Illinois ~ Sales and Use Tax: Prepaid Wireless 911 Surcharge Enacted

Illinois has enacted a 1.5% prepaid wireless 911 surcharge to be imposed on purchases of prepaid wireless telecommunications services. A home rule municipality with a population over 500,000 may impose a 911 surcharge not to exceed 7%. Entities exempt from Illinois sales tax are exempt from the 911 surcharge.

State and local 911 surcharges are imposed on customers, but sellers are liable for remitting all 911 surcharges they collect. The 911 surcharges must be separately stated on customer invoices or receipts or must otherwise be disclosed to customers. A separately stated 911 surcharge is not subject to sales tax, other fees or surcharges.

When prepaid wireless telecommunications service is sold with one or more other products or services for a single, non-itemized price, then the 911 surcharge is applied to the entire non-itemized price unless the seller applies the 911 surcharge to:

– the dollar amount of the service if that amount is disclosed to the customer; or

– the portion of the price attributable to the service if the seller can identify that portion by reasonable and verifiable standards from the books and records it keeps in the regular course of business, including, but not limited to, books and records kept for non-tax purposes.

If a minimal amount of service is sold with a prepaid wireless device for a single, non-itemized price, the seller may choose not to apply the 911 surcharge. An amount of service is minimal if it is 10 minutes or less or $5 or less.

The 911 surcharge will be administered and enforced under existing sales tax provisions to the extent practicable. Procedures for registration and payment of the 911 surcharge will be substantially the same as those that apply for sales tax purposes.

For the first 12 months after August 19, 2011, a seller may deduct and retain 5% of the 911 surcharges it collects and timely remits to the Illinois Department of Revenue with a timely filed return. After the first 12 months, the collection discount is reduced to 3%.

Subscribers can view the bill.

P.A. 97-463 (S.B. 2063), Laws 2011, effective January 1, 2012

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