Prepaid Phone Cards Are Tax Exempt, North Carolina Justices Told

North Carolina unlawfully imposed sales tax on prepaid phone cards because the stored value could be used to purchase tax-exempt goods and services, a retailer told the state’s high court.

Wireless Center of NC Inc. argued that the prepaid cards it sold, which were credited to customers’ Boost Mobile accounts, could be used to purchase internet access services that are exempt from taxation under North Carolina General Statutes § 105-164.3 and the federal Internet Tax Freedom Act.

The prepaid cards can be used to purchase mobile internet services separate from telecommunication services, the Dec. 13 brief said. “Customers may ...