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
1-25 jurisdiction, for each level of taxing jurisdiction, identified by
2-1 one nationwide numeric code. The nationwide standard numeric codes
2-2 shall contain the same number of numeric digits, with each digit or
2-3 combination of digits referring to the same level of taxing
2-4 jurisdiction throughout the United States using a format similar to
2-5 FIPS 55-3 or other appropriate standard approved by the Federation
2-6 of Tax Administrators and the Multistate Tax Commission or their
2-7 successors. Each address shall be provided in standard postal
2-8 format. Such electronic database shall also provide the
2-9 appropriate code for each street address with respect to political
2-10 subdivisions which are not taxing jurisdictions when reasonably
2-11 needed to determine the proper taxing jurisdictions.
2-12 (b) This section applies to state and local sales and use
2-13 taxes administered and computed under this title or Title 3 and to
2-14 which this title or Title 3 applies, including this chapter.
2-15 (c) The federal Mobile Telecommunications Sourcing Act (4
2-16 U.S.C. Sections 116-126) governs the sourcing of charges for mobile
2-17 telecommunications services. In accordance with that Act:
2-18 (1) mobile telecommunications services provided in a
2-19 taxing jurisdiction to a customer, the charges for which are billed
2-20 by or for the customer's home service provider, shall be deemed to
2-21 be provided by the customer's home service provider; and
2-22 (2) all charges for mobile telecommunications services
2-23 that are deemed to be provided by the customer's home service
2-24 provider in accordance with this Act are authorized to be subjected
2-25 to tax, charge, or fee by the taxing jurisdictions whose
2-26 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
4-1 refund or credit any amount of tax erroneously collected from the
4-2 customer. The home service provider shall correct the error and
4-3 refund or credit the amount of tax erroneously collected from the
4-4 customer for a period of up to four years. If the home service
4-5 provider determines that the amount of tax imposed or the
4-6 assignment of place of primary use or taxing jurisdiction is
4-7 correct, the home service provider shall provide a written
4-8 explanation to the customer.
4-9 (f) The procedures prescribed by Subsections (d) and (e) are
4-10 the first course of remedy available to a customer requesting a
4-11 correction of assignment of place of primary use or of taxing
4-12 jurisdiction or a refund of or other compensation for taxes
4-13 erroneously collected by the home service provider.
4-14 (g) The state may provide an electronic database, described
4-15 in Subsection (a)(3), to a home service provider or, if the state
4-16 does not provide such an electronic database to home service
4-17 providers, the designated database provider may provide an
4-18 electronic database to a home service provider.
4-19 (h) The state or the designated database provider that
4-20 provides or maintains an electronic database described in
4-21 Subsection (a)(3) shall provide notice of the availability of the
4-22 then current electronic database, and any subsequent revisions
4-23 thereof, by publication in the manner normally employed by the
4-24 state.
4-25 (i) A home service provider using the data contained in an
4-26 electronic database described in Subsection (a)(3) shall be held
5-1 harmless from any tax, charge, or fee liability that otherwise
5-2 would be due solely as a result of any error or omission in such
5-3 database provided by the state or designated database provider.
5-4 The home service provider shall reflect changes made to such
5-5 database during a calendar quarter not later than 30 days after the
5-6 end of such calendar quarter.
5-7 (j) If neither the state nor the designated database
5-8 provider provides an electronic database as described in Subsection
5-9 (a)(3), a home service provider shall be held harmless from any
5-10 tax, charge, or fee liability in the state that otherwise would be
5-11 due solely as a result of an assignment of a street address to an
5-12 incorrect taxing jurisdiction if, subject to Subsection (n), the
5-13 home service provider employs an enhanced zip code to assign each
5-14 street address to a specific taxing jurisdiction for each level of
5-15 taxing jurisdiction and exercises due diligence at each level of
5-16 taxing jurisdiction to ensure that each such street address is
5-17 assigned to the correct taxing jurisdiction. If an enhanced zip
5-18 code overlaps boundaries of taxing jurisdictions of the same level,
5-19 the home service provider must designate one specific jurisdiction
5-20 within such enhanced zip code for use in taxing the activity for
5-21 such enhanced zip code for each level of taxing jurisdiction. Any
5-22 enhanced zip code assignment changed in accordance with Subsection
5-23 (n) is deemed to be in compliance with this section. For purposes
5-24 of this section, there is a rebuttable presumption that a home
5-25 service provider has exercised due diligence if such home service
5-26 provider demonstrates that it has:
6-1 (1) expended reasonable resources to implement and
6-2 maintain an appropriately detailed electronic database of street
6-3 address assignments to taxing jurisdictions;
6-4 (2) implemented and maintained reasonable internal
6-5 controls to promptly correct misassignments of street addresses to
6-6 taxing jurisdictions; and
6-7 (3) used all reasonably obtainable and usable data
6-8 pertaining to municipal annexations, incorporations,
6-9 reorganizations, and any other changes in jurisdictional boundaries
6-10 that materially affect the accuracy of such database.
6-11 (k) Subsection (j) applies to a home service provider that
6-12 is in compliance with the requirements of Subsection (j), if an
6-13 electronic database as defined in Subsection (a)(3) is not provided
6-14 until the later of:
6-15 (1) 18 months after the nationwide standard numeric
6-16 code described in Subsection (a)(3) has been approved by the
6-17 Federation of Tax Administrators and the Multistate Tax Commission;
6-18 or
6-19 (2) 6 months after the state or a designated database
6-20 provider in the state provides such database as prescribed in
6-21 Subsection (a)(3).
6-22 (l) A home service provider shall be responsible for
6-23 obtaining and maintaining the customer's place of primary use as
6-24 defined in Subsection (a)(2). Subject to Subsection (n), and if
6-25 the home service provider's reliance on information provided by its
6-26 customer is in good faith, a taxing jurisdiction shall:
7-1 (1) allow a home service provider to rely on the
7-2 applicable residential or business street address supplied by the
7-3 home service provider's customer; and
7-4 (2) not hold a home service provider liable for any
7-5 additional taxes, charges, or fees based on a different
7-6 determination of the place of primary use for taxes, charges, or
7-7 fees that are customarily passed on to the customer as a separate
7-8 itemized charge.
7-9 (m) Except as provided in Subsection (n), a taxing
7-10 jurisdiction shall allow a home service provider to treat the
7-11 address used by the home service provider for tax purposes for any
7-12 customer under a service contract or agreement in effect two years
7-13 after the date of the enactment of the Mobile Telecommunications
7-14 Sourcing Act (4 U.S.C. Sections 116-126) as that customer's place
7-15 of primary use for the remaining term of such service contract or
7-16 agreement, excluding any extension or renewal of such service
7-17 contract or agreement, for purposes of determining the taxing
7-18 jurisdictions to which taxes, charges, or fees on charges for
7-19 mobile telecommunications services are remitted.
7-20 (n) The state may:
7-21 (1) determine that the address used for purposes of
7-22 determining the taxing jurisdictions to which taxes, charges, or
7-23 fees for mobile telecommunications services are remitted does not
7-24 meet the definition of place of primary use under Subsection (a)(2)
7-25 and give binding notice to the home service provider to change the
7-26 place of primary use on a prospective basis from the date of notice
8-1 of determination. Before the state gives such notice of
8-2 determination, the customer shall be given an opportunity to
8-3 demonstrate in accordance with applicable state administrative
8-4 procedures that the address is the customer's place of primary use;
8-5 and
8-6 (2) determine that the assignment of a taxing
8-7 jurisdiction by a home service provider under Subsection (j) does
8-8 not reflect the correct taxing jurisdiction and give binding notice
8-9 to the home service provider to change the assignment on a
8-10 prospective basis from the date of notice of determination. The
8-11 home service provider shall be given an opportunity to demonstrate
8-12 in accordance with applicable state administrative procedures that
8-13 the assignment reflects the correct taxing jurisdiction.
8-14 (o)(1) If a taxing jurisdiction does not otherwise subject
8-15 charges for mobile telecommunications services to taxation and if
8-16 these charges are aggregated with and not separately stated from
8-17 charges that are subject to taxation, then the charges for
8-18 nontaxable mobile telecommunications services may be subject to
8-19 taxation unless the home service provider can reasonably identify
8-20 charges not subject to such tax, charge, or fee from its books and
8-21 records that are kept in the regular course of business.
8-22 (2) If a taxing jurisdiction does not subject charges
8-23 for mobile telecommunications services to taxation, a customer may
8-24 not rely upon the nontaxability of charges for mobile
8-25 telecommunications services unless the customer's home service
8-26 provider separately states the charges for nontaxable mobile
9-1 telecommunications services from taxable charges or the home
9-2 service provider elects, after receiving a written request from the
9-3 customer in the form required by the provider, to provide
9-4 verifiable data based upon the home service provider's books and
9-5 records that are kept in the regular course of business that
9-6 reasonably identifies the nontaxable charges.
9-7 SECTION 2. Subsection (g), Section 321.203, Tax Code, is
9-8 amended to read as follows:
9-9 (g) The sale of telecommunications services is consummated
9-10 at the location of the telephone or other telecommunications device
9-11 from which the call or other transmission originates, unless the
9-12 point of origin cannot be determined, in which case the sale is at
9-13 the address to which the call is billed. However, the sale of
9-14 mobile telecommunications services is consummated in accordance
9-15 with the provisions of Section 151.061.
9-16 SECTION 3. Subsection (g), Section 323.203, Tax Code, is
9-17 amended to read as follows:
9-18 (g) The sale of telecommunications services is consummated
9-19 at the location of the telephone or other telecommunications device
9-20 from which the call or other transmission originates, unless the
9-21 point of origin cannot be determined, in which case the sale is at
9-22 the address to which the call is billed. However, the sale of
9-23 mobile telecommunications services is consummated in accordance
9-24 with the provisions of Section 151.061.
9-25 SECTION 4. Subchapter D, Chapter 771, Health and Safety
9-26 Code, is amended by adding Section 771.0735 to read as follows:
10-1 Sec. 771.0735. SOURCING OF CHARGES FOR MOBILE
10-2 TELECOMMUNICATIONS SERVICES. The federal Mobile Telecommunications
10-3 Sourcing Act (4 U.S.C. Sections 116-126) governs the sourcing of
10-4 charges for mobile telecommunications services. In accordance with
10-5 that Act:
10-6 (1) mobile telecommunications services provided in a
10-7 taxing jurisdiction to a customer, the charges for which are billed
10-8 by or for the customer's home service provider, shall be deemed to
10-9 be provided by the customer's home service provider;
10-10 (2) all charges for mobile telecommunications services
10-11 that are deemed to be provided by the customer's home service
10-12 provider in accordance with the Act are authorized to be subjected
10-13 to tax, charge, or fee by the taxing jurisdictions whose
10-14 territorial limits encompass the customer's place of primary use,
10-15 regardless of where the mobile telecommunications services
10-16 originate, terminate, or pass through, and no other taxing
10-17 jurisdiction may impose taxes, charges, or fees on charges for such
10-18 mobile telecommunications services; and
10-19 (3) the fee imposed on wireless telecommunications
10-20 bills shall be administered in accordance with Section 151.061, Tax
10-21 Code.
10-22 SECTION 5. This Act takes effect August 1, 2002, provided
10-23 that the amendments made by this Act with respect to tax
10-24 liabilities shall apply only to revenues from customer bills issued
10-25 on or after August 1, 2002. A tax assessed or charge, fee, or
10-26 assessment imposed before August 1, 2002, is governed by the law in
11-1 effect on the date the tax was assessed or the charge, fee, or
11-2 assessment was imposed, and that law is continued in effect for
11-3 that purpose.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1497 passed the Senate on
April 26, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1497 passed the House on
May 11, 2001, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor