065.01 Intrastate telephone and telegraph service, cellular telephone service, wireless paging service, and wireless radio service are taxable whether furnished by public or private corporations or enterprises. This would also include those services which are sold by mutual companies.

065.01A Intrastate services which are taxable include local exchange telephone service charges, intrastate message toll charges, cellular telephone service, wireless paging service, and wireless radio service, and the gross receipts from coin-operated telephones, 800 service, and 900 service, when such receipts are for intrastate service.

065.01B Sales of switching service and toll service made to service station customers shall be considered sales at retail for telephone use. As such, the telephone company must collect the sales tax from the service station customers for rendering such switching service.

065.01C Charges made to hotels, motels, similar accommodations, or any other company by telephone companies for telephone service, including telephone service that may be rebilled by the telephone company customer to another party, are taxable. (Reg-1-046, Hotels, Lodgings, and Accommodations.)

065.01D Sales of telephone directories or directory covers to Nebraska customers by telephone companies are also taxable.

065.01E Gross receipts does not include payments between telephone service providers, as defined in federal law, for division of revenue, settlements, carrier access charges, or provision of telephone communication service.

065.01F Gross receipts does include the sale of a prepaid telephone calling arrangement but does not include the payments to a telephone service provider attributable to services rendered using a prepaid telephone calling arrangement. A prepaid telephone calling arrangement shall mean the right to exclusively purchase telecommunications service that is paid for in advance that enables the origination of calls using an access number or authorization code, whether manually or electronically dialed.

065.01G When the purchaser is not using any portion of the purchased telephone communication services, such services may be purchased for resale.

065.02 The tax on intrastate toll message charges shall be computed on the gross amount of the total bill rendered, less any interstate telephone and telegram charges. The amount of the tax computed on the intrastate toll message charges must be indicated separately on the toll statement. In computing the Nebraska sales tax, the federal telecommunications excise tax, the Nebraska 911 surcharge, the Nebraska surcharge for hearing impaired, and the Nebraska Universal Service Fund surcharge, which have been billed to customers shall be excluded from the sales tax.

065.02A The tax on local exchange telephone service, whether on a flat or measured basis, shall be computed on each total amount billed by the telephone company for such service.

065.02B Telegrams charged to the account of a telephone subscriber and billed by the telephone company must include the tax as computed by the telegraph company and must appear on the bill in an amount equal to the regular charge for the telegrams plus the sales tax. The tax on these telegrams must be remitted by the telegraph company.

065.02C Intrastate long distance calls provided by a different communication service provider that are charged to the account of a telephone subscriber and billed by the telephone company must include the tax as computed by the telephone company and must appear on the bill in an amount equal to the regular charge for the phone call plus the sales tax. The tax on these telephone calls must be remitted by the telephone company.

065.03 Any company furnishing telephone or telegraph service is required to pass the sales tax on to the consumer. In cases where a charge is made for both intrastate and interstate exchange service, and the interstate exchange service is not charged separately or cannot be readily determined, the sales tax shall apply to the total charge.

065.04 Persons engaged in providing telephone and telegraph communications and services are considered to be the consumers of materials, supplies, and other items which they use in providing their services. As such, they must pay the sales and use tax to the suppliers at the time of purchase.

065.05 Charges made by a telephone company to the customer for installations, service connections, move and change charges, service upgrades, optional features like call waiting or voice mail, and construction costs constitute gross receipts for telephone service and are taxable.

065.06 All interstate toll message charges are exempt from the Nebraska sales tax, as are those gross receipts from coin-operated telephones which are for interstate toll services. There is no tax on private lines maintained by one or more persons if there is no sale of telephone or telegraph service to the public. A private line does not include a line provided by a telephone company that is routed through a switching facility.

065.07 Services rendered to the United States government and to federal agencies and instrumentalities, including those federal corporations enumerated in Reg-1-072, United States Government and Federal Corporations, are exempt. Sales to purchasers enumerated in Reg-1-012.02C are exempt.

(Sections 77-2702.07, 77-2702.14, and 77-2703(1), R.R.S. 2003. October 1, 2003.)