FRANKFORT, Ky.- Customers who purchase prepaid cell phones or calling cards in 2017 will see a new, small service charge on their receipt, but it is a tax that helps save lives. The charge is comparable to fees that currently appear on customer billings for communications services from traditional wireless providers.
The new Kentucky law passed during the 2016 legislative session requires retailers that sell cellular phones or calling cards with preloaded minutes to charge an additional flat rate of $0.93 per purchase. The fee is effective Jan. 1, 2017.
This new small fee helps fund the vitally important 911 service throughout the Commonwealth.
“Retailers are our partners in collecting this service charge that has tremendous benefit to all Kentuckians,” said Daniel Bork, commissioner of the Kentucky Department of Revenue. “This flat rate helps fund 911 services throughout the state. Safety of our citizens is everyone’s top priority. Our role is to ensure timely distribution of these funds so that local 911 services have the resources needed to continue to provide that security.”
This service charge helps fund a multitude of necessary items that 911 emergency services require to function properly. These important needs include hiring additional 911 operations personnel, developing or upgrading address databases, updating software for computer and phone equipment, improving GIS mapping and radio systems as well as technical training for staff.
The Kentucky Department of Revenue (DOR) has made necessary system changes and is ready to administer the new commercial mobile radio service (CMRS) 911 charge on Jan. 1.
Affected purchases include:
Cellular phones preloaded with a set dollar amount for minutes or units of air time, or sold with rebates for air time;
Calling cards for cellular phones preloaded with a set dollar amount for minutes or units of air time;
The recharging of a reusable cellular phone calling card; and
The recharging of a cellular phone itself with additional minutes of units of air time.
Similar to collecting the sales tax, a business selling any of the above mentioned items must collect the prepaid service charge from the customer at the time of purchase for each item sold at retail. Affected retailers must register for the CMRS prepaid service charge with the Department of Revenue, and begin filing returns for each reporting period. The filing schedule is the same as the one for the retailer’s sales and use tax return.
Retailers must be set up to file and pay the CMRS charge when it begins on Jan. 1, 2017.
To file the CMRS prepaid service charge return, or access other online features, retailers must first register for this new charge within the Kentucky Business OneStop Portal (KyBOS).
Additional return and filing tips will be available on the DOR website, revenue.ky.gov, in the near future. For more information about registering and using the portal, visit onestop.ky.gov.
For taxpayer registration questions with KyBOS, call 502-564-5053. For general CMRS prepaid service charge questions, contact the Division of Sales and Use Tax at 502-564-5170, or via email at DOR.WebResponseSalesTax@Ky.gov.