H.R. 4391 (enr) To amend title 4 of the United States Code to establish sourcing requirements for State and local taxation of mobile telecommunication services. [Enrolled bill] ...

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106th CONGRESS

  2d Session

                               H. R. 4391

_______________________________________________________________________

                                 AN ACT

   To amend title 4 of the United States Code to establish sourcing 
 requirements for State and local taxation of mobile telecommunication 
                               services.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
106th CONGRESS
  2d Session
                                H. R. 4391

_______________________________________________________________________

                                 AN ACT


 
   To amend title 4 of the United States Code to establish sourcing 
 requirements for State and local taxation of mobile telecommunication 
                               services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mobile Telecommunications Sourcing 
Act''.

SEC. 2. AMENDMENTS TO TITLE 4 OF THE UNITED STATES CODE.

    (a) Amendment Relating to the States.--Chapter 4 of title 4 of the 
United States Code is amended by adding at the end the following:
``Sec. 116. Rules for determining State and local government treatment 
              of charges related to mobile telecommunications services
    ``(a) Application of This Section Through Section 126.--This 
section through 126 of this title apply to any tax, charge, or fee 
levied by a taxing jurisdiction as a fixed charge for each customer or 
measured by gross amounts charged to customers for mobile 
telecommunications services, regardless of whether such tax, charge, or 
fee is imposed on the vendor or customer of the service and regardless 
of the terminology used to describe the tax, charge, or fee.
    ``(b) General Exceptions.--This section through 126 of this title 
do not apply to--
            ``(1) any tax, charge, or fee levied upon or measured by 
        the net income, capital stock, net worth, or property value of 
        the provider of mobile telecommunications service;
            ``(2) any tax, charge, or fee that is applied to an 
        equitably apportioned amount that is not determined on a 
        transactional basis;
            ``(3) any tax, charge, or fee that represents compensation 
        for a mobile telecommunications service provider's use of 
        public rights of way or other public property, provided that 
        such tax, charge, or fee is not levied by the taxing 
        jurisdiction as a fixed charge for each customer or measured by 
        gross amounts charged to customers for mobile telecommunication 
        services;
            ``(4) any generally applicable business and occupation tax 
        that is imposed by a State, is applied to gross receipts or 
        gross proceeds, is the legal liability of the home service 
        provider, and that statutorily allows the home service provider 
        to elect to use the sourcing method required in this section 
        through 126 of this title;
            ``(5) any fee related to obligations under section 254 of 
        the Communications Act of 1934; or
            ``(6) any tax, charge, or fee imposed by the Federal 
        Communications Commission.
    ``(c) Specific Exceptions.--This section through 126 of this 
title--
            ``(1) do not apply to the determination of the taxing situs 
        of prepaid telephone calling services;
            ``(2) do not affect the taxability of either the initial 
        sale of mobile telecommunications services or subsequent resale 
        of such services, whether as sales of such services alone or as 
        a part of a bundled product, if the Internet Tax Freedom Act 
        would preclude a taxing jurisdiction from subjecting the 
        charges of the sale of such services to a tax, charge, or fee, 
        but this section provides no evidence of the intent of Congress 
        with respect to the applicability of the Internet Tax Freedom 
        Act to such charges; and
            ``(3) do not apply to the determination of the taxing situs 
        of air-ground radiotelephone service as defined in section 
        22.99 of title 47 of the Code of Federal Regulations as in 
        effect on June 1, 1999.
``Sec. 117. Sourcing rules
    ``(a) Treatment of Charges for Mobile Telecommunications 
Services.--Notwithstanding the law of any State or political 
subdivision of any State, mobile telecommunications services provided 
in a taxing jurisdiction to a customer, the charges for which are 
billed by or for the customer's home service provider, shall be deemed 
to be provided by the customer's home service provider.
    ``(b) Jurisdiction.--All charges for mobile telecommunications 
services that are deemed to be provided by the customer's home service 
provider under sections 116 through 126 of this title are authorized to 
be subjected to tax, charge, or fee by the taxing jurisdictions whose 
territorial limits encompass the customer's place of primary use, 
regardless of where the mobile telecommunication services originate, 
terminate, or pass through, and no other taxing jurisdiction may impose 
taxes, charges, or fees on charges for such mobile telecommunications 
services.
``Sec. 118. Limitations
    ``Sections 116 through 126 of this title do not--
            ``(1) provide authority to a taxing jurisdiction to impose 
        a tax, charge, or fee that the laws of such jurisdiction do not 
        authorize such jurisdiction to impose; or
            ``(2) modify, impair, supersede, or authorize the 
        modification, impairment, or supersession of the law of any 
        taxing jurisdiction pertaining to taxation except as expressly 
        provided in sections 116 through 126 of this title.
``Sec. 119. Electronic databases for nationwide standard numeric 
              jurisdictional codes
    ``(a) Electronic Database.--
            ``(1)  Provision of database.--A State may provide an 
        electronic database to a home service provider or, if a State 
        does not provide such an electronic database to home service 
        providers, then the designated database provider may provide an 
        electronic database to a home service provider.
            ``(2) Format.--(A) Such electronic database, whether 
        provided by the State or the designated database provider, 
        shall be provided in a format approved by the American National 
        Standards Institute's Accredited Standards Committee X12, that, 
        allowing for de minimis deviations, designates for each street 
        address in the State, including to the extent practicable, any 
        multiple postal street addresses applicable to one street 
        location, the appropriate taxing jurisdictions, and the 
        appropriate code for each taxing jurisdiction, for each level 
        of taxing jurisdiction, identified by one nationwide standard 
        numeric code.
            ``(B) Such electronic database shall also provide the 
        appropriate code for each street address with respect to 
        political subdivisions which are not taxing jurisdictions when 
        reasonably needed to determine the proper taxing jurisdiction.
            ``(C) The nationwide standard numeric codes shall contain 
        the same number of numeric digits with each digit or 
        combination of digits referring to the same level of taxing 
        jurisdiction throughout the United States using a format 
        similar to FIPS 55-3 or other appropriate standard approved by 
        the Federation of Tax Administrators and the Multistate Tax 
        Commission, or their successors. Each address shall be provided 
        in standard postal format.
    ``(b) Notice; Updates.--A State or designated database provider 
that provides or maintains an electronic database described in 
subsection (a) shall provide notice of the availability of the then 
current electronic database, and any subsequent revisions thereof, by 
publication in the manner normally employed for the publication of 
informational tax, charge, or fee notices to taxpayers in such State.
    ``(c) User Held Harmless.--A home service provider using the data 
contained in an electronic database described in subsection (a) shall 
be held harmless from any tax, charge, or fee liability that otherwise 
would be due solely as a result of any error or omission in such 
database provided by a State or designated database provider. The home 
service provider shall reflect changes made to such database during a 
calendar quarter not later than 30 days after the end of such calendar 
quarter for each State that issues notice of the availability of an 
electronic database reflecting such changes under subsection (b).
``Sec. 120. Procedure if no electronic database provided
    ``(a) Safe Harbor.--If neither a State nor designated database 
provider provides an electronic database under section 119, a home 
service provider shall be held harmless from any tax, charge, or fee 
liability in such State that otherwise would be due solely as a result 
of an assignment of a street address to an incorrect taxing 
jurisdiction if, subject to section 121, the home service provider 
employs an enhanced zip code to assign each street address to a 
specific taxing jurisdiction for each level of taxing jurisdiction and 
exercises due diligence at each level of taxing jurisdiction to ensure 
that each such street address is assigned to the correct taxing 
jurisdiction. If an enhanced zip code overlaps boundaries of taxing 
jurisdictions of the same level, the home service provider must 
designate one specific jurisdiction within such enhanced zip code for 
use in taxing the activity for such enhanced zip code for each level of 
taxing jurisdiction. Any enhanced zip code assignment changed in 
accordance with section 121 is deemed to be in compliance with this 
section. For purposes of this section, there is a rebuttable 
presumption that a home service provider has exercised due diligence if 
such home service provider demonstrates that it has--
            ``(1) expended reasonable resources to implement and 
        maintain an appropriately detailed electronic database of 
        street address assignments to taxing jurisdictions;
            ``(2) implemented and maintained reasonable internal 
        controls to promptly correct misassignments of street addresses 
        to taxing jurisdictions; and
            ``(3) used all reasonably obtainable and usable data 
        pertaining to municipal annexations, incorporations, 
        reorganizations and any other changes in jurisdictional 
        boundaries that materially affect the accuracy of such 
        database.
    ``(b) Termination of Safe Harbor.--Subsection (a) applies to a home 
service provider that is in compliance with the requirements of 
subsection (a), with respect to a State for which an electronic 
database is not provided under section 119 until the later of--
            ``(1) 18 months after the nationwide standard numeric code 
        described in section 119(a) has been approved by the Federation 
        of Tax Administrators and the Multistate Tax Commission; or
            ``(2) 6 months after such State or a designated database 
        provider in such State provides such database as prescribed in 
        section 119(a).
``Sec. 121. Correction of erroneous data for place of primary use
    ``(a) In General.--A taxing jurisdiction, or a State on behalf of 
any taxing jurisdiction or taxing jurisdictions within such State, 
may--
            ``(1) determine that the address used for purposes of 
        determining the taxing jurisdictions to which taxes, charges, 
        or fees for mobile telecommunications services are remitted 
        does not meet the definition of place of primary use in section 
        124(8) and give binding notice to the home service provider to 
        change the place of primary use on a prospective basis from the 
        date of notice of determination if--
                    ``(A) if the taxing jurisdiction making such 
                determination is not a State, such taxing jurisdiction 
                obtains the consent of all affected taxing 
                jurisdictions within the State before giving such 
                notice of determination; and
                    ``(B) before the taxing jurisdiction gives such 
                notice of determination, the customer is given an 
                opportunity to demonstrate in accordance with 
                applicable State or local tax, charge, or fee 
                administrative procedures that the address is the 
                customer's place of primary use;
            ``(2) determine that the assignment of a taxing 
        jurisdiction by a home service provider under section 120 does 
        not reflect the correct taxing jurisdiction and give binding 
        notice to the home service provider to change the assignment on 
        a prospective basis from the date of notice of determination 
        if--
                    ``(A) if the taxing jurisdiction making such 
                determination is not a State, such taxing jurisdiction 
                obtains the consent of all affected taxing 
                jurisdictions within the State before giving such 
                notice of determination; and
                    ``(B) the home service provider is given an 
                opportunity to demonstrate in accordance with 
                applicable State or local tax, charge, or fee 
                administrative procedures that the assignment reflects 
                the correct taxing jurisdiction.
``Sec.  122. Determination of place of primary use
    ``(a) Place of Primary Use.--A home service provider shall be 
responsible for obtaining and maintaining the customer's place of 
primary use (as defined in section 124). Subject to section 121, and if 
the home service provider's reliance on information provided by its 
customer is in good faith, a taxing jurisdiction shall--
            ``(1) allow a home service provider to rely on the 
        applicable residential or business street address supplied by 
        the home service provider's customer; and
            ``(2) not hold a home service provider liable for any 
        additional taxes, charges, or fees based on a different 
        determination of the place of primary use for taxes, charges or 
        fees that are customarily passed on to the customer as a 
        separate itemized charge.
    ``(b) Address Under Existing Agreements.--Except as provided in 
section 121, a taxing jurisdiction shall allow a home service provider 
to treat the address used by the home service provider for tax purposes 
for any customer under a service contract or agreement in effect 2 
years after the date of enactment of the Mobile Telecommunications 
Sourcing Act as that customer's place of primary use for the remaining 
term of such service contract or agreement, excluding any extension or 
renewal of such service contract or agreement, for purposes of 
determining the taxing jurisdictions to which taxes, charges, or fees 
on charges for mobile telecommunications services are remitted.
``Sec. 123. Scope; special rules
    ``(a) Act Does Not Supersede Customer's Liability to Taxing 
Jurisdiction.--Nothing in sections 116 through 126 modifies, impairs, 
supersedes, or authorizes the modification, impairment, or supersession 
of, any law allowing a taxing jurisdiction to collect a tax, charge, or 
fee from a customer that has failed to provide its place of primary 
use.

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