[Congressional Record Volume 145, Number 144 (Thursday, October 21, 1999)]
[Senate]
[Pages S13029-S13031]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 MOBILE TELECOMMUNICATIONS SOURCING ACT

  On October 20, 1999, Mr. Brownback, for himself and Mr. Dorgan, 
introduced S. 1755. The text of the bill follows:

                                S. 1755

       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. FINDINGS.

       The Congress finds the following:
       (1) The provision of mobile telecommunications services is 
     a matter of interstate commerce within the jurisdiction of 
     the United States Congress under Article I, Section 8 of the 
     United States Constitution. Certain aspects of mobile 
     telecommunications technologies and services do not respect, 
     and operate independently of, State and local jurisdictional 
     boundaries.
       (2) The mobility afforded to millions of American consumers 
     by mobile telecommunications services helps to fuel the 
     American economy, facilitate the development of the 
     information superhighway and provide important safety 
     benefits.
       (3) Users of mobile telecommunications services can 
     originate a call in one State or local jurisdiction and 
     travel through other States or local jurisdictions during the 
     course of the call. These circumstances make it more 
     difficult to track the separate segments of a particular call 
     with all of the States and local jurisdictions involved with 
     the call. In addition, expanded home calling areas, bundled 
     service offerings and other marketing advances make it 
     increasingly difficult to assign each transaction to a 
     specific taxing jurisdiction.
       (4) State and local taxes imposed on mobile 
     telecommunications services that are not consistently based 
     on subject consumers, businesses and others engaged in 
     interstate commerce to multiple, confusing and burdensome 
     State and local taxes and result in higher costs to consumers 
     and the industry.
       (5) State and local taxes that are not consistently based 
     can result in some telecommunications revenues inadvertently 
     escaping State and local taxation altogether, thereby 
     violating standards of tax fairness, creating inequities 
     among competitors in the telecommunications market and 
     depriving State and local governments of needed tax revenues.
       (6) Because State and local tax laws and regulations of 
     many jurisdictions were established before the proliferation 
     of mobile telecommunications services, the application of 
     these laws to the provision of mobile telecommunications 
     services may produce conflicting or unintended tax results.
       (7) State and local governments provide essential public 
     services, including services that Congress encourages State 
     and local governments to undertake in partnership with the 
     Federal government for the achievement of important national 
     policy goals.
       (8) State and local governments provide services that 
     support the flow of interstate commerce, including services 
     that support the use and development of mobile 
     telecommunications services.
       (9) State governments as sovereign entities in our Federal 
     system may require that interstate commerce conducted within 
     their borders pay its fair share of tax to support the 
     government services provided by those governments.
       (10) Local governments as autonomous subdivisions of a 
     State government may require that interstate commerce 
     conducted within their borders pay its fair share of tax to 
     support the governmental services provided by those 
     governments.
       (11) To balance the needs of interstate commerce and the 
     mobile telecommunications industry with the legitimate role 
     of State and local governments in our system of federalism, 
     Congress needs to establish a uniform and coherent national 
     policy regarding the taxation of mobile telecommunications 
     services through the exercise of its constitutional authority 
     to regulate interstate commerce.
       (12) Congress also recognizes that the solution established 
     by this legislation is a necessarily practical one and must 
     provide for a system of State and local taxation of mobile 
     telecommunications services that in the absence of this 
     solution would not otherwise occur. To this extent, Congress 
     exercises its power to provide a reasonable solution to 
     otherwise insoluble problems of multi-jurisdictional 
     commerce.

     SEC. 3. AMENDMENT OF COMMUNICATIONS ACT OF 1934 TO PROVIDE 
                   RULES FOR DETERMINING STATE AND LOCAL 
                   GOVERNMENT TREATMENT OF CHARGES RELATED TO 
                   MOBILE TELECOMMUNICATIONS SERVICES.

       The Communications Act of 1934 (47 U.S.C. 151 et seq.) is 
     amended by adding at the end thereof the following:

     ``TITLE VIII--STATE AND LOCAL TREATMENT OF CHARGES FOR MOBILE 
                      TELECOMMUNICATIONS SERVICES.

     ``SEC. 801. APPLICATION OF TITLE.

       ``(a) In General.--This title applies 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 title does 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 gross 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; or
       ``(4) any fee related to obligations under section 254 of 
     this Act.''.
       ``(c) Specific Exceptions.--This title--
       ``(1) does not apply to the determination of the taxing 
     situs of prepaid telephone calling services;
       ``(2) does not affect the taxability of either the initial 
     sale of mobile telecommunications services or subsequent 
     resale, whether as sales of the service alone or as a part of 
     a bundled product, where the Internet Tax Freedom Act would 
     preclude a taxing jurisdiction from subjecting the charges of 
     the sale of these mobile telecommunications 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) does not apply to the determination of the taxing 
     situs of air-ground radiotelephone service as defined in 
     section 22.99 of the Commission's regulations (47 C.F.R. 
     22.99).

     ``SEC. 802. SOURCING RULES.

       ``(a) In General.--Notwithstanding the law of any State or 
     political subdivision thereof to the contrary, 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 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. 803. LIMITATIONS.

       ``This title does not--
       ``(1) provide authority to a taxing jurisdiction to impose 
     a tax, charge, or fee that the laws of the jurisdiction do 
     not authorize the 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 this title.

     ``SEC. 804. ELECTRONIC DATABASES FOR NATIONWIDE STANDARD 
                   NUMERIC JURISDICTIONAL CODES.

       ``(a) Electronic 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. The 
     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

[[Page S13030]]

     postal street addresses applicable to one street location, 
     the appropriate jurisdictions, and the appropriate code for 
     each taxing jurisdiction, for each level of taxing 
     jurisdiction, identified by one nationwide standard numeric 
     code. The 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. 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 that State.
       ``(c) User Held Harmless.--A home service provider using 
     the data contained in the 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 the electronic database 
     provided by a State or designated database provider. The home 
     service provider shall reflect changes made to the electronic 
     database during a calendar quarter no later than 30 days 
     after the end of that calendar quarter for each State that 
     issues notice of the availability of an electronic database 
     reflecting such changes under subsection (b).

     ``SEC. 805. PROCEDURE WHERE NO ELECTRIC DATABASE PROVIDED.

       ``(a) In General.--If neither a State nor designated 
     database provider provides an electronic database under 
     section 804, a home provider shall be held harmless from any 
     tax, charge, or fee liability in that 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 806, the home service provider employs an enhanced 
     zip code to assign each street address to a specific taxing 
     jurisdiction for each level of taxing jurisdictional and 
     exercise due diligence at each level of taxing jurisdiction 
     to ensure that each such street address is assigned to the 
     correct taxing jurisdiction. Where 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 that enhanced zip code for each level of 
     taxing jurisdiction. Any enhanced zip code assignment changed 
     in accordance with section 806 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 the 
     electronic 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 
     804 until the later of--
       ``(1) 18 months after the nationwide standard numeric code 
     described in section 804(a) has been approved by the 
     Federation of Tax Administrators and the Multistate Tax 
     Commission; or
       ``(2) 6 months after the State or a designated database 
     provider in that State provides the electronic database as 
     prescribed in section 804(a).

     ``SEC. 806. 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 809(3) 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) where 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 customer is given an opportunity, prior to such 
     notice of determination, 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 805 
     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) where 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. 807. DUTY OF HOME SERVICE PROVIDER REGARDING PLACE OF 
                   PRIMARY USE.

       ``(a) Place of Primary Use.--A home service provider is 
     responsible for obtaining and maintaining the customer's 
     place of primary use (as defined in section 809). Subject to 
     section 806, and if the home service provider's reliance on 
     information provided by its customer is in good faith, a home 
     service provider--
       ``(1) may rely on the applicable residential or business 
     street address supplied by the home service provider's 
     customer; and
       ``(2) is not 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 806, a home service provider may 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. 808. SCOPE; SPECIAL RULES.

       ``(a) Title Does Not Supersede Customer's Liability to 
     Taxing Jurisdiction.--Nothing in this title 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 otherwise 
     non-taxable 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) Non-taxable Charges.--If a taxing jurisdiction does 
     not subject charges for mobile telecommunications services to 
     taxation, a customer may not rely upon the non-taxability of 
     charges for mobile telecommunications services unless the 
     customer's home service provider separately states the 
     charges for non-taxable 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 non-taxable charges.
       ``(d) References to Regulations.--Any reference in this 
     title to the Commission's regulations is a reference to those 
     regulations as they were in effect on June 1, 1999.

     ``SEC. 809. DEFINITIONS.

       ``In 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 the Commission's regulations (47 CFR 20.3), 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) 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.
       ``(3) 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 either--

[[Page S13031]]

       ``(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.
       ``(4) 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.
       ``(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) 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) where 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.
       ``(7) 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 the electronic database 
     prescribed in section 804(a) if the State has not provided 
     such electronic database; and
       ``(B) sanctioned by municipal and county associations or 
     leagues of the State whose responsibility it would otherwise 
     be to provide the electronic database prescribed by this 
     title.
       ``(8) 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.
       ``(9) 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; 
     but
       ``(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.
       ``(10) 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.
       ``(11) Mobile telecommunications service.--The term `mobile 
     telecommunications service' means commercial mobile radio 
     service, as defined in section 20.3 of the Commission's 
     regulations (47 CFR 20.3).
       ``(12) Enhanced zip code.--The term `enhanced zip code' 
     means a United States postal zip code of 9 or more digits.

     ``SEC. 810. COMMISSION NOT TO HAVE JURISDICTION OF TITLE.

       ``Notwithstanding any other provision of this Act, the 
     Commission shall have no jurisdiction over the 
     interpretation, implementation, or enforcement of this title.

     ``SEC. 811. NONSEVERABILITY.

       ``If a court of competent jurisdiction enters a final 
     judgment on the merits that is no longer subject to appeal, 
     which substantially limits or impairs the essential elements 
     of this title based on Federal statutory or Federal 
     Constitutional grounds, or which determines that this title 
     violates the United States Constitution, then the provisions 
     of this title are null and void and of no effect.

     ``SEC. 812. NO INFERENCE.

       ``(a) Internet Tax Freedom Act.--Nothing in this title may 
     be construed as bearing on Congressional intent in enacting 
     the Internet Tax Freedom Act or as affecting that Act in 
     anyway.
       ``(b) Telecommunications Act of 1996.--Nothing in this 
     title shall limit or otherwise affect the implementation of 
     the Telecommunications Act of 1996 or the amendments made by 
     that Act.''.

     SEC. 4. EFFECTIVE DATE.

       The amendment made by section 3 applies to customer bills 
     issued after the first day of the first month beginning more 
     than 2 years after the date of enactment of this Act.

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