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