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Pub.L. 106-253 To grant to the United States Postal Service the authority to issue semipostals, and for other purposes. ...


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[[Page 1]]

                        MOBILE TELECOMMUNICATIONS
                              SOURCING ACT

[[Page 114 STAT. 2]]

Public Law 106-252
106th Congress

                                 An Act


 
    To amend title 4 of the United States Code to establish sourcing 
 requirements for State and local taxation of mobile telecommunication 
            services. <<NOTE: July 28, 2000 -  [H.R. 4391]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Mobile Tele- communications 
Sourcing Act. 4 USC 1 note.>> 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

[[Page 114 STAT. 3]]

        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

[[Page 114 STAT. 4]]

        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. <<NOTE: Deadline.>> 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

[[Page 114 STAT. 5]]

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) <<NOTE: Applicability.>>  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) <<NOTE: Deadline.>> 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--

[[Page 114 STAT. 6]]

                    ``(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 <<NOTE: Effective 
date.>> 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 

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