funds transfer” shall have the same meaning as defined in Regulation 1707.

   6. (6) Direct Sellers. A direct seller shall remit the 911 and 988 surcharges and local charges on retail transactions of prepaid MTS as follows:

      1. (A) The 911 and 988 surcharges shall be remitted to the Department with a return as provided by Regulation 2440.
      2. (B) Local charges shall be remitted to the local jurisdiction or local agency imposing the local charge, and not to the Department. Remittance of the local charges shall be separately identified from any other local taxes or other charges that are remitted to the local jurisdiction or local entity imposing the local tax or other charge.
6. (f) Records. A seller of prepaid MTS shall maintain and make available records for examination on request by the Department or its authorized representatives in the manner set forth in Regulation 4901.

7. (g) Relief from Liability. In addition to the provisions set forth in Regulation 4902, a seller may be relieved of liability for local charges as set forth in subdivision (g)(1) and (2):

   1. (1) Point-of-Sale Transaction. A seller is not liable for any additional local charges and is not required to refund any amounts collected from the prepaid consumer when all of the following apply:

      1. (A) The seller relies in good faith on the information provided by the Department to match the location of the point-of-sale transaction to the applicable local charges, and
      2. (B) The seller collects such amounts from the prepaid consumer and remits such amounts to the Department.

   2. (2) Known-Address Transaction. A seller is not liable for any additional local charges and is not required to refund any amounts collected from the prepaid consumer when all of the following apply:

      1. (A) The seller relies in good faith with due diligence on credible information to match the five-digit postal zip code of the prepaid consumer's address to the applicable local charges, and

      2. (B) The seller collects such amounts from the prepaid consumer and remits such amounts to the Department.

         The provisions of subdivision (g)(2) apply even if the five-digit postal zip code of the prepaid consumer's address corresponds to more than one local charge.

8. (h) Innocent Spouse Relief. A spouse or registered domestic partner requesting relief from liability for any local charge, interest, and penalties shall be relieved from such liability where all the requirements set forth in Regulation 35055 are met.

9. (i) Local Charges.

   1. (1) A local charge imposed by a local agency shall be collected from a prepaid consumer by a seller at the time prepaid MTS is sold in a retail transaction that occurs in the state, pursuant to the Local Prepaid MTS Collection Act (commencing with Revenue and Taxation code section 42100) and this chapter, if on or before September 1, 2015, the local agency entered into a contract with the Department pursuant to Revenue and Taxation Code section 42101.5.

      In the event a local agency did not enter into a contract with the Department by September 1, 2015, the local agency may enter into a contract with the Department, pursuant to Revenue and Taxation Code section 42101.5, on or before December 1, with collection of its local charge to commence April 1 of the next calendar year.

   2. (2) New Local Charges. When a local agency or local jurisdiction adopts a new local charge, after September 1, 2015, the local agency shall enter into a contract with the Department, pursuant to Revenue and Taxation Code section 42101.5, on or before December 1, with collection of the local charge to commence April 1 of the next calendar year.
   3. (3) Increases in Local Charges. When a local agency or local jurisdiction increases an existing local charge required to be collected under subdivision (i)(1) or (2), the local agency shall provide the Department written notice of the increase, on or before December 1, with collection of the increase in the local charge to commence April 1 of the next calendar year.

   4. (4) Advance Written Notification. When a local charge required to be collected under this subdivision is about to expire or decrease in rate, the local agency or local jurisdiction imposing the local charge shall notify the Department in writing of the upcoming change, not less than 110 days prior to the date the local charge is scheduled to expire or decrease. If timely written notice is provided, the change shall become operative on the first day of the calendar quarter commencing after the specified date of expiration or decrease in rate.

      If advance written notice is provided prior to the specified date of expiration or decrease in rate, but less than 110 days prior to that date, the change shall become operative on the first day of the calendar quarter commencing more than 60 days after the specified date of expiration or decrease.

   5. (5) Inaccurate Rate Posted on Department's Website. When a local agency or local jurisdiction notifies the Department in writing that the rate posted on the Department's website (posted rate) for a local charge imposed by that local agency or local jurisdiction is inaccurate, including where the local charge was reduced or eliminated and the local agency or jurisdiction failed to provide advance written notice pursuant to subdivision (i)(4), the recalculated rate applicable to the local agency or local jurisdiction shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the Department receives the local agency's or local jurisdiction's written notification that the posted rate is inaccurate. The local agency or local jurisdiction shall promptly notify the Department in writing of any such discrepancies with the posted rate that are known or discovered by the local agency or local jurisdiction.

10. (j) Posting Rates.

    The Department shall post on its website, for each local jurisdiction, the combined total of the rate(s) of local charges, as calculated pursuant to Revenue and Taxation Code sections 42102 and 42102.5, that each local jurisdiction has adopted and provided written notice to the Department of, on or before December 1 of each year, as provided in subdivision (i). The Department shall post the combined total of the rates of local charges on its website by March 1, of each year. The posted rates of local charges shall be the rates that apply to all retail transactions during the calendar year beginning April 1 following the posting, unless there is a later change in a rate.

Note: Authority cited: Section 42103, Revenue and Taxation Code. Reference: Sections 6455, 41040, 42101, 42101.5, 42101.6, 42101.8, 42101.9, 42102, 42102.5, 42103 and 42103.2, Revenue and Taxation Code.

History

1. New section filed 1-11-2017; operative 1-11-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 2).

2. Editorial correction adding inadvertently omitted chapter heading (Register 2017, No. 11).

3. Change without regulatory effect amending section and Note filed 8-28-2018 pursuant to section 100, title 1, California Code of Regulations (Register 2018, No. 35).

4. Amendment of chapter heading, section and Note filed 7-16-2025; operative 10-1-2025 (Register 2025, No. 29).