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Business Taxes Law Guide—Revision 2024
Local Prepaid Mobile Telephony Services Collection Act
Revenue and Taxation Code
Division 2. Other Taxes
Part 21.1. Local Prepaid Mobile Telephony Services Collection Act
Section 42101.5
42101.5. Collection of local charge by a seller; Local agency shall enter into a contract with the department; Notification by local agency of increase, reduction, or elimination of local charge; Election by prepaid MTS provider to remit local charge to local taxing jurisdiction. (a) (1) On and after January 1, 2016, a local charge imposed by a local agency on prepaid mobile telephony services shall be collected from the prepaid consumer by a seller at the time of sale, pursuant to this part, if the local agency entered into a contract with the department for the department to perform the functions set forth in Section 42103. In the contract, the local agency shall: (A) certify to the department that its ordinance applies its local charge to prepaid mobile telephony services and that the local agency agrees to indemnify, and hold and save harmless, the department, its officers, agents, and employees for any and all liability for damages that may result from collection pursuant to the contract; and (B) certify to the department the amount of the local 911 charge, as set out in Section 42102.5, or the applicable tiered rate for a utility user tax, as set out in Section 42102.
(2) A seller that is not a direct seller shall be permitted to deduct and retain an amount equal to 2 percent of the amounts that are collected by the seller from prepaid consumers for local charges.
(b) In the event that a local agency adopts a new local charge that is imposed on prepaid mobile telephony services after September 1, 2015, the local agency shall enter into a contract with the department to perform the functions set forth in Section 42103, on or before December 1, with collection of the local charge to commence April 1 of the next calendar year. In the contract, the local agency shall certify to the department: (1) that its ordinance applies its local charge to prepaid mobile telephony services and that the local agency agrees to indemnify, and hold and save harmless, the department, its officers, agents, and employees for any and all liability for damages that may result from collection pursuant to the contract; and, (2) the amount of the local 911 charge, as set out in Section 42102.5, or the applicable tiered rate for a utility user tax, as set out in Section 42102.
(c) In the event that a local agency increases its local charge after September 1, 2015, the local agency shall provide the department with written notice of the increased local charge on or before December 1, with collection of the local charge to commence April 1 of the next calendar year.
(d) In the event that a local agency reduces or eliminates a local charge on prepaid mobile telephony services, the local agency shall provide the department with written notice as required for the department to meet its obligations pursuant to subdivision (a) of Section 42101.6.
(e) Notwithstanding subdivision (a), through and including December 31, 2015, a prepaid MTS provider may elect to remit the local charge to the appropriate local taxing jurisdiction based on the applicable tax rate of Section 42102, Section 42102.5, or both, and those remittances shall be deemed to be in full compliance with the local ordinance imposing a local charge on prepaid mobile telephony service.
History—Added by Stats. 2014, Ch. 885 (AB 1717), in effect September 30, 2014. Stats. 2019, Ch. 642 (SB 344), in effect January 1, 2020, substituted "was" for "is", added "and remitted by the seller as specified" after "collected", added "as that law read on January 1, 2017, except as Section 42018 has been amended," after "42001)," in first sentence of paragraph (1) of subdivision (a); substituted "A" for "1" and "B" for "2" in second sentence of paragraph (1) in subdivision (a); added paragraph (2) to subdivision (a); deleted "," after "and" in second sentence of subdivision (b); substituted "department" for "board" throughout the section. Stats. 2020, Ch. 179 (SB 1441), in effect January 1 , 2021, deleted "same time and in the same manner as the prepaid MTS surcharge was collected and remitted by the seller as specified under Part 21 (commencing with Section 42001), as that law read on January 1, 2017, except as Section 42018 has been amended, if, on or before September 1, 2015," and added "time of sale, pursuant to this part, if" after "the" in first sentence of paragraph (1) of subdivision (a); substituted "entered" for "shall enter" after "agency" in first sentence of paragraph (1) of subdivision (a); added "as required for the department to meet its obligations" after "notice" and substituted "(a) of Section 42101.6." for "(c) of Section 42010." in subdivision (d).