taxes

Audit Procedures for Telecommunications Taxes

Chapter 3 - 9-1-1 Emergency Service Fees and Equalization Surcharge

Introduction

The Commission on State Emergency Communication (CSEC), created in 1987, assists local governments in providing 9-1-1 emergency telephone service, and, in partnership with the Texas Department of Health, operates the State's poison control information telephone network. (200310126L). The Commission's Web site allows access to a wealth of information about the Commission, rules and regulations, operations, etc.:

View website for more information on 9-1-1.

Funding for the emergency telephone system and poison control network is provided through three fees and surcharges:

  • 9-1-1 Emergency Service Fee - Landline, on landline based local exchange access lines;
  • 9-1-1 Emergency Service Fee - Wireless, on wireless communications;
  • Equalization Surcharge, on intrastate long-distance.

A telecommunications provider may, therefore, be responsible for one, two, or all three fees, depending on exactly what they do. A company providing landline telecommunications would be responsible for Subtype 92, and also Subtype 93 if they are also providing long distance service. A service provider for wireless communications will be responsible for Subtype 91, and may also be responsible for Subtype 93 if they are providing long distance service. Some telecommunications companies provide both landline and wireless, and thus could be responsible for all three subtypes.

These three fees are collected by the telecommunications providers from the end users and reported to the Comptroller of Public Accounts. Prior to January 1, 2002, the telecommunications providers sent these reports directly to the CSEC. (200112803L) Effective January 1, 2002, the reporting responsibility for the three fees was transferred to the Comptroller of Public Accounts. (House Bill 2914, 77th Legislative Session.)

Through inter-agency agreement in 1996, the Comptroller began auditing for the fees when a telecommunications company was audited for other taxes. In 1999, audit responsibility was transferred to the Comptroller by statute when Health & Safety Code, Section 771.076 and 771.077 were amended. (House Bill 1983, 76th Legislative Session)

Fees and Surcharges

The three fees and surcharges described in Subchapter D of Chapter 771, Health and Safety Code, provide funding for the statewide 9-1-1 emergency service and the poison control hotlines.

The fees and surcharges are levied upon the telecommunications customers in Texas, are collected by the telecommunications utilities, and are reported to the Comptroller.

  • The customer on which a fee or surcharge is imposed is liable for the fee or surcharge in the same manner as they are liable for the charges for services provided by the service provider. (Sec. 771.073(a).
  • The fee or surcharge must be stated separately on the customer's billing. (Sec. 771.073(a)).
  • A service provider may not disconnect services for non-payment of a fee or surcharge imposed under this subchapter. (Sec. 771.073(d).
  • If a service provider erroneously bills, collects, and remits fees to the Commission, a refund to the customer is required before the service provider may obtain refund from the Commission. (Sec. 771.073(g).
  • The Commission may notify the Comptroller that an audit of a service provider is warranted. If the Comptroller conducts an audit of a service provider, the Comptroller shall also audit the service provider's records to determine if they are complying with the requirements of this Chapter. (Sec. 771.076)
  • Collection of past due amounts, including audits, for the fees and surcharges is the responsibility of the Comptroller. (Sec. 771.077)
  • The only exemptions from the fees and surcharges are:
    • State government agencies (Sec. 771.074)
    • Federal Government agencies (Sec. 771.074)
    • Institutions of higher education as listed in Sec. 61.003, Education Code, except a public junior college or community college. The public junior colleges, community colleges, and other non-profit organizations, i.e., other educational and charitable organizations, do not receive an exemption from the fees and surcharges. Rule 252.1.

Resale and Exemption Certificates

The 9-1-1 Emergency Service Fees and Surcharge are to be collected from the ultimate consumer of the telecom service.

Sales for resale, therefore, are not subject to the 9-1-1 Fees and Surcharges, but the reseller must be permitted for and remitting the 9-1-1 Fees and Surcharges on their sales. For example, Telecom Provider X is selling to Reseller Y who is providing telecom service to Customer Z. If Telecom Provider X accepts a sales tax resale certificate from the Reseller Y, it may or may not be applicable to the 911 Fees and Surcharge. If the resale certificate was given because Reseller Y is a reseller of telecommunications, the 911 fees and surcharge should not be charged to Reseller Y by Telecom Provider X. However, Reseller Y should be permitted and remitting 911 fees and surcharges from Customer Z.

Exemption certificates given for sales tax purposes generally do not apply to the 911 fees and surcharges since the only exempt customers for 911 fees and surcharges are state and federal government and certain institutions of higher education. If Telecom Provider has accepted an exemption certificate from their customer, it is important to examine the account to determine if a global tax exemption flag was placed on the account. If so, 911 fees and surcharges may not have been collected from the customer when appropriate.

General Information

Tax Code 54 for 9-1-1 Fees includes three separate fees and surcharges:

Subtype 91 = 9-1-1 Emergency Service Fee - Wireless

Subtype 92 = 9-1-1 Emergency Service Fee - Landline

Subtype 93 = Equalization Surcharge

Statute:

Health and Safety Code, Chapter 771, State Administration of Emergency Communications

Tax Code, Chapters 111 and 112, also apply, effective 09-01-99, which include the right to a DRO conference, redetermination hearing, statute of limitations, interest and all collection actions.

Rules:

Commission Rules can be found at:

Statutes and Rules

Assessment Rates:

  • 50 cents per wireless connection per month
  • 50 cents per landline connection per month
  • 1% of intrastate long distance charges per billing cycle (prior to 9-1-05, the rate was .6%)

Penalty: Tax Code, Sec. 111.061(a)

  • 5% on amounts past due for 1-30 days;
  • 10% on amounts past due for 31 days or more;

NOTE: For periods prior to 01-01-02, total late filing penalties were limited to an amount not to exceed $100 per day for each day the fee is late (Health & Safety Code, Sec. 771.077).

This is interpreted to mean that the maximum late filing penalty is 10% of the tax due per period, or $100 per day, whichever is less:

Step 1: Calculate normal 10% determination penalty.X = (tax) 10%.

Step 2: Calculate penalty cap.Y = [(calculation date) - (due date + 1 day)] $100.
This is the # of days late multiplied by $100 per day.

Step 3: If Y > X, use X.

Step 4: If X > Y, use Y + $100 per day for each additional day after calculation date until Y = X.

The billing will say something about the penalty if it is capped, i.e. "penalty continues to accrue at $100 per day until the maximum 10% is reached or payment is made."

Jeopardy Penalty:

Tax Code Sec. 111.022, additional 10% jeopardy penalty is not subject to the $100 per day cap.

Fraud Penalty:

Tax Code Sec. 111.061(b) is not subject to the $100 per day cap.

Interest:

  • Reports due on or after 01-01-00 = variable interest rate and credit interest provisions apply. See Interest on Credits and Refunds and on Tax Due for the rate each year.
  • Reports due 09-1-99 through 12-31-99 = 12% beginning on the 61st day after the due date. (Sec.771.073(c).

Due Dates:

Monthly: 20th day of month for wireless; 30th day of month for landline and for surcharge.

Administrative Fee:

Service providers may retain an administrative fee of one percent (1%) of the gross amount of fees or surcharges reported each month. Timely filing is not required for the service provider to retain this administrative fee. (Prior to 09-01-99, for the Emergency Service Fee - Landline and the surcharge, the administrative fee was 2% of the gross amount reported. The fee was always 1% on the Emergency Service Fee - Wireless.)

Reported Data:

Examine XIDATA on the fee system for reported amounts after January 1, 2002. Reported data for all periods prior to 01-01-02 is available from the Commission on State Emergency Communications.

Please provide:

  • taxpayer name
  • taxpayer number
  • audit period
  • description of company's activity (landline, wireless, long distance)
  • date information is needed

Allow a minimum of 10 working days to obtain the reported data since this information is retained by the Commission and must be retrieved manually.

NOTE: Historical data maintained by the Commission is NET of the administrative fees. When comparing these figures against taxable revenues, be sure to re-calculate to add back in the 1% administrative fee.

Statute of Limitations:

Effective 09-01-99, the General Provisions of the Tax Code apply, which imposes the four year statute of limitations upon an audit of the 9-1-1 fees.

The Agreement to Extend Period of Limitation should be obtained as necessary. For "Type of Tax" use:

  • Subtype 91 (Wireless): "9-1-1 Emergency Service Fees - Wireless, Health & Safety Code, Sec. 771.0711";
  • Subtype 92 (Landline): "9-1-1 Emergency Service Fees - Landline, Health & Safety Code, Sec. 771.071"; or
  • Subtype 93 (Surcharge): "9-1-1 Equalization & Poison Control Surcharge, Health and Safety Code, Sec. 771.072"

Confidentiality:

Sections 771.061 and 771.0711, Health and Safety Code.

Information reported to the Commission or the Comptroller by the telecommunications provider is confidential.

Information obtained in an audit of the telecommunications provider is confidential under Tax Code, Sec. 111.006.

9-1-1 Emergency Services Fee - Wireless (Subtype 91)

Statute Reference:

Health & Safety Code, Section 771.0711, effective 09-01-97.

Rate:

$0.50 per month per wireless connection

Administrative Fee: = 1%

The wireless service provider may retain an administrative fee of 1% of the amount collected. This administrative fee has been 1% since its inception at 09-01-97. (Timely filing is not required, so the administrative fee should be deducted in an audit.)

9-1-1 Emergency Service Fee - Wireless Due Date
Period Covered Due Date
Reports due on/after 01-01-02 20th day of month following month in which collected
Reports due 09-01-97
through 12-31-01		 30th day of month following month in which collected

Tax Calculation:

  • Imposed on each wireless telecommunications connection: The 9-1-1 emergency service fee is imposed upon each wireless telecommunications connection. This applies to each wireless telephone number with an area code in Texas, regardless of location, in or out of a home-rule city or Emergency Service District. Pre-paid wireless service is included, such as pre-paid wireless cards with a code for activating additional minutes.
    Note: Wireless connection is defined as "any wireless communication mobile station assigned a number containing an area code assigned to Texas by the North American Numbering Plan Administrator that connects a wireless service provider to the local exchange service provider. (Health & Safety Code, Section 771.001(13))
  • Bad debts: Fees are based upon revenues collected; if based upon revenues billed, a bad debt deduction is allowed. (Rule 255.5.)
  • Stated separately on billing: The fee shall be stated separately on the customer's bill, generally referred to as the "9-1-1 Service Fee."
  • Partial month service: The fee is imposed on each wireless telephone connection, and shall be charged in full for each customer that had any service during the month. If the customer had service for only part of the month, the full fee is charged. However, if the customer's service was disconnected and reconnected during the same month, the fee is only due one time.

Report Form: Form #54-103, 9-1-1 Wireless Emergency Service Fee Report

Historical Reported Data:

Prior to 01-01-02, this fee was remitted to the Commission on State Emergency Communication. Effective 01-01-02, the reporting function was moved to the State Comptroller. Examine XIDATA on the fee system for reported amounts after January 1, 2002. A history of reported data prior to 01-01-02 must be retrieved from the CSEC's manual records.

Appropriated To:

Revenue collected is to be deposited to the Wireless Trust Fund. Revenue collected under this section may be distributed to each emergency communication district a portion of the money that bears the same proportion to the total amount collected that the population of the district bears to the total population of the state.

EXEMPTIONS/EXCLUSIONS FROM SUBTYPE 91 - WIRELESS


  • Commercial mobile radio service that provides access to a paging or other one-way signaling device (200201804L)
  • Wireless roaming or other non-vocal commercial mobile radio service (200201804L)
  • Lines to internet service providers for data modem lines used only to provide internet access service and that are not capable of transmitting voice message. Effective 06-18-99. (200308073L, 200201804L)
  • State and federal government agencies (Utilities Code, Sec. 771.074)
  • Federally chartered credit unions (200306992L)
  • Certain State institutions of higher education as outlined in Sec. 61.003, Education Code, except public junior colleges and community colleges. (Rule 252.1.)
  • Long distance charges: If providing long distance services, these charges are to be reported under Subtype 93, Equalization Surcharge.
  • Landline telecommunications: If the company is providing landline local exchange telephone services, these charges are to be reported under Subtype 92, 9-1-1 Emergency Service Fee- Landline.
  • Taxes or fees collected as reimbursements from the customer, including the PUC Gross Receipts Assessment, Telecommunications Infrastructure Fund, etc.

9-1-1 Emergency Service Fee - Landline (Subtype 92)

Statute Reference:

Health & Safety Code, Section 771.071, effective 09-01-89

TAC Rule 255.4 — Definition of a Local Exchange Access Line or an Equivalent Local Exchange Access Line

Rate:

$0.50 per month per line on local exchange access

Administrative Fees:

The service provider collecting fees or surcharges under this subchapter may retain as an administrative fee an amount equal to:

  • 1% of the total collected for report periods beginning 9909
  • 2% of the total collected for report periods through 9908

(Timely filing is not required, and the administrative fee may be allowed in an audit.)

9-1-1 Emergency Service Fee - Landline Due Date
Period Monthly Quarterly*
Reports due on or after 04-01-00 30 days after last day of month Not allowed
Reports due 09-01-99 through 03-31-00 30 days after last day of month 15 days after end of calendar quarter
Reports due through 08-31-99 60 days after last day of month 15 days after end of calendar quarter

*Quarterly (Rule 255.7 eff. 01-01-96 through 03-31-00)
If service provider collects an average of less than $1000 per month, it may be remitted quarterly on the 15th day following the end of the calendar quarter.

Note: Prior to 09-01-99, the 911 Emergency Service Fee was remitted to the local regional Councils of Government. Beginning on 09-01-99, the reporting was made to the Commission on State Emergency Communication

Tax Calculation:

  • Imposed on each local exchange access line: The 9-1-1 emergency service fee is imposed upon each local exchange access line or equivalent local exchange access line in areas where the 9-1-1 service is operated by a Regional Council of Governments. (see COGs) If a business service user provides residential facilities, each line that terminates at a residential unit, and that is a communication link equivalent to a residential local exchange access line, shall be charged the 911 emergency service fee.
    Note: Definition of Local Exchange Access Line.: The terms "local exchange access line" or "equivalent local exchange access line" mean the physical voice grade telecommunications connection or the cable or broadband transport facilities, or any combination of those facilities, between an end user customer's premises and a service provider's network, that, when the digits 911 are dialed, provides the end user customer access to a public safety answering point through a permissible interconnection to the dedicated 911 network. Each such connection (e.g. individual channel) provided to an end user customer shall constitute a separate "local exchange access line" or "equivalent local exchange access line." A service provider that bills federal subscriber line charges on all its retail lines and services to all its end user customers may use the federal subscriber line charge as an alternative definition and may bill, collect, and remit 911 emergency service fees on that basis. (Rule 255.4, as of February 2005)
  • Partial month service: The fee is imposed on each local access telephone line, and shall be charged in full for each customer that had any service during the month. If the customer had service for only part of the month, the full fee is charged. However, if the customer's line was disconnected and reconnected during the same month, the fee is only due one time.
  • Stated separately on billing: The fee shall be stated separately on the customer's bill, generally referred to as the "9-1-1 Service Fee."
  • Bad Debts: Fees are based upon revenues collected; if based upon revenues billed, a bad debt deduction is allowed. (Rule 255.5).
  • Location of customer: The location of the customer's telephone number is used to determine the district in which the customer resides for reporting of the fee. If the customer is located in a home rule city or Emergency Communication District (ECD) that is not participating in the state-wide plan, the 911 Emergency Service Fee is payable to the City or ECD. If the customer is not located in a home rule city or ECD, the 911 Emergency Service Fee is payable to the Comptroller for allocation to the COGs participating in the state-wide plan. (see "Jurisdiction")
  • Allocation to COGs: Similar to an allocation for local sales tax, receipts from the landline telecommunications connections must be allocated to the COGs in which the customers are located. The service provider must keep this allocation in their records and report the landline emergency service fees by COG. The report form includes a breakdown of the COGs for which the receipts must be reported. This allocation must be retained in scheduling audit adjustments since the allocation of money is made back to the COGs by the Commission on State Emergency Communications (CSEC).

Patricipating Jurisdictions and Councils of Government (COGs)

The CSEC jurisdiction is limited to overseeing 9-1-1 services operated by regional councils of government (COGs), and the Comptroller's auditing responsibility is, therefore, limited to the 9-1-1 Emergency Service Fees reported to the COGs.

COGs are Councils of Government, which are regional planning councils composed of member governments that have joined together to administer programs for aging, transportation, workforce, and to provide 9-1-1 service in 224 of Texas' 254 counties. They have formed 24 COGs statewide, which are:

  1. Alamo Area COG
  2. Ark-Tex COG
  3. Brazos Valley COG
  4. Capital Area Planning Council
  5. Coastal Bend COG
  6. Central Texas COG
  7. Concho Valley COG
  8. Deep East Texas COG
  9. East Texas COG
  10. Golden Crescent Regional Planning Commission
  11. Houston-Galveston Area Council
  12. Heart of Texas COG
  13. Lower Rio Grande Valley Development Council
  14. Middle Rio Grande Development Council
  15. North Central Texas COG
  16. Nortex Regional Planning Commission
  17. Permian Basin Regional Planning Commission
  18. Panhandle Regional Planning Commission
  19. Rio Grand COG
  20. South East Texas Regional Planning Commission
  21. South Plains Association of Governments
  22. South Texas Development Council
  23. Texoma COG
  24. West Central Texas COG

If the telecommunications provider has customers located within any of these 24 COGs, the revenues from these customers must be reported to the Comptroller on Form #54-100, and allocated to the appropriate COGs on the second page of that report.

Non-participating Jurisdictions, Home Rule Cities and Emergency Communication Districts

Within the boundaries of the COGs are a number of home-rule cities that have opted out of the state-wide plan, and they provide their own services and do not participate in the statewide 9-1-1 system. The Commission has no authority over 9-1-1 services provided in these home-rule cities which have opted not to participate, and fees collected in those cities are not reported to the Comptroller.

These 26 Home Rule Cities are:

  1. Addison (Dallas Co.)
  2. Aransas Pass (Aransas Co.)
  3. Cedar Hill (Dallas Co.)
  4. Coppell (Dallas Co.)
  5. Corpus Christi (Nueces Co.) (as of March 2002)
  6. Dallas (Dallas Co.)
  7. DeSoto (Dallas Co.)
  8. Denison (Grayson Co.)
  9. Duncanville (Dallas Co.)
  10. Ennis (Ellis Co.)
  11. Farmers Branch (Dallas Co.)
  12. Garland (Dallas Co.)
  13. Glenn Heights (Dallas Co.)
  14. Highland Park (Dallas Co.)
  15. Hutchins (Dallas Co.)
  16. Kilgore (Gregg Co.)
  17. Lancaster (Dallas Co.)
  18. Longview (Gregg Co.)
  19. Mesquite (Dallas Co.)
  20. Plano (Collin Co.)
  21. Portland (San Patricio Co.)
  22. Richardson (Dallas Co.)
  23. Rowlett (Dallas Co.)
  24. Sherman (Grayson Co.)
  25. University Park (Dallas Co.)
  26. Wylie (Collin Co.)

If the telecommunications customer's address is inside the city limits of one of these home rule cities, the 9-1-1 Emergency Service Fee, set at a rate by the city, should be remitted by the service provider to the home rule city in which the customer resides. These fees are not remitted to the State Comptroller.

There are also 24 Emergency Communication Districts (ECD) that operated 9-1-1 systems before enactment of the Commission's statewide 9-1-1 system. These 24 districts have their own rules, regulations, fees and report forms for customers in their service areas. The Commission has no authority over 9-1-1 services provided in these districts, and fees collected in those districts are not reported to the Comptroller.

These 24 Emergency Communication Districts (ECDs) are:

  1. Abilene/Taylor County
  2. Austin County
  3. Bexar Metro (serves Bexar, Comal and Guadalupe Counties)
  4. Brazos County
  5. Calhoun County
  6. Cameron County
  7. Denco Area
  8. El Paso County
  9. Ector County
  10. Galveston County
  11. Greater Harris County
  12. Henderson County
  13. Howard County
  14. Kerr County
  15. Lubbock County
  16. McLennan County
  17. Medina County
  18. Midland County
  19. Montgomery County
  20. Potter-Randall County
  21. Smith County
  22. Tarrant County
  23. Texas Eastern 911 Network (serves Harrison and Rusk Counties)
  24. Wichita/Wilbarger (serves Wichita and Wilbarger Counties)

If the telecommunications customer's address is inside the boundaries of one of these ECDs, the 9-1-1 Emergency Service Fee, set at a rate by the ECD, should be remitted by the service provider to the ECD in which the customer resides. These fees are not remitted to the State Comptroller.

Note: Fort Bend County withdrew from the state program and joined the Greater Harris 9-1-1 Emergency Network effective 09-01-05. Fees on customer billings prior to 09-01-05 should have been remitted to the Comptroller, while the fees on billings after 09-01-05 are to be remitted to the Greater Harris 9-1-1 Emergency Network.

While the 26 home-rule cities and 24 emergency districts provide 9-1-1 services without State assistance, these local governments represent the state's most populous urban areas where funding is available and the cost per person is low. The Commission's 9-1-1 service areas are generally rural and the cost of providing 9-1-1 service is high.

Allocation of Emergency Service Fee - Landline

When examining the books of a service provider, be aware that they may have customers in the areas provided within the statewide 9-1-1 system, and other customers in one of the home-rule cities or emergency districts providing their own 9-1-1 service. It will be important to determine where the customer is located to determine whether they should be paying the statewide fees (to the Comptroller) or the local fees (to the city or district).

To determine if the customer is in a state program COG, a home-rule city (HRC, or emergency service district (ECD), the proper Regional Planning Commission (RPC) should be contacted. Go to this Internet site to obtain contact information for the RPC:

It may be necessary to first determine the county in which the customer resides. Using the customer's zip code, go to:

USPS - ZIP Code Lookup - Search By Address

and look up the zip code to find the city/county. Then contact the proper RPC to determine what jurisdiction in which the customer is located.

Exclusions/Exemptions from Subtype 92 - Landline

  • Customers located within a home-rule city or Emergency Service District not participating in the statewide program (see "Jurisdiction")
  • A coin-operated or card-operated public telephone (200201804L)
  • Commercial mobile radio service that provides access to a paging or other one-way signaling device (200201804L)
  • Private telecommunications systems (200201804L)
  • Lines to internet service providers for data modem lines used only to provide internet access service and that are not capable of transmitting voice message. Effective 06-18-99 (200308073L, 200201804L)
  • Hotels that charge hotel guests for calls made from their rooms (200203840L)
  • Communication channel suitable only for data transmission (i.e. data lines between banks) (200201804L)
  • State and federal agencies (Health & Safety Code, Section 771.074)
  • Federally chartered credit unions (200306992L)
  • State institutions of higher education outlined in Sec. 61.003, Education Code, except public junior colleges and community colleges. (Rule 252.1).
  • Wireless connections: If providing wireless connections, these charges are to be reported under Subtype 91, 911 Emergency Service Fee - Wireless.
  • Long distance charges: If providing long distance services, these charges are to be reported under Subtype 93, Equalization Surcharge.
  • Taxes or fees collected as reimbursements from the customer, including PUC Gross Receipts Assessment, Telecommunications Infrastructure Fund, etc.

Report Form:

Form #54-100, 9-1-1 Emergency Service Fee Report

Historical Reported Data:

Prior to 09-01-99, this fee was reported by the telecommunications provider directly to the appropriate Regional Council of Government. Effective 09-01-99, the reporting function was moved to the Commission on State Emergency Communication. Effective 01-01-02, the reporting function was moved to the State Comptroller. Examine XIDATA on the fee system for reported amounts after January 1, 2002.

Appropriated to:

Revenue collected under this section is deposited to the 9-1-1 Service Fee Fund and may be appropriated to the emergency medical services and trauma care system fund established by Section 773.121.

Equalization Surcharge (Subtype 93)

Statute Reference:

Section 771.072, Health and Safety Code

TAC Rule 255.2

Chapter 777, Health and Safety Code (Poison Control)

Effective Date:

9-1-1 Equalization Surcharge effective 07-01-88

Poison Control Surcharge added, effective 01-01-94

9-1-1 Equalization Surcharge Rate:
Period Covered Rate
Prior to 09-01-05 0.60%
09-01-05 forward 1%

The rate change applies to customer billings on/after 09-01-05.

Administrative Fees:

The service provider collecting fees or surcharges under this subchapter may retain as an administrative fee an amount equal to

  • 1% of the total amount collected for report periods due on or after 9909
  • 2% of the total amount collected for report periods due through 9908

(Timely filing is not required, and the administrative fee should be deducted in an audit.)

9-1-1 Equalization Surcharge Due Date:
Period Covered Monthly Quarterly
Reports due on or after 04-01-00 30 days after last day of month Not allowed
Reports due 09-01-99 through 03-31-00 30 days after last day of month 15 days after end of calendar quarter
Reports due through 08-31-99 60 days after last day of month 15 days after end of calendar quarter

*Quarterly (Rule 255.7 eff. 01-01-96 through 03-31-00)
If service provider collects an average of less than $1000 per month, it may be remitted quarterly on the 15th day following the end of the calendar quarter.

Note: Prior to 01-01-02, the Commission on State Emergency Communication collected two identical surcharges called the "9-1-1 Equalization Surcharge" and the "Poison Control Surcharge." Two report forms were sent to the Commission to report these surcharges, which had the exact same rate of 0.3% each. When the reporting function was moved to the Comptroller's office effective 01-01-02, the two surcharges were combined into one, called the 9-1-1 Equalization Surcharge, with a rate of 0.6%. (200207232L)

Prior to 01-01-94, the rate for the 9-1-1 Equalization Surcharge was 0.20% of the charges for intrastate long distance. When the Poison Control Surcharge began on 01-01-94, the rate for each surcharge was set at 0.30%.

Tax Calculation:

  • Assessment: The Equalization Surcharge is imposed upon the total amount charged for intrastate long-distance service billed to the customer each billing cycle.
  • Bundling: If the intrastate long distance service amount cannot be separately identified from the total charge for long distance service, the full amount will be taxable for the Surcharge. This includes bulk-minute flat rate plans which include long distance service. Effective 09-01-2003. (200508233L).
  • Total Intrastate calls: The application of the surcharge is based upon the total of intrastate long distance service for the billing period, not on a per-call basis. The tax rate is not to be applied to each call as separate transactions; it is to be applied to the total for the billing cycle.
    Note: Intrastate long distance service is defined as "intrastate interexchange electronic or electrical transmission, conveyance, routing, or reception of sounds, signals, data or information utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, or any other methods now in existence or that may be devised. The storage of data or information for subsequent retrieval, or the processing or reception and processing of data or information intended to change its forms or content are not included in intrastate long distance service." (Rule 255.2)
  • Rounding: Prior to March 1, 2006, when the tax rate is applied to the total of intrastate long distance charges for the billing period, the result is always rounded up to the next whole cent. (200508233L)
    Excel Formula Examples
    Prior to September 1, 2005: "=ROUNDUP(D10*.006,2)"
    September 1, 2005 - February 28, 2006: "=ROUNDUP(D10*.01,2)"
    On or After March 1, 2006: "=ROUND(D10*01,2)"

Effective March 1, 2006, natural rounding is used (in accordance with Tax Code, Section 151.053), so that if the result of the calculation is less than ½ of a cent, round down to the next whole cent, or if the result is ½ cent or more, round up to the next whole cent.

Note effective September 1, 2005, the surcharge rate increased from 0.6 percent to 1.0 percent. The change from rounding up to natural rounding did not take effect until 180 days after the rate change (March 1, 2006). Natural rounding = Fractions of less than one-half cent will be dropped, while fractions of one-half cent or more will be rounded up to the next whole cent.

  • Taxes excluded: This base does not include taxes charged by local, state, and federal authorities, nor shall local, state, or federal taxes be applied to this surcharge.
  • Other telephone service: The surcharge is imposed upon each intrastate long distance call that originates and terminates within the state of Texas. The surcharge also applies to any telephone service used in lieu of long distance, i.e., intrastate WATS, private-line or data-circuit service.
  • Location of customer: The surcharge is imposed on intrastate long-distance calls without regard to the city or county from which they are placed. Therefore, if a customer is in a home-rule city or emergency service district which is not participating in the statewide 9-1-1 program for the Emergency Service Fee, they will be paying the 9-1-1 Emergency Service Fee to the city or district in which they are located, but the Equalization Surcharge will be collected and remitted to the Comptroller (under Subtype 93).
  • Mobile Sourcing Act:Section 771.0735 was added to the Health and Safety Code, effective August 1, 2002, in accordance with the federal law pertaining to the sourcing of mobile telecommunications services. This section of the Health and Safety Code states that the mobile telecommunications services provided in a taxing jurisdiction to a customer, the charges for which are billed by or for the customer's home service provider, shall be deemed to be provided by the customer's home service provider. These charges are then subject to the taxes, charges, or fees by the taxing jurisdiction whose territorial limits include the customer's place of primary use, regardless of where the mobile service originates, terminates, or passes through. Place of primary use is defined in Tax Code, Section 151.061(a) as the customer's residential or business street address (not necessarily the billing address.)
  • Bad debts: Fees are based upon revenues collected; if based upon revenues billed, a bad debt deduction is allowed. (Rule 255.5.)
  • Surcharge separately stated: The surcharge must be stated separately on the customer's bill, either combined or stated separately. If stated separately, they will generally be referred to as the "Texas 9-1-1 Equalization Surcharge" and the "Texas Poison Control Surcharge." If combined, the usual notation is the "Texas 9-1-1/Poison Surcharge."
  • "800" calls are taxable if both the origination point and destination are within Texas and the charges are shown on the customer's invoice
  • Directory assistance charges are taxable if both the origination and destination are in Texas and the charges are shown on the customer's invoice

Exemptions/Exclusions From Subtype 93 - Surcharge

  • Interstate long distance service
  • Coin-operated or card-operated telephones (200201804L)
  • Paging or other non-vocal mobile radio service (200201804L)
  • Lines to internet service providers for data modem lines used only to provide internet access service and that are not capable of transmitting voice message. Effective 06-18-99. (200308073L, 200201804L)
  • Hotels that charge hotel guests for calls made from their rooms (200203840L)
  • State and federal agencies (Sec. 771.074, Health & Safety Code)
  • Federally chartered credit unions (200306992L)
  • State institutions of higher education, as outlined inSec. 61.003, Education Code, except public junior colleges and community colleges. (Rule 252.1.)
  • If providing local exchange service, landline charges are to be reported under Subtype 92, 9-1-1 Emergency Service Fee - Landline.
  • If providing wireless communication, wireless connection charges are to be reported under Subtype 91, 9-1-1 Emergency Service Fee -Wireless.
  • Taxes or fees collected as reimbursements from the customer, including Telecommunications Infrastructure Fund, PUC Gross Receipts Assessment, etc.
  • Installation, equipment rental, repairs and maintenance, etc.
  • Expedite fees, late charges, etc.
  • Private line revenues
  • LAN Service revenues

Report Form: Form #54-102, 9-1-1 Equalization Surcharge Report

Historical Reported Data:

Prior to 01-01-02, the surcharge(s) were reported to the Commission on State Emergency Communication. Effective 01-01-02, the reporting function was moved to the State Comptroller. Examine XIDATA on the fee system for reported amounts after January 1, 2002.

Note: When taxpayers sent the Equalization Surcharge and Poison Control Surcharge in two separate pieces to the Commission, the amounts should have been identical. However, it has been noted on many accounts that the two amounts differed when reported. This abnormality should be examined during an audit and adjustments made as necessary.

Appropriated to:

Revenue collected is to be deposited to the general revenue fund in the state treasury, for distribution to regional planning commissions and poison control centers in accordance with this section of the statute.

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(Revised 05/2008)