LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                                May 2, 2001
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1497  by Ellis, Rodney (Relating to the sourcing of
               charges for mobile telecommunications services.), As
               Engrossed
  
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*  No fiscal implication to the State is anticipated.                    *
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The bill would amend Chapter 151 of the Tax Code, concerning the sourcing
of state and local sales taxation of mobile telecommunications services.
The bill would stipulate that the federal Mobile Telecommunications
Sourcing Act (4 U.S.C. Sections 116-126) governs the sourcing of charges
for mobile telecommunications services.

The bill would apply to state and local sales and use taxes administered
and computed under Title 2 or Title 3 of the Tax Code, and to which these
titles apply.  The bill also would apply to the 9-1-1 emergency service
fee imposed on wireless telecommunications under Chapter 771 of the
Health and Safety Code.

The bill would provide procedures and remedies for customers to correct
any erroneous collection of taxes and fees under the federal act.

The bill would allow the state or a designated database provider to
maintain and provide to home service providers, as defined in the bill,
an electronic database of street address assignments to taxing
jurisdictions.

The bill would take effect August 1, 2002.

Methodology

Telecommunications services, including local and long-distance wireline
and wireless (mobile) telecommunications services, are taxable under the
state sales and use tax and may be taxed by certain units of local
government.  Telecommunications services are also subject to the state
Telecommunications Infrastructure Fund (TIF) assessment under Section
57.043 of the Utilities Code.

Under current state law, long-distance telephone calls made from wireline
and wireless telephones are subject to sales tax if they originate from
and are billed to a telephone number or billing or service address within
Texas.  Under the federal act, mobile telecommunications services are to
be taxed by the jurisdiction where the customer primarily uses the
services, irrespective of where the mobile telecommunications services
originate, terminate, or pass through.

As federal law is preeminent, the state will follow federal sourcing
provisions for mobile telecommunications services beginning on August 1,
2002, even in instances where state law differs from federal law.

Note:  The bill does not specify which state agency would be responsible
for maintaining and providing the electronic database, if the state
provided the database.
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, SM