[106th Congress Public Law 252]
[From the U.S. Government Printing Office]
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[DOCID: f:publ252.106]
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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
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
[[Page 114 STAT. 7]]
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.
[[Page 114 STAT. 8]]
``(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.
[[Page 114 STAT. 9]]
``(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. <<NOTE: 4 USC 116 note.>> 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.
Approved July 28, 2000.
LEGISLATIVE HISTORY--H.R. 4391 (S. 1755):
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HOUSE REPORTS: No. 106-719 (Comm. on the Judiciary).
SENATE REPORTS: No. 106-326 accompanying S. 1755 (Comm. on Commerce,
Science, and Transportation).
CONGRESSIONAL RECORD, Vol. 146 (2000):
July 11, considered and passed House.
July 14, considered and passed Senate.
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