77R11511 E
By Oliveira H.B. No. 3595
Substitute the following for H.B. No. 3595:
By Ritter C.S.H.B. No. 3595
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the sourcing of charges for mobile telecommunications
1-3 services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter C, Chapter 151, Tax Code, is amended
1-6 by adding Section 151.061 to read as follows:
1-7 Sec. 151.061. SOURCING OF CHARGES FOR MOBILE
1-8 TELECOMMUNICATIONS SERVICES. (a) In this section:
1-9 (1) "Home service provider" means the facilities-based
1-10 carrier or reseller with which the customer contracts for the
1-11 provision of mobile telecommunications services.
1-12 (2) "Place of primary use" means the street address
1-13 that is representative of where the customer's use of the mobile
1-14 telecommunications service primarily occurs. That location must be
1-15 the residential street address or the primary business street
1-16 address of the customer that is within the licensed service area of
1-17 the home service provider.
1-18 (3) "Electronic database" means a database provided by
1-19 the state or by a designated database provider to home service
1-20 providers. Such electronic database shall, allowing for de minimis
1-21 deviations, designate for each street address in the state,
1-22 including to the extent practical, any multiple postal street
1-23 addresses applicable to one street location, the appropriate taxing
1-24 jurisdictions, and the appropriate code for each taxing
2-1 jurisdiction, for each level of taxing jurisdiction, identified by
2-2 one nationwide numeric code. The nationwide standard numeric codes
2-3 shall contain the same number of numeric digits with each digit or
2-4 combination of digits referring to the same level of taxing
2-5 jurisdiction throughout the United States using a format similar to
2-6 FIPS 55-3 or other appropriate standard approved by the Federation
2-7 of Tax Administrators and the Multistate Tax Commission, or their
2-8 successors. Each address shall be provided in standard postal
2-9 format. Such electronic database shall also provide the appropriate
2-10 code for each street address with respect to political subdivisions
2-11 which are not taxing jurisdictions when reasonably needed to
2-12 determine the proper taxing jurisdictions.
2-13 (b) This section applies to state and local sales and use
2-14 taxes administered and computed under this title or Title 3 and to
2-15 which this title or Title 3 applies, including this chapter.
2-16 (c) The federal Mobile Telecommunications Sourcing Act (4
2-17 U.S.C. Sections 116-126) governs the sourcing of charges for mobile
2-18 telecommunications services. In accordance with that Act:
2-19 (1) mobile telecommunications services provided in a
2-20 taxing jurisdiction to a customer, the charges for which are billed
2-21 by or for the customer's home service provider, shall be deemed to
2-22 be provided by the customer's home service provider; and
2-23 (2) all charges for mobile telecommunications services
2-24 that are deemed to be provided by the customer's home service
2-25 provider in accordance with this Act are authorized to be subjected
2-26 to tax, charge, or fee by the taxing jurisdictions whose
2-27 territorial limits encompass the customer's place of primary use,
3-1 regardless of where the mobile telecommunications services
3-2 originate, terminate, or pass through, and no other taxing
3-3 jurisdiction may impose taxes, charges, or fees on charges for such
3-4 mobile telecommunications services.
3-5 (d) If a customer believes that an amount of tax or an
3-6 assignment of place of primary use or taxing jurisdiction included
3-7 on a billing is erroneous, the customer shall notify the home
3-8 service provider in writing. The customer shall include in the
3-9 written notification:
3-10 (1) the customer's street address for the customer's
3-11 place of primary use;
3-12 (2) the account name and number for which the customer
3-13 requests the correction;
3-14 (3) a description of the error asserted by the
3-15 customer; and
3-16 (4) any other information that the home service
3-17 provider reasonably requires to process the request.
3-18 (e) Not later than the 60th day after the date the home
3-19 service provider receives a request under Subsection (d), the home
3-20 service provider shall review the provider's records and the
3-21 electronic database or enhanced zip code to determine the correct
3-22 amount of the tax imposed or the assignment of the customer's place
3-23 of primary use or taxing jurisdiction, as appropriate. If the home
3-24 service provider determines that the amount of tax imposed or the
3-25 assignment of place of primary use or taxing jurisdiction is
3-26 incorrect, the home service provider shall correct the error and
3-27 refund or credit any amount of tax erroneously collected from the
4-1 customer. The home service provider shall correct the error and
4-2 refund or credit the amount of tax erroneously collected from the
4-3 customer for a period of up to four years. If the home service
4-4 provider determines that the amount of tax imposed or the
4-5 assignment of place of primary use or taxing jurisdiction is
4-6 correct, the home service provider shall provide a written
4-7 explanation to the customer.
4-8 (f) The procedures prescribed by Subsections (d) and (e) are
4-9 the first course of remedy available to a customer requesting a
4-10 correction of assignment of place of primary use or of taxing
4-11 jurisdiction or a refund of or other compensation for taxes
4-12 erroneously collected by the home service provider.
4-13 (g) The state may provide an electronic database, described
4-14 in Subsection (a)(3), to a home service provider or, if the state
4-15 does not provide such an electronic database to home service
4-16 providers, the designated database provider may provide an
4-17 electronic database to a home service provider.
4-18 (h) The state or the designated database provider that
4-19 provides or maintains an electronic database described in
4-20 Subsection (a)(3) shall provide notice of the availability of the
4-21 then current electronic database, and any subsequent revisions
4-22 thereof, by publication in the manner normally employed by the
4-23 state.
4-24 (i) A home service provider using the data contained in an
4-25 electronic database described in Subsection (a)(3) shall be held
4-26 harmless from any tax, charge, or fee liability that otherwise
4-27 would be due solely as a result of any error or omission in such
5-1 database provided by the state or designated database provider.
5-2 The home service provider shall reflect changes made to such
5-3 database during a calendar quarter not later than 30 days after the
5-4 end of such calendar quarter.
5-5 (j) If neither the state nor the designated database
5-6 provider provides an electronic database as described in Subsection
5-7 (a)(3), a home service provider shall be held harmless from any
5-8 tax, charge, or fee liability in the state that otherwise would be
5-9 due solely as a result of an assignment of a street address to an
5-10 incorrect taxing jurisdiction if, subject to Subsection (n), the
5-11 home service provider employs an enhanced zip code to assign each
5-12 street address to a specific taxing jurisdiction for each level of
5-13 taxing jurisdiction and exercises due diligence at each level of
5-14 taxing jurisdiction to ensure that each such street address is
5-15 assigned to the correct taxing jurisdiction. If an enhanced zip
5-16 code overlaps boundaries of taxing jurisdictions of the same level,
5-17 the home service provider must designate one specific jurisdiction
5-18 within such enhanced zip code for use in taxing the activity for
5-19 such enhanced zip code for each level of taxing jurisdiction. Any
5-20 enhanced zip code assignment changed in accordance with Subsection
5-21 (n) is deemed to be in compliance with this section. For purposes
5-22 of this section, there is a rebuttable presumption that a home
5-23 service provider has exercised due diligence if such home service
5-24 provider demonstrates that it has:
5-25 (1) expended reasonable resources to implement and
5-26 maintain an appropriately detailed electronic database of street
5-27 address assignments to taxing jurisdictions;
6-1 (2) implemented and maintained reasonable internal
6-2 controls to promptly correct misassignments of street addresses to
6-3 taxing jurisdictions; and
6-4 (3) used all reasonably obtainable and usable data
6-5 pertaining to municipal annexations, incorporations,
6-6 reorganizations, and any other changes in jurisdictional boundaries
6-7 that materially affect the accuracy of such database.
6-8 (k) Subsection (j) applies to a home service provider that
6-9 is in compliance with the requirements of Subsection (j), if an
6-10 electronic database as defined in Subsection (a)(3) is not provided
6-11 until the later of:
6-12 (1) 18 months after the nationwide standard numeric
6-13 code described in Subsection (a)(3) has been approved by the
6-14 Federation of Tax Administrators and the Multistate Tax Commission;
6-15 or
6-16 (2) 6 months after the state or a designated database
6-17 provider in the state provides such database as prescribed in
6-18 Subsection (a)(3).
6-19 (l) A home service provider shall be responsible for
6-20 obtaining and maintaining the customer's place of primary use as
6-21 defined in Subsection (a)(2). Subject to Subsection (n), and if
6-22 the home service provider's reliance on information provided by its
6-23 customer is in good faith, a taxing jurisdiction shall:
6-24 (1) allow a home service provider to rely on the
6-25 applicable residential or business street address supplied by the
6-26 home service provider's customer; and
6-27 (2) not hold a home service provider liable for any
7-1 additional taxes, charges, or fees based on a different
7-2 determination of the place of primary use for taxes, charges, or
7-3 fees that are customarily passed on to the customer as a separate
7-4 itemized charge.
7-5 (m) Except as provided in Subsection (n), a taxing
7-6 jurisdiction shall allow a home service provider to treat the
7-7 address used by the home service provider for tax purposes for any
7-8 customer under a service contract or agreement in effect two years
7-9 after the date of the enactment of the Mobile Telecommunications
7-10 Sourcing Act (4 U.S.C. Sections 116-126) as that customer's place
7-11 of primary use for the remaining term of such service contract or
7-12 agreement, excluding any extension or renewal of such service
7-13 contract or agreement, for purposes of determining the taxing
7-14 jurisdictions to which taxes, charges, or fees on charges for
7-15 mobile telecommunications services are remitted.
7-16 (n) The state may:
7-17 (1) determine that the address used for purposes of
7-18 determining the taxing jurisdictions to which taxes, charges, or
7-19 fees for mobile telecommunications services are remitted does not
7-20 meet the definition of place of primary use in Subsection (a)(3)
7-21 and give binding notice to the home service provider to change the
7-22 place of primary use on a prospective basis from the date of notice
7-23 of determination. Before the state gives such notice of
7-24 determination, the customer shall be given an opportunity to
7-25 demonstrate in accordance with applicable state administrative
7-26 procedures that the address is the customer's place of primary use;
7-27 and
8-1 (2) determine that the assignment of a taxing
8-2 jurisdiction by a home service provider under Subsection (j) does
8-3 not reflect the correct taxing jurisdiction and give binding notice
8-4 to the home service provider to change the assignment on a
8-5 prospective basis from the date of notice of determination. The
8-6 home service provider shall be given an opportunity to demonstrate
8-7 in accordance with applicable state administrative procedures that
8-8 the assignment reflects the correct taxing jurisdiction.
8-9 (o)(1) If a taxing jurisdiction does not otherwise subject
8-10 charges for mobile telecommunications services to taxation and if
8-11 these charges are aggregated with and not separately stated from
8-12 charges that are subject to taxation, then the charges for
8-13 nontaxable mobile telecommunications services may be subject to
8-14 taxation unless the home service provider can reasonably identify
8-15 charges not subject to such tax, charge, or fee from its books and
8-16 records that are kept in the regular course of business.
8-17 (2) If a taxing jurisdiction does not subject charges
8-18 for mobile telecommunications services to taxation, a customer may
8-19 not rely upon the nontaxability of charges for mobile
8-20 telecommunications services unless the customer's home service
8-21 provider separately states the charges for nontaxable mobile
8-22 telecommunications services from taxable charges or the home
8-23 service provider elects, after receiving a written request from the
8-24 customer in the form required by the provider, to provide
8-25 verifiable data based upon the home service provider's books and
8-26 records that are kept in the regular course of business that
8-27 reasonably identifies the nontaxable charges.
9-1 SECTION 2. Section 321.203(g), Tax Code, is amended to read
9-2 as follows:
9-3 (g) The sale of telecommunications services is consummated
9-4 at the location of the telephone or other telecommunications device
9-5 from which the call or other transmission originates, unless the
9-6 point of origin cannot be determined, in which case the sale is at
9-7 the address to which the call is billed. However, the sale of
9-8 mobile telecommunications services is consummated in accordance
9-9 with the provisions of Section 151.061.
9-10 SECTION 3. Section 323.203(g), Tax Code, is amended to read
9-11 as follows:
9-12 (g) The sale of telecommunications services is consummated
9-13 at the location of the telephone or other telecommunications device
9-14 from which the call or other transmission originates, unless the
9-15 point of origin cannot be determined, in which case the sale is at
9-16 the address to which the call is billed. However, the sale of
9-17 mobile telecommunications services is consummated in accordance
9-18 with the provisions of Section 151.061.
9-19 SECTION 4. Subchapter D, Chapter 771, Health and Safety
9-20 Code, is amended by adding Section 771.0735 to read as follows:
9-21 Sec. 771.0735. SOURCING OF CHARGES FOR MOBILE
9-22 TELECOMMUNICATIONS SERVICES. The federal Mobile Telecommunications
9-23 Sourcing Act (4 U.S.C. Sections 116-126) governs the sourcing of
9-24 charges for mobile telecommunications services. In accordance with
9-25 that Act:
9-26 (1) mobile telecommunications services provided in a
9-27 taxing jurisdiction to a customer, the charges for which are billed
10-1 by or for the customer's home service provider, shall be deemed to
10-2 be provided by the customer's home service provider;
10-3 (2) all charges for mobile telecommunications services
10-4 that are deemed to be provided by the customer's home service
10-5 provider in accordance with this Act are authorized to be subjected
10-6 to tax, charge, or fee by the taxing jurisdictions whose
10-7 territorial limits encompass the customer's place of primary use,
10-8 regardless of where the mobile telecommunications services
10-9 originate, terminate, or pass through, and no other taxing
10-10 jurisdiction may impose taxes, charges, or fees on charges for such
10-11 mobile telecommunications services; and
10-12 (3) the fee imposed on wireless telecommunications
10-13 bills shall be administered in accordance with Section 151.061, Tax
10-14 Code.
10-15 SECTION 5. This Act takes effect September 1, 2001, provided
10-16 that the amendments made by this Act with respect to tax
10-17 liabilities shall apply only to revenues from customer bills issued
10-18 on or after August 1, 2002. A tax assessed or charge, fee, or
10-19 assessment imposed before August 1, 2002, is governed by the law in
10-20 effect on the date the tax was assessed or the charge, fee, or
10-21 assessment was imposed, and that law is continued in effect for
10-22 that purpose.