Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Emergency Telephone Users Surcharge Annotations
- Interstate Access Charge Not Subject to 911 Surcharge
- Los Angeles County Utility Users Tax Not Subject to 911 Surcharge
- Out-of-State User—Charges for Services
- Proration of Flat Rate Service Charges or Monthly Recurring Charges
- Public and Nonprofit School Exemption
- Service Supplier—Telemanagement or Shared User Services
There is no contradiction between Revenue and Taxation Code Section 41130, providing for Board access to telephone records, and a CPUC tariff rule which authorizes a phone company to release customer "calling records" only under specific circumstances, including in response to a subpoena duces tecum which is in compliance with Code of Civil Procedure Section 1985.3. While the Board may subpoena records pursuant to CCP 1985.3, as a state agency, the Board is not a "subpoenaing party" as defined and is therefore exempt from the customer notification requirements of Section 1985.3. 12/22/86. (Am 2003-1).
Billing agents that coordinate the billing, collection and reporting of amounts due on behalf of a service supplier but are not themselves service suppliers are not required to be registered with the Board. 7/21/97.
The California Public Utilities Commission (CPUC) mandates the imposition of a number of charges and surcharges on telephone communication service suppliers and service users, some of which are subject to the Emergency Telephone Users (911) Surcharge and some of which are not. Of those CPUC charges and surcharges that are in effect as of March 27, 2012, the only charge that is subject to the 911 Surcharge is the California Public Utilities Commission Reimbursement (or PUC) Fee. The charges that are not subject to the 911 Surcharge are: the Universal LifeLine Telephone Service (ULTS) Surcharge; the High-Cost Fund-A and Fund-B Surcharges; the California Teleconnect Fund (CTF) Surcharge; the California Relay Service and Communications Devices Fund (CA Relay SVC/Comm) Surcharge, also known as the Deaf and Disabled Telecommunications Program (DDTP) Surcharge; and the California Advanced Services Fund (CASF) Surcharge. 3/27/12.
Charges to a contractor, who is also the operator of a Job Corps Center, are exempt from the Emergency Telephone Users Surcharge, as exempt sales to the U.S. Government. If the contractor is not the operator but simply a supplier or a consultant, the exemption does not apply. 7/27/93.
The federal government requires service suppliers to contribute to the Federal Universal Service Fund (FUSF), and service suppliers may pass on, if they choose, the cost of this contribution to their customers, which they do in the form of a line item called a variety of different names (e.g., "Federal Universal Service Fee" or "Universal Connectivity Fee"). Regardless of the name by which it is called, if the charge is for recoupment of the cost of the service supplier's contribution to the FUSF, the charge is not subject to the Emergency Telephone Users Surcharge. 1/8/10.
An insurance company obligated to pay the California gross premiums insurance tax is exempt under California Constitution Article XIII; Section 28 from the Emergency Telephone Users Surcharge. 2/19/90.
An insurance company owns a farm which is operated by a farm management company. Because the insurance company is contractually responsible for the monthly utility bills, telephone charges incurred by the farm management company acting on behalf of the insurance company are exempt from the Emergency Telephone Surcharge under the California Constitution Article XIII, Section 28. 3/25/96.
Although an insurance company is exempt from the surcharge as a result of a provision of the California Constitution, a shared service provider which contracts with an insurance company is not exempt because the shared service provider is the service user. 10/24/88.
The Interstate Access Charge, which is mandated by the Federal Communications Commission for interstate service, is not subject to the surcharge. 5/3/94, 7/25/94. (Am 2003-1).
The Los Angeles County Utility Users Tax is imposed directly by the county on the end user. Such taxes which are not imposed by the service supplier are not "charges for services" and therefore are not subject to the Emergency Telephone Users Surcharge; but the PUC fee reimbursement and the Lifeline surcharge and the Deaf and Disabled surcharge are imposed on the service supplier and passed on to the service user as part of the "charges for services" under Revenue and Taxation Code Section 41011 and therefore would be subject to the 911 Surcharge. 7/13/94. (Am 2003-1).
Section 41011 provides, in part, that charges for services shall not include charges for intrastate toll calls where bills for such calls originate out of California. This exemption applies only to intrastate calls made by an out-of-state user between two California locations when billed by the user's out-of-state service supplier who bills the user's out-of-state address, even if the service supplier was also engaged in business in California. The origination point of the bill for purposes of this exemption is not the location from which the service supplier sends or causes its billing notices to be sent to the service user, rather, it is the location of the out-of-state number to which the bill applies. This exemption does not apply to bills mailed from outside this state to California residents by a California service supplier. 1/18/84. (Am M99-1). (Am 2003-1).
Since flat rate service charges, also known generally as monthly recurring charges, are both intrastate and interstate in nature, they must be prorated to determine the intrastate portion of the total charge, and the Emergency Telephone Users (911) Surcharge should only be applied to the intrastate portion. Of the two types of monthly recurring charges that must be prorated to determine the amount of their intrastate component, the first is flat rate charges (variously named) that the service supplier bills, generally in connection with its various calling plans, to its customers, the service users, each billing period and that do not vary based on the number, length, or time elapsed of any toll calls made during the billing period. The second type is charges (also variously named) that are intended to reimburse the service supplier for amounts it pays to local telephone companies for access to and use of local telephone lines so that its customers can make intrastate, interstate, and international long distance phone calls. Both types of charges:
- Are billed by service suppliers as part of their various billing plans and must be paid by their customers as a precondition to the customer being able to make long distance calls, whether intrastate, interstate, or international.
- Are billed to a customer in the exact same amount each month, whether or not the customer makes any long distance calls during the billing period and whether or not all long distance calls made during the billing period are intrastate or interstate or some combination of each.
- Are set forth in the service supplier's federal tariffs, filed with the Federal Communications Commission, not with the California Public Utilities Commission.
However, monthly recurring flat charges that have been historically associated with the provision of local telephone service are not subject to proration. In addition, the flat charge made by service suppliers for recoupment of their contribution to the Federal Universal Service Fund should not be prorated because it does not have an intrastate component and is not subject to the 911 Surcharge. 1/8/10.
Section 41046 of the Revenue and Taxation Code provides an exemption from the surcharge for intrastate telecommunications of state and local government and nonprofit educational organizations exempt from Section 4253 of the Internal Revenue Code of 1954. Therefore, California public and other qualifying nonprofit schools are exempt from the surcharge. 11/8/93.
An entity which provides both shared use (or "telemanagement") service and services subject to CPUC regulation must pay the surcharge only on charges provided "pursuant to California intrastate tariffs." Shared user services are not provided pursuant to CPUC tariffs. Therefore, even if a provider qualifies as a "service supplier" for other services it provides, it is not liable for the surcharge on charges for non-tariffed services. 8/26/96.
|Billing Agent 2/24/89||M98–1|
|Billing Service Company 8/31/88||2003–1|
|California Public Utilities Commission Mandated Charges 1/8/10||2012–1|
|Debit Cards 6/05/97||2003–1|
|Debit Cards 5/21/97||2003–1|
|Multiple Service Suppliers 10/23/90||M98–1|
|Multiple Service Supplier—Collection by Service Supplier 4/10/92||M98–1|
|Nonregulated Entity 2/15/91||2003–1|
|Packet-Switching Network 6/27/88||2003–1|
|Private Communication Service 9/08/92||2003–1|
|Proration of Access Charges 1/16/92||2003–1|
|Proration of Flat Rate Service Charge 12/28/93||2011–4|
|PUC Fee 6/17/91||2011–4|
|Roaming Charges 7/6/91||M98–1|
|Service Supplier—Cellular Telephone Service 10/23/90||2003–1|
|Service Supplier—Cellular Telephone Service—Out-Collect Revenues 6/3/98||2010–1|
|Subscription Fees 10/09/92||2011–4|
|Universal Telephone Service Surcharge 4/20/88||2011–4|