Home > 106th Congressional Bills > H.R. 4391 (ih) To amend title 4 of the United States Code to establish nexus requirements for State and local taxation of mobile telecommunication services. [Introduced in House] ...H.R. 4391 (ih) To amend title 4 of the United States Code to establish nexus requirements for State and local taxation of mobile telecommunication services. [Introduced in House] ...
H.R.4391
One Hundred Sixth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday,
the twenty-fourth day of January, two thousand
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 the 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.
``(b) Additional Taxable Charges.--If a taxing jurisdiction does
not otherwise subject charges for mobile telecommunications services to
taxation and if these charges are aggregated with and not separately
stated from charges that are subject to taxation, then the charges for
nontaxable mobile telecommunications services may be subject to
taxation unless the home service provider can reasonably identify
charges not subject to such tax, charge, or fee from its books and
records that are kept in the regular course of business.
``(c) Nontaxable Charges.--If a taxing jurisdiction does not
subject charges for mobile telecommunications services to taxation, a
customer may not rely upon the nontaxability of charges for mobile
telecommunications services unless the customer's home service provider
separately states the charges for nontaxable mobile telecommunications
services from taxable charges or the home service provider elects,
after receiving a written request from the customer in the form
required by the provider, to provide verifiable data based upon the
home service provider's books and records that are kept in the regular
course of business that reasonably identifies the nontaxable charges.
``Sec. 124. Definitions
``In sections 116 through 126 of this title:
``(1) Charges for mobile telecommunications services.--The term
`charges for mobile telecommunications services' means any charge
for, or associated with, the provision of commercial mobile radio
service, as defined in section 20.3 of title 47 of the Code of
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