[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4391 Engrossed in House (EH)]


  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.
    ``(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 Federal Regulations as in effect on June 1, 1999, 
        or any charge for, or associated with, a service provided as an 
        adjunct to a commercial mobile radio service, that is billed to 
        the customer by or for the customer's home service provider 
        regardless of whether individual transmissions originate or 
        terminate within the licensed service area of the home service 
        provider.
            ``(2) Customer.--
                    ``(A) In general.--The term `customer' means--
                            ``(i) the person or entity that contracts 
                        with the home service provider for mobile 
                        telecommunications services; or
                            ``(ii) if the end user of mobile 
                        telecommunications services is not the 
                        contracting party, the end user of the mobile 
                        telecommunications service, but this clause 
                        applies only for the purpose of determining the 
                        place of primary use.
                    ``(B) The term `customer' does not include--
                            ``(i) a reseller of mobile 
                        telecommunications service; or
                            ``(ii) a serving carrier under an 
                        arrangement to serve the customer outside the 
                        home service provider's licensed service area.
            ``(3) Designated database provider.--The term `designated 
        database provider' means a corporation, association, or other 
        entity representing all the political subdivisions of a State 
        that is--
                    ``(A) responsible for providing an electronic 
                database prescribed in section 119(a) if the State has 
                not provided such electronic database; and
                    ``(B) approved by municipal and county associations 
                or leagues of the State whose responsibility it would 
                otherwise be to provide such database prescribed by 
                sections 116 through 126 of this title.
            ``(4) Enhanced zip code.--The term `enhanced zip code' 
        means a United States postal zip code of 9 or more digits.
            ``(5) Home service provider.--The term `home service 
        provider' means the facilities-based carrier or reseller with 
        which the customer contracts for the provision of mobile 
        telecommunications services.
            ``(6) Licensed service area.--The term `licensed service 
        area' means the geographic area in which the home service 
        provider is authorized by law or contract to provide commercial 
        mobile radio service to the customer.
            ``(7) Mobile telecommunications service.--The term `mobile 
        telecommunications service' means commercial mobile radio 
        service, as defined in section 20.3 of title 47 of the Code of 
        Federal Regulations as in effect on June 1, 1999.
            ``(8) Place of primary use.--The term `place of primary 
        use' means the street address representative of where the 
        customer's use of the mobile telecommunications service 
        primarily occurs, which must be--
                    ``(A) the residential street address or the primary 
                business street address of the customer; and
                    ``(B) within the licensed service area of the home 
                service provider.
            ``(9) Prepaid telephone calling services.--The term 
        `prepaid telephone calling service' means the right to purchase 
        exclusively telecommunications services that must be paid for 
        in advance, that enables the origination of calls using an 
        access number, authorization code, or both, whether manually or 
        electronically dialed, if the remaining amount of units of 
        service that have been prepaid is known by the provider of the 
        prepaid service on a continuous basis.
            ``(10) Reseller.--The term `reseller'--
                    ``(A) means a provider who purchases 
                telecommunications services from another 
                telecommunications service provider and then resells, 
                uses as a component part of, or integrates the 
                purchased services into a mobile telecommunications 
                service; and
                    ``(B) does not include a serving carrier with which 
                a home service provider arranges for the services to 
                its customers outside the home service provider's 
                licensed service area.
            ``(11) Serving carrier.--The term `serving carrier' means a 
        facilities-based carrier providing mobile telecommunications 
        service to a customer outside a home service provider's or 
        reseller's licensed service area.
            ``(12) Taxing jurisdiction.--The term `taxing jurisdiction' 
        means any of the several States, the District of Columbia, or 
        any territory or possession of the United States, any 
        municipality, city, county, township, parish, transportation 
        district, or assessment jurisdiction, or any other political 
        subdivision within the territorial limits of the United States 
        with the authority to impose a tax, charge, or fee.
``Sec. 125. Nonseverability
    ``If a court of competent jurisdiction enters a final judgment on 
the merits that--
            ``(1) is based on Federal law;
            ``(2) is no longer subject to appeal; and
            ``(3) substantially limits or impairs the essential 
        elements of sections 116 through 126 of this title,
then sections 116 through 126 of this title are invalid and have no 
legal effect as of the date of entry of such judgment.
``Sec. 126. No inference
    ``(a) Internet Tax Freedom Act.--Nothing in sections 116 through 
this section of this title shall be construed as bearing on 
Congressional intent in enacting the Internet Tax Freedom Act or to 
modify or supersede the operation of such Act.
    ``(b) Telecommunications Act of 1996.--Nothing in sections 116 
through this section of this title shall limit or otherwise affect the 
implementation of the Telecommunications Act of 1996 or the amendments 
made by such Act.''.
    (b) Technical Amendment.--The table of sections of chapter 4 of 
title 4, United States Code, is amended by adding the following after 
the item relating to section 115:

``116. Rules for determining State and local government treatment of 
                            charges related to mobile 
                            telecommunications services.
``117. Sourcing rules.
``118. Limitations.
``119. Electronic databases for nationwide standard numeric 
                            jurisdictional codes.
``120. Procedure if no electronic database provided.
``121. Correction of erroneous data for place of primary use.
``122. Determination of place of primary use.
``123. Scope; special rules.
``124. Definitions.
``125. Nonseverability.
``126. No inference.''.

SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENT.

    (a) Effective Date..--Except as provided in subsection (b), this 
Act and the amendment made by this Act shall take effect on the date of 
the enactment of this Act.
    (b) Application of Act.--The amendment made by this Act shall apply 
only to customer bills issued after the first day of the first month 
beginning more than 2 years after the date of the enactment of this 
Act.

            Passed the House of Representatives July 11, 2000.

            Attest:

                                                                 Clerk.