NE 01-02-2 Sales and Use Tax 2002-07-22

How is Nebraska sales tax charged on cell phone, paging, and other wireless service, and which state gets the tax?

Short answer: Charges are taxed at the customer's place of primary use. Under Revenue Ruling 01-02-2, Neb. Rev. Stat. §77-2706.02 (Laws 2002, LB 947) imposes Nebraska sales and use tax on mobile telecommunications service -- including local and intrastate cellular telephone, wireless paging, wireless two-way radio, and any other wireless personal communications service -- beginning August 1, 2002, at the rate in effect at the customer's place of primary use (the residential or business street address where the customer's use primarily occurs). Providers must keep a record of that address and may rely on an enhanced zip code, with hold-harmless protection under the federal Mobile Telecommunications Sourcing Act (P.L. 106-252). If the customer's place of primary use is in Nebraska, both in-state and interstate calls are subject to Nebraska and local option tax; if it is outside Nebraska, calls that originate and terminate in Nebraska are not.

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This page answers the general question as of 2002. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Nebraska passed a law (LB 947, codified at Neb. Rev. Stat. §77-2706.02) that, beginning August 1, 2002, taxes charges for mobile telecommunications service. That covers one-way and two-way wireless communication — including local and intrastate cellular telephone service, wireless paging, wireless two-way radio, and any other wireless personal communications service.

Who charges the tax, and at what rate. The service is taxed at the rate in effect at the customer's place of primary use — the customer's residential or business street address where their use of the service primarily occurs (not where any given call happens to be placed). Providers must obtain and keep a record of that address. They may rely on an enhanced zip code to identify the correct taxing jurisdiction and get the hold-harmless protection of the federal Mobile Telecommunications Sourcing Act (P.L. 106-252) if they do.

Which state gets the tax. The law also redefined "intrastate" service to include calls that originate and terminate within the same state. As a result:

If the customer's place of primary use is in Nebraska, both calls that stay within Nebraska and calls that originate and terminate in another state are subject to Nebraska and applicable local option sales and use tax.
If the customer's place of primary use is outside Nebraska, calls that originate and terminate in Nebraska are not subject to Nebraska or local option tax.

The ruling notes that several Nebraska Sales and Use Tax Regulations (1-001.01, 1-005.01E, 1-006.08, 1-007.01A, 1-065.01A) and Local Option Regulation 9-007.02C are incomplete because they predate this new law.

Source note: this ruling was recovered by optical character recognition from a scanned PDF, so the header and the commissioner's signature line contain minor garbled characters ("ry Jane Egr" for Mary Jane Egr); the substantive text of the ruling is intact and is reproduced verbatim below.

What this means for you

A Nebraska wireless customer

Your cellular, paging, and two-way radio charges are taxed based on the street address you gave your provider as your place of primary use — Nebraska state and local tax applies if that address is in Nebraska, regardless of where you actually use the phone.

A wireless service provider

Keep a record of each customer's place of primary use. If you source tax using an enhanced zip code, the federal Mobile Telecommunications Sourcing Act protects you from liability for errors in that database.

Common questions

Q: When did Nebraska start taxing mobile telecommunications service this way?
A: August 1, 2002, under LB 947 (Neb. Rev. Stat. §77-2706.02).

Q: What decides which state's tax applies?
A: The customer's place of primary use — their residential or business street address — not where an individual call is made.

Q: I live outside Nebraska but made a call that started and ended in Nebraska. Is it taxed by Nebraska?
A: No. If your place of primary use is outside Nebraska, calls that originate and terminate in Nebraska are not subject to Nebraska or local option tax.

Citations and references

Neb. Rev. Stat. §77-2706.02 (Laws 2002, LB 947) — imposes the tax on mobile telecommunications service, effective August 1, 2002.
Federal Mobile Telecommunications Sourcing Act, P.L. 106-252 — the place-of-primary-use sourcing framework and provider hold-harmless protection.
Regs 1-001.01, 1-005.01E, 1-006.08, 1-007.01A, 1-065.01A, and Local Option Reg 9-007.02C — identified as incomplete because they predate the new law.

Source

Original ruling text

department
of revenue

8 [eevee a Revenue Ruling 1-02-2

Sales and Use Tax - Mobile Telecommunications Service. CHARGES FOR MOBILE
TELECOMMUNICATIONS SERVICE, INCLUDING WIRELESS PAGING, WIRELESS TWO-
WAY RADIO AND ANY OTHER WIRELESS PERSONAL COMMUNICATIONS SERVICE
ARE SUBJECT TO TAX AT THE RATE IMPOSED AT THE CUSTOMER’S PLACE OF
PRIMARY USE.

Neb. Rev. Stat. §77-2706.02 (Laws 2002, LB 947), imposes a tax on charges for “mobile
telecommunications service” beginning August 1, 2002. The term “mobile telecommunications
service” means one-way and two-way wireless communication service carried on between mobile
stations or receivers and land stations and by mobile stations communicating among themselves.
Mobile telecommunications service includes, but is not limited to, local and intrastate cellular
telephone service, wireless paging service and wireless two-way radio service.

Although local and intrastate cellular telephone services are currently subject to sales and use
tax, beginning August 1, 2002, the new law provides for the taxation of these services at the
customer’s place of primary use which is defined as the residential street address or the business
street address of the customer, representative of where the customer’s use of the service primarily
occurs. Providers of mobile telecommunications services are required to obtain and maintain a
record of the customer’s place of primary use. Service providers may rely on an enhanced zip
code for identifying the proper taxing jurisdiction and are entitled to the hold harmless protections
provided by the federal Mobile Telecommunications Sourcing Act, P.L. 106-252.

The definition of “intrastate” service has also been changed to include calls which originate
and terminate within the same state. Therefore, if the customer’s place of primary use is within
Nebraska, services which originate and terminate within Nebraska and services which originate
and terminate in another state are both subject to Nebraska and applicable local option sales and
use tax. If the customer’s place of primary use is outside Nebraska, services which originate and
terminate within Nebraska are not subject to Nebraska or applicable local option sales and use tax.
These provisions bring Nebraska into compliance with the federal Mobile Telecommunications
Sourcing Act.

Beginning August 1, 2002, charges for wireless paging, wireless two-way radio, and other wireless
personal communications service are subject to tax at the customer’s place of primary use.

Nebraska Sales and Use Tax Regulations 1-001.01, 1-005.01E, 1-006.08, 1-007.01A, 1-065.01A
and Local Option Sales and Use Tax Regulation 9-007.02C are incomplete to the extent they do
not include provisions of the new law as it relates to mobile telecommunications service.

APPROVED:

ry Jane Egr
State Tax Commissioner

July 22, 2002

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 1-02-1 Page 2

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