Ezel / Tax Rulings / NE
NE 01-99-1 Sales and Use Tax 1999-04-22

Is the Nebraska Universal Service Fund (NUSF) surcharge on a phone bill subject to Nebraska sales tax?

Short answer: No — the NUSF surcharge is not subject to sales tax. Under Revenue Ruling 01-99-1, the Nebraska Universal Service Fund (NUSF) surcharge assessed against certain retail, end-user telecommunications revenues is not included in the gross receipts subject to sales tax. The fund is created under Neb. Rev. Stat. §86-1405, and the surcharge was established by the Nebraska Public Service Commission's January 13, 1999 findings and conclusions on Application No. C-1628 (modified February 2 and March 9, 1999). The surcharge is imposed on intrastate telecommunication services billed to retail end-users, must be separately stated on the customer's bill, and is remitted by the vendor to the Public Service Commission as part of the Universal Service Fund. Like the Nebraska 911 surcharge and the surcharge for the hearing impaired, it is not part of a telecommunications vendor's taxable gross receipts.

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This page answers the general question as of 1999. Ezel answers yours, under current Nebraska tax law, with citations.

Currency note: this ruling is from 1999
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
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Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it.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

This ruling answers a narrow but recurring telecom-billing question: is the Nebraska Universal Service Fund (NUSF) surcharge that appears on a phone bill itself subject to sales tax? The answer is no.

What the NUSF surcharge is. The Nebraska Universal Service Fund exists under Neb. Rev. Stat. §86-1405 to help make telecommunications services available to everyone in Nebraska. To finance it, the Nebraska Public Service Commission issued findings and conclusions dated January 13, 1999 on Application No. C-1628 (modified February 2, 1999 and March 9, 1999) creating the NUSF surcharge. It is imposed on intrastate telecommunication services billed to retail end-users, must be separately stated on the customer's bill, and is remitted by the vendor to the Public Service Commission as part of the Universal Service Fund.

The holding. The NUSF surcharge is not included in the gross receipts subject to Nebraska sales tax. The Department treats it like the Nebraska 911 surcharge and the Nebraska surcharge for the hearing impaired — pass-through regulatory charges that are not part of a telecommunications vendor's taxable gross receipts.

What this means for you

A telecommunications provider billing Nebraska customers

Don't fold the separately stated NUSF surcharge into the taxable gross receipts on which you compute sales tax. It's a pass-through you collect and remit to the Public Service Commission, and it's treated the same way as the 911 and hearing-impaired surcharges.

A business or consumer reading a phone bill

The NUSF line item isn't itself taxed for Nebraska sales-tax purposes — sales tax should be computed on the underlying taxable telecommunications charges, not on the surcharge.

Common questions

Q: Is the NUSF surcharge taxable under Nebraska sales tax?
A: No — it is not included in the taxable gross receipts of a telecommunications vendor.

Q: Why is it treated that way?
A: It's a separately stated regulatory surcharge remitted to the Public Service Commission, comparable to the Nebraska 911 surcharge and the surcharge for the hearing impaired, which are likewise not subject to sales tax.

Q: Who created the surcharge?
A: The Nebraska Public Service Commission, by its January 13, 1999 findings on Application No. C-1628 (modified February 2 and March 9, 1999), to finance the fund established under Neb. Rev. Stat. §86-1405.

Citations and references

  • Neb. Rev. Stat. §86-1405 — creates the Nebraska Universal Service Fund.
  • Nebraska Public Service Commission, Application No. C-1628 — the January 13, 1999 findings (modified February 2 and March 9, 1999) that created the NUSF surcharge.
  • Nebraska 911 surcharge; surcharge for the hearing impaired — the comparable surcharges that are likewise not part of taxable gross receipts.

Source

Original ruling text

REVENUE RULING 1-99-1
April 22, 1999
Sales Tax - Surcharge levied on retail, end-user revenue from telecommunication services. THE
NEBRASKA UNIVERSAL SERVICE FUND (NUSF) SURCHARGE ASSESSED AGAINST
CERTAIN RETAIL, END-USER REVENUES IS NOT INCLUDED IN GROSS RECEIPTS
SUBJECT TO SALES TAX.
Advice has been requested as to whether the Nebraska Universal Service Fund (NUSF) surcharge
should be included in the gross receipts of a retailer providing telecommunication services within
Nebraska.
The Nebraska Universal Service Fund is created pursuant to Neb. Rev. Stat. §86-1405 for the
purpose of providing assistance necessary to make telecommunications services available to all
persons in Nebraska. In order to finance this fund, the Nebraska Public Service Commission issued
a findings and conclusions dated January 13, 1999, on Application No. C-1628, which created the
NUSF surcharge. Modifications to the order were issued by the commission on February 2, 1999,
and March 9, 1999. The NUSF surcharge is imposed on intrastate telecommunication services
billed to retail end-users. It is required to be separately stated on the customer’s bill. It is remitted
by the vendor to the Public Service Commission and becomes a part of the Universal Service
Fund.
The NUSF surcharge is similar to the Nebraska 911 surcharge and the Nebraska surcharge for
hearing impaired. Like these surcharges, it is not subject to Nebraska sales tax and is not a part of
the taxable gross receipts of a vendor providing telecommunication services..
APPROVED:

Mary Jane Egr
State Tax Commissioner
April 22, 1999

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

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