II

Calendar No. 660

106TH CONGRESS

2D SESSION S. 1755

[Report No. 106–326]

To amend the Communications Act of 1934 to regulate interstate commerce

in the use of mobile telephones.

IN THE SENATE OF THE UNITED STATES

OCTOBER 20, 1999

Mr. BROWNBACK (for himself, Mr. DORGAN, Mr. WYDEN, Mr. CLELAND, Mr.

BREAUX, Mr. ROCKEFELLER, Mr. BRYAN, Mr. LOTT, Mr. GORTON, Ms.

SNOWE, Mr. ASHCROFT, Mr. ABRAHAM, Mr. KERRY, Mr. BURNS, Mr.

HOLLINGS, Mr. FRIST, and Mr. INOUYE) introduced the following bill;

which was read twice and referred to the Committee on Commerce,

Science, and Transportation

JUNE 30, 2000

Reported by Mr. MCCAIN, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To amend the Communications Act of 1934 to regulate

interstate commerce in the use of mobile telephones.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Mobile Telecommuni3 cations Sourcing Act’’.

4 SEC. 2. FINDINGS

5 The Congress finds the following:

6 (1) The provision of mobile telecommunications

7 services is a matter of interstate commerce within

8 the jurisdiction of the United States Congress under

9 Article I, Section 8 of the United States Constitu10 tion. Certain aspects of mobile telecommunications

11 technologies and services do not respect, and operate

12 independently of, State and local jurisdictional

13 boundaries.

14 (2) The mobility afforded to millions of Amer15 ican consumers by mobile telecommunications serv16 ices helps to fuel the American economy, facilitate

17 the development of the information superhighway

18 and provide important safety benefits.

19 (3) Users of mobile telecommunications services

20 can originate a call in one State or local jurisdiction

21 and travel through other States or local jurisdictions

22 during the course of the call. These circumstances

23 make it more difficult to track the separate seg24 ments of a particular call with all of the States and

25 local jurisdictions involved with the call. In addition,

26 expanded home calling areas, bundled service offer-
3

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1 ings and other marketing advances make it increas2 ingly difficult to assign each transaction to a specific

3 taxing jurisdiction.

4 (4) State and local taxes imposed on mobile

5 telecommunications services that are not consistently

6 based can subject consumers, businesses and others

7 engaged in interstate commerce to multiple, con8 fusing and burdensome State and local taxes and re9 sult in higher costs to consumers and the industry.

10 (5) State and local taxes that are not consist11 ently based can result in some telecommunications

12 revenues inadvertently escaping State and local tax13 ation altogether, thereby violating standards of tax

14 fairness, creating inequities among competitors in

15 the telecommunications market and depriving State

16 and local governments of needed tax revenues.

17 (6) Because State and local tax laws and regu18 lations of many jurisdictions were established before

19 the proliferation of mobile telecommunications serv20 ices, the application of these laws to the provision of

21 mobile telecommunications services may produce

22 conflicting or unintended tax results.

23 (7) State and local governments provide essen24 tial public services, including services that Congress

25 encourages State and local governments to under-
4

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1 take in partnership with the Federal government for

2 the achievement of important national policy goals.

3 (8) State and local governments provide serv4 ices that support the flow of interstate commerce,

5 including services that support the use and develop6 ment of mobile telecommunications services.

7 (9) State governments as sovereign entities in

8 our Federal system may require that interstate com9 merce conducted within their borders pay its fair

10 share of tax to support the governmental services

11 provided by those governments.

12 (10) Local governments as autonomous subdivi13 sions of a State government may require that inter14 state commerce conducted within their borders pay

15 its fair share of tax to support the governmental

16 services provided by those governments.

17 (11) To balance the needs of interstate com18 merce and the mobile telecommunications industry

19 with the legitimate role of State and local govern20 ments in our system of federalism, Congress needs

21 to establish a uniform and coherent national policy

22 regarding the taxation of mobile telecommunications

23 services through the exercise of its constitutional au24 thority to regulate interstate commerce.
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1 (12) Congress also recognizes that the solution

2 established by this legislation is a necessarily prac3 tical one and must provide for a system of State and

4 local taxation of mobile telecommunications services

5 that in the absence of this solution would not other6 wise occur. To this extent, Congress exercises its

7 power to provide a reasonable solution to otherwise

8 insoluble problems of multi-jurisdictional commerce.

9 SEC. 3. AMENDMENT OF COMMUNICATIONS ACT OF 1934 TO

10 PROVIDE RULES FOR DETERMINING STATE

11 AND LOCAL GOVERNMENT TREATMENT OF

12 CHARGES RELATED TO MOBILE TELE13 COMMUNICATIONS SERVICES.

14 The Communications Act of 1934 (47 U.S.C. 151 et

15 seq.) is amended by adding at the end thereof the fol16 lowing:

17 ‘‘TITLE VIII—STATE AND LOCAL

18 TREATMENT OF CHARGES

19 FOR MOBILE TELECOMMUNI20 CATIONS SERVICES.

21 ‘‘SEC. 801. APPLICATION OF TITLE.

22 ‘‘(a) IN GENERAL.—This title applies to any tax,

23 charge, or fee levied by a taxing jurisdiction as a fixed

24 charge for each customer or measured by gross amounts

25 charged to customers for mobile telecommunications serv-
6

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1 ices, regardless of whether such tax, charge, or fee is im2 posed on the vendor or customer of the service and regard3 less of the terminology used to describe the tax, charge,

4 or fee.

5 ‘‘(b) GENERAL EXCEPTIONS.—This title does not

6 apply to—

7 ‘‘(1) any tax, charge, or fee levied upon or

8 measured by the net income, capital stock, net

9 worth, or property value of the provider of mobile

10 telecommunications service;

11 ‘‘(2) any tax, charge, or fee that is applied to

12 an equitably apportioned gross amount that is not

13 determined on a transactional basis;

14 ‘‘(3) any tax, charge, or fee that represents

15 compensation for a mobile telecommunications serv16 ice provider’s use of public rights of way or other

17 public property, provided that such tax, charge, or

18 fee is not levied by the taxing jurisdiction as a fixed

19 charge for each customer or measured by gross

20 amounts charged to customers for mobile tele21 communication services; or

22 ‘‘(4) any fee related to obligations under section

23 254 of this Act.’’.

24 ‘‘(c) SPECIFIC EXCEPTIONS.—This title—
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1 ‘‘(1) does not apply to the determination of the

2 taxing situs of prepaid telephone calling services;

3 ‘‘(2) does not affect the taxability of either the

4 initial sale of mobile telecommunications services or

5 subsequent resale, whether as sales of the service

6 alone or as a part of a bundled product, where the

7 Internet Tax Freedom Act would preclude a taxing

8 jurisdiction from subjecting the charges of the sale

9 of these mobile telecommunications services to a tax,

10 charge, or fee but this section provides no evidence

11 of the intent of Congress with respect to the applica12 bility of the Internet Tax Freedom Act to such

13 charges; and

14 ‘‘(3) does not apply to the determination of the

15 taxing situs of air-ground radiotelephone service as

16 defined in section 22.99 of the Commission’s regula17 tions (47 C.F.R. 22.99).

18 ‘‘SEC. 802. SOURCING RULES.

19 ‘‘(a) IN GENERAL.—Notwithstanding the law of any

20 State or political subdivision thereof to the contrary, mo21 bile telecommunications services provided in a taxing juris22 diction to a customer, the charges for which are billed by

23 or for the customer’s home service provider, shall be

24 deemed to be provided by the customer’s home service pro25 vider.
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1 ‘‘(b) JURISIDICTION.—All charges for mobile tele2 communications services that are deemed to be provided

3 by the customer’s home service provider under this title

4 are authorized to be subjected to tax, charge, or fee by

5 the taxing jurisdictions whose territorial limits encompass

6 the customer’s place of primary use, regardless of where

7 the mobile telecommunication services originate, terminate

8 or pass through, and no other taxing jurisdiction may im9 pose taxes, charges, or fees on charges for such mobile

10 telecommunications services.

11 ‘‘SEC. 803. LIMITATIONS.

12 ‘‘This title does not—

13 ‘‘(1) provide authority to a taxing jurisdiction

14 to impose a tax, charge, or fee that the laws of the

15 jurisdiction do not authorize the jurisdiction to im16 pose; or

17 ‘‘(2) modify, impair, supersede, or authorize the

18 modification, impairment, or supersession of, the law

19 of any taxing jurisdiction pertaining to taxation ex20 cept as expressly provided in this title.

21 ‘‘SEC. 804. ELECTRONIC DATABASES FOR NATIONWIDE

22 STANDARD NUMERIC JURISDICTIONAL

23 CODES.

24 ‘‘(a) ELECTRONIC DATABASE.—A State may provide

25 an electronic database to a home service provider or, if
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1 a State does not provide such an electronic database to

2 home service providers, then the designated database pro3 vider may provide an electronic database to a home service

4 provider. The electronic database, whether provided by the

5 State or the designated database provider, shall be pro6 vided in a format approved by the American National

7 Standards Institute’s Accredited Standards Committee

8 X12, that, allowing for de minimis deviations, designates

9 for each street address in the State, including to the ex10 tent practicable, any multiple postal street addresses ap11 plicable to one street location, the appropriate taxing juris12 dictions, and the appropriate code for each taxing jurisdic13 tion, for each level of taxing jurisdiction, identified by one

14 nationwide standard numeric code. The electronic data15 base shall also provide the appropriate code for each street

16 address with respect to political subdivisions which are not

17 taxing jurisdictions when reasonably needed to determine

18 the proper taxing jurisdiction. The nationwide standard

19 numeric codes shall contain the same number of numeric

20 digits with each digit or combination of digits referring

21 to the same level of taxing jurisdiction throughout the

22 United States using a format similar to FIPS 55-3 or

23 other appropriate standard approved by the Federation of

24 Tax Administrators and the Multistate Tax Commission,
10

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1 or their successors. Each address shall be provided in

2 standard postal format.

3 ‘‘(b) NOTICE; UPDATES.—A State or designated

4 database provider that provides or maintains an electronic

5 database described in subsection (a) shall provide notice

6 of the availability of the then current electronic database,

7 and any subsequent revisions thereof, by publication in the

8 manner normally employed for the publication of informa9 tional tax, charge, or fee notices to taxpayers in that

10 State.

11 ‘‘(c) USER HELD HARMLESS.—A home service pro12 vider using the data contained in the electronic database

13 described in subsection (a) shall be held harmless from

14 any tax, charge, or fee liability that otherwise would be

15 due solely as a result of any error or omission in the elec16 tronic database provided by a State or designated data17 base provider. The home service provider shall reflect

18 changes made to the electronic database during a calendar

19 quarter no later than 30 days after the end of that cal20 endar quarter for each State that issues notice of the

21 availability of an electronic database reflecting such

22 changes under subsection (b).
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1 ‘‘SEC. 805. PROCEDURE WHERE NO ELECTRONIC DATABASE

2 PROVIDED.

3 ‘‘(a) IN GENERAL.—If neither a State nor designated

4 database provider provides an electronic database under

5 section 804, a home service provider shall be held harmless

6 from any tax, charge, or fee liability in that State that

7 otherwise would be due solely as a result of an assignment

8 of a street address to an incorrect taxing jurisdiction if,

9 subject to section 806, the home service provider employs

10 an enhanced zip code to assign each street address to a

11 specific taxing jurisdiction for each level of taxing jurisdic12 tion and exercises due diligence at each level of taxing ju13 risdiction to ensure that each such street address is as14 signed to the correct taxing jurisdiction. Where an en15 hanced zip code overlaps boundaries of taxing jurisdictions

16 of the same level, the home service provider must des17 ignate one specific jurisdiction within such enhanced zip

18 code for use in taxing the activity for that enhanced zip

19 code for each level of taxing jurisdiction. Any enhanced

20 zip code assignment changed in accordance with section

21 806 is deemed to be in compliance with this section. For

22 purposes of this section, there is a rebuttable presumption

23 that a home service provider has exercised due diligence

24 if such home service provider demonstrates that it has—

25 ‘‘(1) expended reasonable resources to imple26 ment and maintain an appropriately detailed elec-
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1 tronic database of street address assignments to tax2 ing jurisdictions;

3 ‘‘(2) implemented and maintained reasonable

4 internal controls to promptly correct misassignments

5 of street addresses to taxing jurisdictions; and

6 ‘‘(3) used all reasonably obtainable and usable

7 data pertaining to municipal annexations,

8 incorporations, reorganizations and any other

9 changes in jurisdictional boundaries that materially

10 affect the accuracy of the electronic database.

11 ‘‘(b) TERMINATION OF SAFE HARBOR.—Subsection

12 (a) applies to a home service provider that is in compliance

13 with the requirements of subsection (a), with respect to

14 a State for which an electronic database is not provided

15 under section 804 until the later of—

16 ‘‘(1) 18 months after the nationwide standard

17 numeric code described in section 804(a) has been

18 approved by the Federation of Tax Administrators

19 and the Multistate Tax Commission; or

20 ‘‘(2) 6 months after that State or a designated

21 database provider in that State provides the elec22 tronic database as prescribed in section 804(a).
13

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1 ‘‘SEC. 806. CORRECTION OF ERRONEOUS DATA FOR PLACE

2 OF PRIMARY USE.

3 ‘‘(a) IN GENERAL.—A taxing jurisdiction, or a State

4 on behalf of any taxing jurisdiction or taxing jurisdictions

5 within such State, may—

6 ‘‘(1) determine that the address used for pur7 poses of determining the taxing jurisdictions to

8 which taxes, charges, or fees for mobile tele9 communications services are remitted does not meet

10 the definition of place of primary use in section

11 809(3) and give binding notice to the home service

12 provider to change the place of primary use on a

13 prospective basis from the date of notice of deter14 mination if—

15 ‘‘(A) where the taxing jurisdiction making

16 such determination is not a State, such taxing

17 jurisdiction obtains the consent of all affected

18 taxing jurisdictions within the State before giv19 ing such notice of determination; and

20 ‘‘(B) the customer is given an opportunity,

21 prior to such notice of determination, to dem22 onstrate in accordance with applicable State or

23 local tax, charge, or fee administrative proce24 dures that the address is the customer’s place

25 of primary use;
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1 ‘‘(2) determine that the assignment of a taxing

2 jurisdiction by a home service provider under section

3 805 does not reflect the correct taxing jurisdiction

4 and give binding notice to the home service provider

5 to change the assignment on a prospective basis

6 from the date of notice of determination if—

7 ‘‘(A) where the taxing jurisdiction making

8 such determination is not a State, such taxing

9 jurisdiction obtains the consent of all affected

10 taxing jurisdictions within the State before giv11 ing such notice of determination; and

12 ‘‘(B) the home service provider is given an

13 opportunity to demonstrate in accordance with

14 applicable State or local tax, charge, or fee ad15 ministrative procedures that the assignment re16 flects the correct taxing jurisdiction.

17 ‘‘SEC. 807. DUTY OF HOME SERVICE PROVIDER REGARDING

18 PLACE OF PRIMARY USE.

19 ‘‘(a) PLACE OF PRIMARY USE.—A home service pro20 vider is responsible for obtaining and maintaining the cus21 tomer’s place of primary use (as defined in section 809).

22 Subject to section 806, and if the home service provider’s

23 reliance on information provided by its customer is in good

24 faith, a home service provider—
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1 ‘‘(1) may rely on the applicable residential or

2 business street address supplied by the home service

3 provider’s customer; and

4 ‘‘(2) is not liable for any additional taxes,

5 charges, or fees based on a different determination

6 of the place of primary use for taxes, charges or fees

7 that are customarily passed on to the customer as

8 a separate itemized charge.

9 ‘‘(b) ADDRESS UNDER EXISTING AGREEMENTS.—

10 Except as provided in section 806, a home service provider

11 may treat the address used by the home service provider

12 for tax purposes for any customer under a service contract

13 or agreement in effect 2 years after the date of enactment

14 of the Mobile Telecommunications Sourcing Act as that

15 customer’s place of primary use for the remaining term

16 of such service contract or agreement, excluding any ex17 tension or renewal of such service contract or agreement,

18 for purposes of determining the taxing jurisdictions to

19 which taxes, charges, or fees on charges for mobile tele20 communications services are remitted.

21 ‘‘SEC. 808. SCOPE; SPECIAL RULES.

22 ‘‘(a) TITLE DOES NOT SUPERSEDE CUSTOMER’S LI23 ABILITY TO TAXING JURISDICTION.—Nothing in this title

24 modifies, impairs, supersedes, or authorizes the modifica25 tion, impairment, or supersession of, any law allowing a
16

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1 taxing jurisdiction to collect a tax, charge, or fee from a

2 customer that has failed to provide its place of primary

3 use.

4 ‘‘(b) ADDITIONAL TAXABLE CHARGES.—If a taxing

5 jurisdiction does not otherwise subject charges for mobile

6 telecommunications services to taxation and if these

7 charges are aggregated with and not separately stated

8 from charges that are subject to taxation, then the charges

9 for otherwise non-taxable mobile telecommunications serv10 ices may be subject to taxation unless the home service

11 provider can reasonably identify charges not subject to

12 such tax, charge, or fee from its books and records that

13 are kept in the regular course of business.

14 ‘‘(c) NON-TAXABLE CHARGES.—If a taxing jurisdic15 tion does not subject charges for mobile telecommuni16 cations services to taxation, a customer may not rely upon

17 the non-taxability of charges for mobile telecommuni18 cations services unless the customer’s home service pro19 vider separately states the charges for non-taxable mobile

20 telecommunications services from taxable charges or the

21 home service provider elects, after receiving a written re22 quest from the customer in the form required by the pro23 vider, to provide verifiable data based upon the home serv24 ice provider’s books and records that are kept in the reg-
17

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1 ular course of business that reasonably identifies the non2 taxable charges.

3 ‘‘(d) REFERENCES TO REGULATIONS.—Any ref4 erence in this title to the Commission’s regulations is a

5 reference to those regulations as they were in effect on

6 June 1, 1999.

7 ‘‘SEC. 809. DEFINITIONS.

8 ‘‘In this title:

9 ‘‘(1) CHARGES FOR MOBILE TELECOMMUNI10 CATIONS SERVICES.—The term ‘charges for mobile

11 telecommunications services’ means any charge for,

12 or associated with, the provision of commercial mo13 bile radio service, as defined in section 20.3 of the

14 Commission’s regulations (47 C.F.R. 20.3), or any

15 charge for, or associated with, a service provided as

16 an adjunct to a commercial mobile radio service,

17 that is billed to the customer by or for the cus18 tomer’s home service provider regardless of whether

19 individual transmissions originate or terminate with20 in the licensed service area of the home service pro21 vider.

22 ‘‘(2) TAXING JURISDICTION.—The term ‘taxing

23 jurisdiction’ means any of the several States, the

24 District of Columbia, or any territory or possession

25 of the United States, any municipality, city, county,
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1 township, parish, transportation district, or assess2 ment jurisdiction, or any other political subdivision

3 within the territorial limits of the United States with

4 the authority to impose a tax, charge, or fee.

5 ‘‘(3) PLACE OF PRIMARY USE.—The term ‘place

6 of primary use’ means the street address representa7 tive of where the customer’s use of the mobile tele8 communications service primarily occurs, which must

9 be either—

10 ‘‘(A) the residential street address or the

11 primary business street address of the cus12 tomer; and

13 ‘‘(B) within the licensed service area of the

14 home service provider.

15 ‘‘(4) LICENSED SERVICE AREA.—The term ‘li16 censed service area’ means the geographic area in

17 which the home service provider is authorized by law

18 or contract to provide commercial mobile radio serv19 ice to the customer.

20 ‘‘(5) HOME SERVICE PROVIDER.—The term

21 ‘home service provider’ means the facilities-based

22 carrier or reseller with which the customer contracts

23 for the provision of mobile telecommunications serv24 ices.

25 ‘‘(6) CUSTOMER.—
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1 ‘‘(A) IN GENERAL.—The term ‘customer’

2 means—

3 ‘‘(i) the person or entity that con4 tracts with the home service provider for

5 mobile telecommunications services; or

6 ‘‘(ii) where the end user of mobile

7 telecommunications services is not the con8 tracting party, the end user of the mobile

9 telecommunications service, but this clause

10 applies only for the purpose of determining

11 the place of primary use.

12 ‘‘(B) The term ‘customer’ does not

13 include—

14 ‘‘(i) a reseller of mobile telecommuni15 cations service; or

16 ‘‘(ii) a serving carrier under an ar17 rangement to serve the customer outside

18 the home service provider’s licensed service

19 area.

20 ‘‘(7) DESIGNATED DATABASE PROVIDER.—The

21 term ‘designated database provider’ means a cor22 poration, association, or other entity representing all

23 the political subdivisions of a State that is—

24 ‘‘(A) responsible for providing the elec25 tronic database prescribed in section 804(a) if
20

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1 the State has not provided such electronic data2 base; and

3 ‘‘(B) sanctioned by municipal and county

4 associations or leagues of the State whose re5 sponsibility it would otherwise be to provide the

6 electronic database prescribed by this title.

7 ‘‘(8) PREPAID TELEPHONE CALLING SERV8 ICES.—The term ‘prepaid telephone calling service’

9 means the right to purchase exclusively tele10 communications services that must be paid for in

11 advance, that enables the origination of calls using

12 an access number, authorization code, or both,

13 whether manually or electronically dialed, if the re14 maining amount of units of service that have been

15 prepaid is known by the provider of the prepaid

16 service on a continuous basis.

17 ‘‘(9) RESELLER.—The term ‘reseller’—

18 ‘‘(A) means a provider who purchases tele19 communications services from another tele20 communications service provider and then re21 sells, uses as a component part of, or integrates

22 the purchased services into a mobile tele23 communications service; but

24 ‘‘(B) does not include a serving carrier

25 with which a home service provider arranges for
21

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1 the services to its customers outside the home

2 service provider’s licensed service area.

3 ‘‘(10) SERVING CARRIER.—The term ‘serving

4 carrier’ means a facilities-based carrier providing

5 mobile telecommunications service to a customer

6 outside a home service provider’s or reseller’s li7 censed service area.

8 ‘‘(11) MOBILE TELECOMMUNICATIONS SERV9 ICE.—The term ‘mobile telecommunications service’

10 means commercial mobile radio service, as defined in

11 section 20.3 of the Commission’s regulations (47

12 C.F.R. 20.3).

13 ‘‘(12) ENHANCED ZIP CODE.—The term ‘en14 hanced zip code’ means a United States postal zip

15 code of 9 or more digits.

16 ‘‘SEC. 810. COMMISSION NOT TO HAVE JURISDICTION OF

17 TITLE.

18 ‘‘Notwithstanding any other provision of this Act, the

19 Commission shall have no jurisidiction over the interpreta20 tion, implementation, or enforcement of this title.

21 ‘‘SEC. 811. NONSEVERABILITY.

22 ‘‘If a court of competent jurisdiction enters a final

23 judgment on the merits that is no longer subject to appeal,

24 which substantially limits or impairs the essential ele25 ments of this title based on Federal statutory or Federal
22

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1 Constitutional grounds, or which determines that this title

2 violates the United States Constitution, then the provi3 sions of this title are null and void and of no effect.

4 ‘‘SEC. 812. NO INFERENCE.

5 ‘‘(a) INTERNET TAX FREEDOM ACT.—Nothing in

6 this title may be construed as bearing on Congressional

7 intent in enacting the Internet Tax Freedom Act or as

8 affecting that Act in any way.

9 ‘‘(b) TELECOMMUNICATIONS ACT OF 1996.—Nothing

10 in this title shall limit or otherwise affect the implementa11 tion of the Telecommunications Act of 1996 or the amend12 ments made by that Act.’’.

13 SEC. 4. EFFECTIVE DATE.

14 The amendment made by section 3 applies to cus15 tomer bills issued after the first day of the first month

16 beginning more than 2 years after the date of enactment

17 of this Act.

18 SECTION 1. SHORT TITLE.

19 This Act may be cited as the ‘‘Mobile Telecommuni20 cations Sourcing Act’’.

21 SEC. 2. FINDINGS.

22 The Congress finds the following:

23 (1) The provision of mobile telecommunications

24 services is a matter of interstate commerce within the

25 jurisdiction of the United States Congress under arti-
23

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1 cle I, section 8 of the United States Constitution. Cer2 tain aspects of mobile telecommunications technologies

3 and services do not respect, and operate independ4 ently of, State and local jurisdictional boundaries.

5 (2) The mobility afforded to millions of Amer6 ican consumers by mobile telecommunications services

7 helps to fuel the American economy, facilitate the de8 velopment of the information superhighway and pro9 vide important safety benefits.

10 (3) Users of mobile telecommunications services

11 can originate a call in one State or local jurisdiction

12 and travel through other States or local jurisdictions

13 during the course of the call. These circumstances

14 make it more difficult to track the separate segments

15 of a particular call with all of the States and local

16 jurisdictions involved with the call. In addition, ex17 panded home calling areas, bundled service offerings

18 and other marketing advances make it increasingly

19 difficult to assign each transaction to a specific tax20 ing jurisdiction.

21 (4) State and local taxes imposed on mobile tele22 communications services that are not consistently

23 based can subject consumers, businesses and others en24 gaged in interstate commerce to multiple, confusing
24

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1 and burdensome State and local taxes and result in

2 higher costs to consumers and the industry.

3 (5) State and local taxes that are not consist4 ently based can result in some telecommunications

5 revenues inadvertently escaping State and local tax6 ation altogether, thereby violating standards of tax

7 fairness, creating inequities among competitors in the

8 telecommunications market and depriving State and

9 local governments of needed tax revenues.

10 (6) Because State and local tax laws and regula11 tions of many jurisdictions were established before the

12 proliferation of mobile telecommunications services,

13 the application of these laws to the provision of mo14 bile telecommunications services may produce con15 flicting or unintended tax results.

16 (7) State and local governments provide essential

17 public services, including services that Congress en18 courages State and local governments to undertake in

19 partnership with the Federal Government for the

20 achievement of important national policy goals.

21 (8) State and local governments provide services

22 that support the flow of interstate commerce, includ23 ing services that support the use and development of

24 mobile telecommunications services.
25

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1 (9) State governments as sovereign entities in

2 our Federal system may require that interstate com3 merce conducted within their borders pay its fair

4 share of tax to support the governmental services pro5 vided by those governments.

6 (10) Local governments as autonomous subdivi7 sions of a State government may require that inter8 state commerce conducted within their borders pay its

9 fair share of tax to support the governmental services

10 provided by those governments.

11 (11) To balance the needs of interstate commerce

12 and the mobile telecommunications industry with the

13 legitimate role of State and local governments in our

14 system of federalism, Congress needs to establish a

15 uniform and coherent national policy regarding the

16 taxation of mobile telecommunications services

17 through the exercise of its constitutional authority to

18 regulate interstate commerce.

19 (12) Congress also recognizes that the solution es20 tablished by this legislation is a necessarily practical

21 one and must provide for a system of State and local

22 taxation of mobile telecommunications services that in

23 the absence of this solution would not otherwise occur.

24 To this extent, Congress exercises its power to provide
26

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1 a reasonable solution to otherwise insoluble problems

2 of multi-jurisdictional commerce.

3 SEC. 3. AMENDMENT OF COMMUNICATIONS ACT OF 1934 TO

4 PROVIDE RULES FOR DETERMINING STATE

5 AND LOCAL GOVERNMENT TREATMENT OF

6 CHARGES RELATED TO MOBILE TELE7 COMMUNICATIONS SERVICES.

8 The Communications Act of 1934 (47 U.S.C. 151 et

9 seq.) is amended by adding at the end thereof the following:

10 ‘‘TITLE VIII—STATE AND LOCAL

11 TREATMENT OF CHARGES

12 FOR MOBILE TELECOMMUNI13 CATIONS SERVICES.

14 ‘‘SEC. 801. APPLICATION OF TITLE.

15 ‘‘(a) IN GENERAL.—This title applies to any tax,

16 charge, or fee levied by a taxing jurisdiction as a fixed

17 charge for each customer or measured by gross amounts

18 charged to customers for mobile telecommunications serv19 ices, regardless of whether such tax, charge, or fee is imposed

20 on the vendor or customer of the service and regardless of

21 the terminology used to describe the tax, charge, or fee.

22 ‘‘(b) GENERAL EXCEPTIONS.—This title does not

23 apply to—

24 ‘‘(1) any tax, charge, or fee levied upon or meas25 ured by the net income, capital stock, net worth, or
27

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1 property value of the provider of mobile telecommuni2 cations service;

3 ‘‘(2) any tax, charge, or fee that is applied to an

4 equitably apportioned amount that is not determined

5 on a transactional basis;

6 ‘‘(3) any tax, charge, or fee that represents com7 pensation for a mobile telecommunications service

8 provider’s use of public rights of way or other public

9 property, provided that such tax, charge, or fee is not

10 levied by the taxing jurisdiction as a fixed charge for

11 each customer or measured by gross amounts charged

12 to customers for mobile telecommunication services;

13 ‘‘(4) any generally applicable State-imposed

14 business and occupation tax—

15 ‘‘(A) that is applied to gross receipts or

16 gross proceeds;

17 ‘‘(B) that is the legal liability of the carrier;

18 and

19 ‘‘(C) under which the carrier may elect to

20 use the sourcing rules under this title; or

21 ‘‘(5) any fee related to obligations under section

22 254 of this Act.’’.

23 ‘‘(c) SPECIFIC EXCEPTIONS.—This title—

24 ‘‘(1) does not apply to the determination of the

25 taxing situs of prepaid telephone calling services;
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1 ‘‘(2) does not affect the taxability of either the

2 initial sale of mobile telecommunications services or

3 subsequent resale, whether as sales of the service alone

4 or as a part of a bundled product, where the Internet

5 Tax Freedom Act would preclude a taxing jurisdic6 tion from subjecting the charges of the sale of these

7 mobile telecommunications services to a tax, charge,

8 or fee but this section provides no evidence of the in9 tent of Congress with respect to the applicability of

10 the Internet Tax Freedom Act to such charges; and

11 ‘‘(3) does not apply to the determination of the

12 taxing situs of air-ground radiotelephone service as

13 defined in section 22.99 of the Commission’s regula14 tions (47 C.F.R. 22.99).

15 ‘‘SEC. 802. SOURCING RULES.

16 ‘‘(a) IN GENERAL.—Notwithstanding the law of any

17 State or political subdivision thereof to the contrary, mobile

18 telecommunications services provided in a taxing jurisdic19 tion to a customer, the charges for which are billed by or

20 for the customer’s home service provider, shall be deemed

21 to be provided by the customer’s home service provider.

22 ‘‘(b) JURISIDICTION.—All charges for mobile tele23 communications services that are deemed to be provided by

24 the customer’s home service provider under this title are au25 thorized to be subjected to tax, charge, or fee by the taxing
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1 jurisdictions whose territorial limits encompass the cus2 tomer’s place of primary use, regardless of where the mobile

3 telecommunication services originate, terminate or pass

4 through, and no other taxing jurisdiction may impose taxes,

5 charges, or fees on charges for such mobile telecommuni6 cations services.

7 ‘‘SEC. 803. LIMITATIONS.

8 ‘‘This title does not—

9 ‘‘(1) provide authority to a taxing jurisdiction to

10 impose a tax, charge, or fee that the laws of the juris11 diction do not authorize the jurisdiction to impose; or

12 ‘‘(2) modify, impair, supersede, or authorize the

13 modification, impairment, or supersession of, the law

14 of any taxing jurisdiction pertaining to taxation ex15 cept as expressly provided in this title.

16 ‘‘SEC. 804. ELECTRONIC DATABASES FOR NATIONWIDE

17 STANDARD NUMERIC JURISDICTIONAL

18 CODES.

19 ‘‘(a) ELECTRONIC DATABASE.—A State may provide

20 an electronic database to a home service provider or, if a

21 State does not provide such an electronic database to home

22 service providers, then the designated database provider

23 may provide an electronic database to a home service pro24 vider. The electronic database, whether provided by the

25 State or the designated database provider, shall be provided
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1 in a format approved by the American National Standards

2 Institute’s Accredited Standards Committee X12, that, al3 lowing for de minimis deviations, designates for each street

4 address in the State, including to the extent practicable,

5 any multiple postal street addresses applicable to one street

6 location, the appropriate taxing jurisdictions, and the ap7 propriate code for each taxing jurisdiction, for each level

8 of taxing jurisdiction, identified by one nationwide stand9 ard numeric code. The electronic database shall also provide

10 the appropriate code for each street address with respect to

11 political subdivisions which are not taxing jurisdictions

12 when reasonably needed to determine the proper taxing ju13 risdiction. The nationwide standard numeric codes shall

14 contain the same number of numeric digits with each digit

15 or combination of digits referring to the same level of taxing

16 jurisdiction throughout the United States using a format

17 similar to FIPS 55–3 or other appropriate standard ap18 proved by the Federation of Tax Administrators and the

19 Multistate Tax Commission, or their successors. Each ad20 dress shall be provided in standard postal format.

21 ‘‘(b) NOTICE; UPDATES.—A State or designated data22 base provider that provides or maintains an electronic

23 database described in subsection (a) shall provide notice of

24 the availability of the then current electronic database, and

25 any subsequent revisions thereof, by publication in the man-
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1 ner normally employed for the publication of informational

2 tax, charge, or fee notices to taxpayers in that State.

3 ‘‘(c) USER HELD HARMLESS.—A home service pro4 vider using the data contained in the electronic database

5 described in subsection (a) shall be held harmless from any

6 tax, charge, or fee liability that otherwise would be due sole7 ly as a result of any error or omission in the electronic

8 database provided by a State or designated database pro9 vider. The home service provider shall reflect changes made

10 to the electronic database during a calendar quarter no

11 later than 30 days after the end of that calendar quarter

12 for each State that issues notice of the availability of an

13 electronic database reflecting such changes under subsection

14 (b).

15 ‘‘SEC. 805. PROCEDURE WHERE NO ELECTRONIC DATABASE

16 PROVIDED.

17 ‘‘(a) IN GENERAL.—If neither a State nor designated

18 database provider provides an electronic database under

19 section 804, a home service provider shall be held harmless

20 from any tax, charge, or fee liability in that State that oth21 erwise would be due solely as a result of an assignment of

22 a street address to an incorrect taxing jurisdiction if, sub23 ject to section 806, the home service provider employs an

24 enhanced zip code to assign each street address to a specific

25 taxing jurisdiction for each level of taxing jurisdiction and
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1 exercises due diligence at each level of taxing jurisdiction

2 to ensure that each such street address is assigned to the

3 correct taxing jurisdiction. Where an enhanced zip code

4 overlaps boundaries of taxing jurisdictions of the same level,

5 the home service provider must designate one specific juris6 diction within such enhanced zip code for use in taxing the

7 activity for that enhanced zip code for each level of taxing

8 jurisdiction. Any enhanced zip code assignment changed in

9 accordance with section 806 is deemed to be in compliance

10 with this section. For purposes of this section, there is a

11 rebuttable presumption that a home service provider has ex12 ercised due diligence if such home service provider dem13 onstrates that it has—

14 ‘‘(1) expended reasonable resources to implement

15 and maintain an appropriately detailed electronic

16 database of street address assignments to taxing juris17 dictions;

18 ‘‘(2) implemented and maintained reasonable in19 ternal controls to promptly correct misassignments of

20 street addresses to taxing jurisdictions; and

21 ‘‘(3) used all reasonably obtainable and usable

22 data pertaining to municipal annexations,

23 incorporations, reorganizations and any other

24 changes in jurisdictional boundaries that materially

25 affect the accuracy of the electronic database.
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1 ‘‘(b) TERMINATION OF SAFE HARBOR.—Subsection (a)

2 applies to a home service provider that is in compliance

3 with the requirements of subsection (a), with respect to a

4 State for which an electronic database is not provided under

5 section 804 until the later of—

6 ‘‘(1) 18 months after the nationwide standard

7 numeric code described in section 804(a) has been ap8 proved by the Federation of Tax Administrators and

9 the Multistate Tax Commission; or

10 ‘‘(2) 6 months after that State or a designated

11 database provider in that State provides the electronic

12 database as prescribed in section 804(a).

13 ‘‘SEC. 806. CORRECTION OF ERRONEOUS DATA FOR PLACE

14 OF PRIMARY USE.

15 ‘‘(a) IN GENERAL.—A taxing jurisdiction, or a State

16 on behalf of any taxing jurisdiction or taxing jurisdictions

17 within such State, may—

18 ‘‘(1) determine that the address used for purposes

19 of determining the taxing jurisdictions to which taxes,

20 charges, or fees for mobile telecommunications services

21 are remitted does not meet the definition of place of

22 primary use in section 809(3) and give binding no23 tice to the home service provider to change the place

24 of primary use on a prospective basis from the date

25 of notice of determination if—
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1 ‘‘(A) where the taxing jurisdiction making

2 such determination is not a State, such taxing

3 jurisdiction obtains the consent of all affected

4 taxing jurisdictions within the State before giv5 ing such notice of determination; and

6 ‘‘(B) the customer is given an opportunity,

7 prior to such notice of determination, to dem8 onstrate in accordance with applicable State or

9 local tax, charge, or fee administrative proce10 dures that the address is the customer’s place of

11 primary use;

12 ‘‘(2) determine that the assignment of a taxing

13 jurisdiction by a home service provider under section

14 805 does not reflect the correct taxing jurisdiction and

15 give binding notice to the home service provider to

16 change the assignment on a prospective basis from the

17 date of notice of determination if—

18 ‘‘(A) where the taxing jurisdiction making

19 such determination is not a State, such taxing

20 jurisdiction obtains the consent of all affected

21 taxing jurisdictions within the State before giv22 ing such notice of determination; and

23 ‘‘(B) the home service provider is given an

24 opportunity to demonstrate in accordance with

25 applicable State or local tax, charge, or fee ad-
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1 ministrative procedures that the assignment re2 flects the correct taxing jurisdiction.

3 ‘‘SEC. 807. DUTY OF HOME SERVICE PROVIDER REGARDING

4 PLACE OF PRIMARY USE.

5 ‘‘(a) PLACE OF PRIMARY USE.—A home service pro6 vider is responsible for obtaining and maintaining the cus7 tomer’s place of primary use (as defined in section 809).

8 Subject to section 806, and if the home service provider’s

9 reliance on information provided by its customer is in good

10 faith, a home service provider—

11 ‘‘(1) may rely on the applicable residential or

12 business street address supplied by the home service

13 provider’s customer; and

14 ‘‘(2) is not liable for any additional taxes,

15 charges, or fees based on a different determination of

16 the place of primary use for taxes, charges or fees that

17 are customarily passed on to the customer as a sepa18 rate itemized charge.

19 ‘‘(b) ADDRESS UNDER EXISTING AGREEMENTS.—Ex20 cept as provided in section 806, a home service provider

21 may treat the address used by the home service provider

22 for tax purposes for any customer under a service contract

23 or agreement in effect 2 years after the date of enactment

24 of the Mobile Telecommunications Sourcing Act as that cus25 tomer’s place of primary use for the remaining term of such
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1 service contract or agreement, excluding any extension or

2 renewal of such service contract or agreement, for purposes

3 of determining the taxing jurisdictions to which taxes,

4 charges, or fees on charges for mobile telecommunications

5 services are remitted.

6 ‘‘SEC. 808. SCOPE; SPECIAL RULES.

7 ‘‘(a) TITLE DOES NOT SUPERSEDE CUSTOMER’S LI8 ABILITY TO TAXING JURISDICTION.—Nothing in this title

9 modifies, impairs, supersedes, or authorizes the modifica10 tion, impairment, or supersession of, any law allowing a

11 taxing jurisdiction to collect a tax, charge, or fee from a

12 customer that has failed to provide its place of primary

13 use.

14 ‘‘(b) ADDITIONAL TAXABLE CHARGES.—If a taxing ju15 risdiction does not otherwise subject charges for mobile tele16 communications services to taxation and if these charges

17 are aggregated with and not separately stated from charges

18 that are subject to taxation, then the charges for otherwise

19 non-taxable mobile telecommunications services may be sub20 ject to taxation unless the home service provider can reason21 ably identify charges not subject to such tax, charge, or fee

22 from its books and records that are kept in the regular

23 course of business.

24 ‘‘(c) NON-TAXABLE CHARGES.—If a taxing jurisdic25 tion does not subject charges for mobile telecommunications
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1 services to taxation, a customer may not rely upon the non2 taxability of charges for mobile telecommunications services

3 unless the customer’s home service provider separately states

4 the charges for non-taxable mobile telecommunications serv5 ices from taxable charges or the home service provider elects,

6 after receiving a written request from the customer in the

7 form required by the provider, to provide verifiable data

8 based upon the home service provider’s books and records

9 that are kept in the regular course of business that reason10 ably identifies the non-taxable charges.

11 ‘‘(d) REFERENCES TO REGULATIONS.—Any reference

12 in this title to the Commission’s regulations is a reference

13 to those regulations as they were in effect on June 1, 1999.

14 ‘‘SEC. 809. DEFINITIONS.

15 ‘‘In this title:

16 ‘‘(1) CHARGES FOR MOBILE TELECOMMUNI17 CATIONS SERVICES.—The term ‘charges for mobile

18 telecommunications services’ means any charge for, or

19 associated with, the provision of commercial mobile

20 radio service, as defined in section 20.3 of the Com21 mission’s regulations (47 C.F.R. 20.3), or any charge

22 for, or associated with, a service provided as an ad23 junct to a commercial mobile radio service, that is

24 billed to the customer by or for the customer’s home

25 service provider regardless of whether individual
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1 transmissions originate or terminate within the li2 censed service area of the home service provider.

3 ‘‘(2) TAXING JURISDICTION.—The term ‘taxing

4 jurisdiction’ means any of the several States, the Dis5 trict of Columbia, or any territory or possession of the

6 United States, any municipality, city, county, town7 ship, parish, transportation district, or assessment ju8 risdiction, or any other political subdivision within

9 the territorial limits of the United States with the au10 thority to impose a tax, charge, or fee.

11 ‘‘(3) PLACE OF PRIMARY USE.—The term ‘place

12 of primary use’ means the street address representa13 tive of where the customer’s use of the mobile tele14 communications service primarily occurs, which must

15 be—

16 ‘‘(A) either the residential street address or

17 the primary business street address of the cus18 tomer; and

19 ‘‘(B) within the licensed service area of the

20 home service provider.

21 ‘‘(4) LICENSED SERVICE AREA.—The term ‘li22 censed service area’ means the geographic area in

23 which the home service provider is authorized by law

24 or contract to provide commercial mobile radio serv25 ice to the customer.
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1 ‘‘(5) HOME SERVICE PROVIDER.—The term

2 ‘home service provider’ means the facilities-based car3 rier or reseller with which the customer contracts for

4 the provision of mobile telecommunications services.

5 ‘‘(6) CUSTOMER.—

6 ‘‘(A) IN GENERAL.—The term ‘customer’

7 means—

8 ‘‘(i) the person or entity that contracts

9 with the home service provider for mobile

10 telecommunications services; or

11 ‘‘(ii) where the end user of mobile tele12 communications services is not the con13 tracting party, the end user of the mobile

14 telecommunications service, but this clause

15 applies only for the purpose of determining

16 the place of primary use.

17 ‘‘(B) The term ‘customer’ does not include—

18 ‘‘(i) a reseller of mobile telecommuni19 cations service; or

20 ‘‘(ii) a serving carrier under an ar21 rangement to serve the customer outside the

22 home service provider’s licensed service

23 area.

24 ‘‘(7) DESIGNATED DATABASE PROVIDER.—The

25 term ‘designated database provider’ means a corpora-
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1 tion, association, or other entity representing all the

2 political subdivisions of a State that is—

3 ‘‘(A) responsible for providing the electronic

4 database prescribed in section 804(a) if the State

5 has not provided such electronic database; and

6 ‘‘(B) sanctioned by municipal and county

7 associations or leagues of the State whose respon8 sibility it would otherwise be to provide the elec9 tronic database prescribed by this title.

10 ‘‘(8) PREPAID TELEPHONE CALLING SERVICES.—

11 The term ‘prepaid telephone calling service’ means the

12 right to purchase exclusively telecommunications serv13 ices that must be paid for in advance, that enables the

14 origination of calls using an access number, author15 ization code, or both, whether manually or electroni16 cally dialed, if the remaining amount of units of serv17 ice that have been prepaid is known by the provider

18 of the prepaid service on a continuous basis.

19 ‘‘(9) RESELLER.—The term ‘reseller’—

20 ‘‘(A) means a provider who purchases tele21 communications services from another tele22 communications service provider and then re23 sells, uses as a component part of, or integrates

24 the purchased services into a mobile tele25 communications service; but
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1 ‘‘(B) does not include a serving carrier with

2 which a home service provider arranges for the

3 services to its customers outside the home service

4 provider’s licensed service area.

5 ‘‘(10) SERVING CARRIER.—The term ‘serving

6 carrier’ means a facilities-based carrier providing

7 mobile telecommunications service to a customer out8 side a home service provider’s or reseller’s licensed

9 service area.

10 ‘‘(11) MOBILE TELECOMMUNICATIONS SERV11 ICE.—The term ‘mobile telecommunications service’

12 means commercial mobile radio service, as defined in

13 section 20.3 of the Commission’s regulations (47

14 C.F.R. 20.3).

15 ‘‘(12) ENHANCED ZIP CODE.—The term ‘en16 hanced zip code’ means a United States postal zip

17 code of 9 or more digits.

18 ‘‘SEC. 810. COMMISSION NOT TO HAVE JURISDICTION OF

19 TITLE.

20 ‘‘Notwithstanding any other provision of this Act, the

21 Commission shall have no jurisidiction over the interpreta22 tion, implementation, or enforcement of this title.

23 ‘‘SEC. 811. NONSEVERABILITY.

24 ‘‘If a court of competent jurisdiction enters a final

25 judgment on the merits that is no longer subject to appeal,
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1 which substantially limits or impairs the essential elements

2 of this title based on Federal statutory or Federal Constitu3 tional grounds, or which determines that this title violates

4 the United States Constitution, then the provisions of this

5 title are null and void and of no effect.

6 ‘‘SEC. 812. NO INFERENCE.

7 ‘‘(a) INTERNET TAX FREEDOM ACT.—Nothing in this

8 title may be construed as bearing on Congressional intent

9 in enacting the Internet Tax Freedom Act or as affecting

10 that Act in any way.

11 ‘‘(b) TELECOMMUNICATIONS ACT OF 1996.—Nothing

12 in this title shall limit or otherwise affect the implementa13 tion of the Telecommunications Act of 1996 or the amend14 ments made by that Act.’’.

15 SEC. 4. EFFECTIVE DATE.

16 The amendment made by section 3 applies to customer

17 bills issued after the first day of the first month beginning

18 more than 2 years after the date of enactment of this Act.

Calendar No. 660

106TH CONGRESS

2D SESSION S. 1755

[Report No. 106–326]

A BILL

To amend the Communications Act of 1934 to regulate interstate commerce in the use of mobile

telephones.

JUNE 30, 2000

Reported with an amendment