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 ************************************************************************** * No fiscal implication to the State is anticipated. * ************************************************************************** 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