The general State and applicable local and transit rates of sales and use tax apply to the gross receipts derived from the sale or recharge of prepaid telephone calling service. The tax applies regardless of whether tangible personal property, such as a card or a telephone, is transferred. The tax applies to a service that is sold in conjunction with prepaid wireless calling service. Prepaid wireless calling service is taxable at the point of sale instead of at the point of use and is sourced in accordance with N.C. Gen. Stat. § 105-164.4B. Prepaid telephone calling service taxed under N.C. Gen. Stat. § 105-164.4(a)(4d) is not subject to tax as a telecommunications service.
See the 911 Service Charge for Prepaid Wireless Telecommunications Service webpage for information regarding the 911 service charge.
Gross receipts derived from the sale or recharge of prepaid telephone calling service and the sales and use tax thereon are to be reported to the Department on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.
Technical Information for Prepaid Telephone Calling Service
Sales and Use Tax Bulletins - See Telecommunication Service, Ancillary Service, Prepaid Telephone Calling Service, and Other Related Topics Bulletin