LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 21, 2001
  
  
          TO:  Honorable Rodney Ellis, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1497  by Ellis, Rodney (Relating to the sourcing of
               state and local taxation of mobile telecommunications
               services.), As Introduced
  
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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 and relates to the
sourcing of state and local sales taxation of mobile telecommunications
services.  The bill would specify the Legislature's intent to implement
the provisions of the federal Mobile Telecommunications Sourcing Act.
The bill would apply to the computation of taxes and fees under Sections
151.0103 and 321.203 of the Tax Code.  It would also apply to those taxes
in Section 451.404 of the Transportation Code and Section 56.107 of the
Utility Code.  The bill would provide procedures and remedies for
customers to correct any erroneous collection of taxes and fees under the
federal Act.

Currently, 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.  Further, long-distance telephone
calls made from both 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.

The bill would take effect September 1, 2001, and would apply only to
charges on or revenue from customer bills issued after August 1, 2002. 

Note:  The bill's provisions would not apply to local sales and use taxes
under Chapters 322, 323, 324, or 325 of the Tax Code.  The bill does not
reference the computation of the TIF assessment under Chapter 57 of the
Utilities Code, which utilizes the tax collected under Chapter 151 (the
state sales tax).
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, WP, SM