[Congressional Record Volume 146, Number 88 (Tuesday, July 11, 2000)]
[House]
[Pages H5741-H5744]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MOBILE TELECOMMUNICATIONS SOURCING ACT
Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 4391) to amend title 4 of the United States Code to establish
nexus requirements for State and local taxation of mobile
telecommunication services, as amended.
The Clerk read as follows:
H.R. 4391
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;
[[Page H5742]]
``(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
[[Page H5743]]
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 1st day
of the 1st month beginning more than 2 years after the date
of enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Pennsylvania (Mr. Gekas) and the gentleman from New York (Mr. Nadler)
each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).
General Leave
Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous material on H.R. 4391, as amended.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, everyone recognizes that over the 10 previous years
prior to this exact moment, there has been an explosion of use of
wireless communications, mobile communications devices.
{time} 1015
These are seen in every hallway in Congress, in every shopping mall
in the country, and every place where there are more than two people.
One can sense that wireless communications has reached a new plateau.
It is estimated that some 80 million such devices are in constant use
every single day even as we proceed here on this bill.
The problem has been one of a complex problem that local taxing
authorities have not known how to proceed in levying the tax that they
would by law, by their own ordinances, et cetera, be able to cast on
such a wireless service.
Where should it be? Where the wireless communications originate or
[[Page H5744]]
where they fall into the receivers of the call itself, all the things
in between that could account for the course that a wireless
communication takes. So what to do?
What has happened here in this particular case, Mr. Speaker, is an
example that we ought to be looking to more than just at a glance in
many of the issues that come before us. We go to the source of the
people that are involved in the very vexing problem about which we
speak.
In this case, the wireless industry and the local taxing authorities
got together and fashioned a way out of the jungle of taxation and
complexity that they found themselves. So what they determined was that
the place to be taxed would be where the receiver receives that
particular call, and the taxing authority would be limited to that.
That way, there would not be a proliferation of taxing authorities, nor
of taxing acts on any part of the taxing community.
So we come to this moment ready to present a bill to the Congress
that has been prepared for us by the goodwill of the wireless industry
people and the taxing authorities who wanted to solve the situation
without too much trouble.
Mr. Speaker, I reserve the balance of my time.
Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of this legislation. I will not burden
the House with a duplicate description of the legislation. The
gentleman from Pennsylvania (Mr. Gekas), the distinguished chairman of
the subcommittee, has given us a very accurate and adequate description
of what this legislation does.
We are dealing today with a complex interstate taxation issue, and we
are dealing with it the right way. Industry and State and local
governments have worked together for the last 2 years to formulate an
intelligent and fair way to manage the taxation of wireless
telecommunications dealing with such complex issues as sourcing, nexus,
and the place of a customer's primary use.
All this work analysis and cooperation will ensure the calls which
may be made in one jurisdiction but which are received in or passed
through several others are not confronted with a thicket of taxing
jurisdictions. It will simplify the process of tax collection without
imposing any new taxes, all of this to the benefit of consumers, of the
industry, and of taxing jurisdictions.
I hope we can take a lesson from the way in which this complex
taxation issue has been handled and perhaps apply it to the Internet
tax issue which, so far, has not been handled in this way but has been
overly politicized with a result that none of the critical issues in
that area have been resolved and may not be resolved for some time to
come.
It is regrettable that the Internet tax bill was marked up in
committee and voted on the floor at the behest of the leadership before
a hearing was held. I am almost embarrassed to note that we only held
our first hearing on the subject after that floor vote. Shooting first
and asking questions later is no way to help foster a stable economic
environment for the new economy.
By very complete contrast, the development of this legislation has
been a model of cooperation and bipartisanship. Majority and minority
staff worked with the States, with local governments, and with industry
to perfect the bill introduced by the gentleman from Illinois (Chairman
Hyde), the gentleman from Pennsylvania (Chairman Gekas), the gentleman
from Michigan (Mr. Conyers), and myself.
I support this legislation, and I commend all of those who came
together to make it a product that will be a credit to this Congress. I
hope that the cooperation, common sense, and consensus which has shaped
this legislation will have a positive influence on the Internet tax
issue as we deal with that in the future.
Regardless, this is a good and a worthy bill. It has the support of
State and local government as well as of the industry. It has been
introduced by the bipartisan leadership of the Committee on the
Judiciary and of the subcommittee, and I urge my colleagues to support
it.
Mr. Speaker, I reserve the balance of my time.
Mr. HYDE. Mr. Speaker, I am pleased to lend my support to this
eminently sensible piece of legislation. Due to the mobile nature of
cellular telecommunications, traditional methods of assessing and
collecting sales and use tax on them do not work well. Because the tax
on a cellular telephone call now varies depending on where the customer
was located when it was initiated, each individual call must be tracked
and matched up with a taxing jurisdiction. This makes it difficult for
the cellular service provider to calculate the tax, and difficult for
the state and local governments to monitor compliance. It also causes a
customer's state and local tax assessment to change from month to
month, depending on where the customer has traveled.
H.R. 4391 will provide customers with simpler billing for their
wireless telephone calls, while preserving state and local authority to
tax wireless services. It will reduce the chances that a wireless call
might be taxed by more than one jurisdiction, and will simplify and
reduce the costs of tax administration, both for the carrier and for
the taxing authority. This should in turn lower the cost of wireless
telecommunications services to the consumer.
I want to congratulate the wireless telecommunications industry and
state and local governments for having found a mutually agreeable
solution to this problem. I know that they have worked long and hard on
this project over at least the last two years.
I also want to commend my colleague from Mississippi, Chip Pickering,
for his leadership on this issue. Had it not been for his initiative in
identifying this proposal as a worthy response to the growing
complexities posed by taxing mobile telecommunications, we would not be
here today. He has labored tirelessly--and successfully--to gain
consensus on the bill and has worked closely with our committee to
perfect the work which we have before us.
Mr. GEKAS. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
Mr. NADLER. Mr. Speaker, I have no requests for time, so I yield back
the balance of my time.
The SPEAKER pro tempore (Mr. Kuykendall). The question is on the
motion offered by the gentleman from Pennsylvania (Mr. Gekas) that the
House suspend the rules and pass the bill, H.R. 4391, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
The title of the bill was amended so as to read:
``A bill to amend title 4 of the United States Code to
establish sourcing requirements for State and local taxation
of mobile telecommunication services.''.
A motion to reconsider was laid on the table.
____________________