Nebraska Merchants: New Prepaid Wireless Surcharge Act in effect in Nebraska

If your business currently sells prepaid phone cards or prepaid cellular minutes in Nebraska, please read the following.

The State of Nebraska Department of Revenue was required to notify merchants of the Prepaid Wireless Surcharge Act last year. This surcharge took effect January 1, 2013.

We have received a few inquiries regarding this new tax/fee, and wanted to ensure you had the correct information. Here is a link to the Nebraska Department of revenue explaining the new surcharge: http://www.revenue.state.ne.us/wireless/wireless.html.

Beginning in Nebraska on January 1, 2013, every domestic and international cell phone and phone card product must be taxed 1.1%. The exception to this rule is phone cards retailing at $5 or less or cellular prepaid products for 10 minutes or less do not need to be taxed. HOWEVER, they do need to be tracked.

The merchant must be able to show the amount of $5 or less phone cards sold and the 10-minutes or less cellular purchases that were not taxed in case of an audit.

If a customer purchases 10 $5 prepaid phone cards, merchants should not add the extra 1.1% tax. The 1.1% tax should only be added to purchases over $5 for prepaid phone cards and over 10 minutes for prepaid cellular.

Sales tax is to be charged on the amount of the card – not on the card plus the additional 1.1%.

For all of Premier Merchants Group’s prepaid phone products customers, you are now set up so the extra 1.1% tax is added to the customer’s ticket.