The North Carolina Supreme Court ruled in *North Carolina Department of Revenue v. Wireless Center of NC, Inc.* on Dec. 12, 2025, addressing a complex tax dispute over prepaid wireless services that could affect how digital property sales are taxed statewide.
The case centers on whether real-time replenishments sold by Wireless Center of NC, Inc., a North Carolina retailer for Boost Mobile, constitute "prepaid wireless calling service" subject to immediate sales tax collection under the North Carolina Sales and Use Tax Act.
Wireless Center operates as a retailer for Boost Mobile and sells products called real-time replenishments, which function as stored-value cards that customers can later redeem for prepaid wireless calling services or other products from Boost.
The dispute arose after the North Carolina Department of Revenue audited Wireless Center for the period from January 2016 to December 2018. During this audit, the Department concluded that the real-time replenishments constituted "prepaid wireless calling service" under the Tax Act, which imposes sales tax on digital property including prepaid wireless calling services sold by retailers within the state.
Based on this determination, the Department concluded that Wireless Center was responsible for collecting and remitting sales tax on its sale of replenishments at the point of sale when customers initially purchased the stored-value cards.
Wireless Center challenged this interpretation, arguing that because the replenishments function as stored-value cards, any applicable sales tax should not be collected until customers actually redeem the replenishments for prepaid wireless calling service or other products from Boost Mobile.
This distinction is significant because it affects the timing of tax collection and could impact cash flow for retailers and the state's tax revenue recognition. The stored-value card argument suggests that the initial purchase represents only a transfer of funds, with the actual taxable transaction occurring later upon redemption.
The North Carolina Sales and Use Tax Act specifically addresses prepaid wireless calling services because these products can be offered in different forms. The Tax Act defines the characteristics of products that constitute "prepaid wireless calling service" to provide clarity for retailers and tax collectors.
The case was designated as a mandatory complex business case by the Chief Justice pursuant to N.C.G.S. § 7A-45.4(b) and was initially heard by Judge Michael L. Robinson, a Special Superior Court Judge for Complex Business Cases, in Wake County Superior Court.
Judge Robinson entered an opinion and final judgment on June 2, 2023. The case then proceeded to the North Carolina Supreme Court through an appeal pursuant to N.C.G.S. § 7A-27(a)(2). The state's highest court heard oral arguments on Sept. 17, 2024, before issuing its final ruling in December 2025.
The case attracted attention from industry stakeholders, with Dish Wireless LLC filing an amicus curiae brief through counsel Virginia "Jenny" Worthy of Eversheds Sutherland (US) LLP, indicating the broader implications of the ruling for the wireless telecommunications industry.
Attorney General Jeff Jackson represented the state through a team of prosecutors including Assistant Attorneys General Tania X. Laporte-Reverón and Hunter E. Fritz, along with Special Deputy Attorney General Ronald D. Williams II. Wireless Center was represented by Stanton P. Geller of Culp Elliott & Carpenter, P.L.L.C.
Justice Riggs authored the Supreme Court's opinion, though the specific holding and reasoning were not detailed in the available court documents.
The ruling has implications beyond this single retailer, as it establishes precedent for how North Carolina will treat similar stored-value products in the prepaid wireless market. The decision affects the timing of tax collection, which impacts both retailer operations and state revenue streams.
The case reflects broader challenges in digital taxation as traditional tax frameworks adapt to evolving business models in telecommunications and digital services. Prepaid wireless services have become increasingly popular, particularly among consumers seeking budget-friendly mobile options without long-term contracts.
Retailers selling prepaid wireless products must now operate under the clarified framework established by this ruling, which provides certainty about when tax obligations arise in stored-value card transactions.
The Department of Revenue's audit covered a three-year period, suggesting that similar issues may have affected multiple retailers during that timeframe. The ruling provides guidance for ongoing and future audits of businesses selling comparable products.
The case underscores the complexity of applying traditional sales tax concepts to modern digital commerce, where the line between storing value and completing a taxable transaction can be unclear. The Supreme Court's resolution of this dispute provides needed clarity for both tax collectors and businesses operating in North Carolina's digital marketplace.