II

106TH CONGRESS

1ST SESSION S. 1755

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 and Mr. DORGAN) introduced the following bill;

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

Science, and Transportation

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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Mobile Telecommuni5 cations Sourcing Act’’.

6 SEC. 2. FINDINGS

7 The Congress finds the following:

8 (1) The provision of mobile telecommunications

9 services is a matter of interstate commerce within

10 the jurisdiction of the United States Congress under
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1 Article I, Section 8 of the United States Constitu2 tion. Certain aspects of mobile telecommunications

3 technologies and services do not respect, and operate

4 independently of, State and local jurisdictional

5 boundaries.

6 (2) The mobility afforded to millions of Amer7 ican consumers by mobile telecommunications serv8 ices helps to fuel the American economy, facilitate

9 the development of the information superhighway

10 and provide important safety benefits.

11 (3) Users of mobile telecommunications services

12 can originate a call in one State or local jurisdiction

13 and travel through other States or local jurisdictions

14 during the course of the call. These circumstances

15 make it more difficult to track the separate seg16 ments of a particular call with all of the States and

17 local jurisdictions involved with the call. In addition,

18 expanded home calling areas, bundled service offer19 ings and other marketing advances make it increas20 ingly difficult to assign each transaction to a specific

21 taxing jurisdiction.

22 (4) State and local taxes imposed on mobile

23 telecommunications services that are not consistently

24 based can subject consumers, businesses and others

25 engaged in interstate commerce to multiple, con-
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1 fusing and burdensome State and local taxes and re2 sult in 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

8 the telecommunications market and depriving State

9 and local governments of needed tax revenues.

10 (6) Because State and local tax laws and regu11 lations of many jurisdictions were established before

12 the proliferation of mobile telecommunications serv13 ices, the application of these laws to the provision of

14 mobile telecommunications services may produce

15 conflicting or unintended tax results.

16 (7) State and local governments provide essen17 tial public services, including services that Congress

18 encourages State and local governments to under19 take in partnership with the Federal government for

20 the achievement of important national policy goals.

21 (8) State and local governments provide serv22 ices that support the flow of interstate commerce,

23 including services that support the use and develop24 ment of mobile telecommunications services.
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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

5 provided 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

9 its fair share of tax to support the governmental

10 services provided by those governments.

11 (11) To balance the needs of interstate com12 merce and the mobile telecommunications industry

13 with the legitimate role of State and local govern14 ments in our system of federalism, Congress needs

15 to establish a uniform and coherent national policy

16 regarding the taxation of mobile telecommunications

17 services through the exercise of its constitutional au18 thority to regulate interstate commerce.

19 (12) Congress also recognizes that the solution

20 established by this legislation is a necessarily prac21 tical one and must provide for a system of State and

22 local taxation of mobile telecommunications services

23 that in the absence of this solution would not other24 wise occur. To this extent, Congress exercises its
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1 power to provide a reasonable solution to otherwise

2 insoluble problems 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 fol10 lowing:

11 ‘‘TITLE VIII—STATE AND LOCAL

12 TREATMENT OF CHARGES

13 FOR MOBILE TELECOMMUNI14 CATIONS SERVICES.

15 ‘‘SEC. 801. APPLICATION OF TITLE.

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

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

18 charge for each customer or measured by gross amounts

19 charged to customers for mobile telecommunications serv20 ices, regardless of whether such tax, charge, or fee is im21 posed on the vendor or customer of the service and regard22 less of the terminology used to describe the tax, charge,

23 or fee.

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

25 apply to—
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1 ‘‘(1) any tax, charge, or fee levied upon or

2 measured by the net income, capital stock, net

3 worth, or property value of the provider of mobile

4 telecommunications service;

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

6 an equitably apportioned gross amount that is not

7 determined on a transactional basis;

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

9 compensation for a mobile telecommunications serv10 ice provider’s use of public rights of way or other

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

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

13 charge for each customer or measured by gross

14 amounts charged to customers for mobile tele15 communication services; or

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

17 254 of this Act.’’.

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

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

20 taxing situs of prepaid telephone calling services;

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

22 initial sale of mobile telecommunications services or

23 subsequent resale, whether as sales of the service

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

25 Internet Tax Freedom Act would preclude a taxing
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1 jurisdiction from subjecting the charges of the sale

2 of these mobile telecommunications services to a tax,

3 charge, or fee but this section provides no evidence

4 of the intent of Congress with respect to the applica5 bility of the Internet Tax Freedom Act to such

6 charges; and

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

8 taxing situs of air-ground radiotelephone service as

9 defined in section 22.99 of the Commission’s regula10 tions (47 C.F.R. 22.99).

11 ‘‘SEC. 802. SOURCING RULES.

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

13 State or political subdivision thereof to the contrary, mo14 bile telecommunications services provided in a taxing juris15 diction to a customer, the charges for which are billed by

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

17 deemed to be provided by the customer’s home service pro18 vider.

19 ‘‘(b) JURISIDICTION.—All charges for mobile tele20 communications services that are deemed to be provided

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

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

23 the taxing jurisdictions whose territorial limits encompass

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

25 the mobile telecommunication services originate, terminate
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1 or pass through, and no other taxing jurisdiction may im2 pose taxes, charges, or fees on charges for such mobile

3 telecommunications services.

4 ‘‘SEC. 803. LIMITATIONS.

5 ‘‘This title does not—

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

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

8 jurisdiction do not authorize the jurisdiction to im9 pose; or

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

11 modification, impairment, or supersession of, the law

12 of any taxing jurisdiction pertaining to taxation ex13 cept as expressly provided in this title.

14 ‘‘SEC. 804. ELECTRONIC DATABASES FOR NATIONWIDE

15 STANDARD NUMERIC JURISDICTIONAL

16 CODES.

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

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

19 a State does not provide such an electronic database to

20 home service providers, then the designated database pro21 vider may provide an electronic database to a home service

22 provider. The electronic database, whether provided by the

23 State or the designated database provider, shall be pro24 vided in a format approved by the American National

25 Standards Institute’s Accredited Standards Committee
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1 X12, that, allowing for de minimis deviations, designates

2 for each street address in the State, including to the ex3 tent practicable, any multiple postal street addresses ap4 plicable to one street location, the appropriate taxing juris5 dictions, and the appropriate code for each taxing jurisdic6 tion, for each level of taxing jurisdiction, identified by one

7 nationwide standard numeric code. The electronic data8 base shall also provide the appropriate code for each street

9 address with respect to political subdivisions which are not

10 taxing jurisdictions when reasonably needed to determine

11 the proper taxing jurisdiction. The nationwide standard

12 numeric codes shall contain the same number of numeric

13 digits with each digit or combination of digits referring

14 to the same level of taxing jurisdiction throughout the

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

16 other appropriate standard approved by the Federation of

17 Tax Administrators and the Multistate Tax Commission,

18 or their successors. Each address shall be provided in

19 standard postal format.

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

21 database provider that provides or maintains an electronic

22 database described in subsection (a) shall provide notice

23 of the availability of the then current electronic database,

24 and any subsequent revisions thereof, by publication in the

25 manner normally employed for the publication of informa-
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1 tional tax, charge, or fee notices to taxpayers in that

2 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

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

7 due solely as a result of any error or omission in the elec8 tronic database provided by a State or designated data9 base provider. The home service provider shall reflect

10 changes made to the electronic database during a calendar

11 quarter no later than 30 days after the end of that cal12 endar quarter for each State that issues notice of the

13 availability of an electronic database reflecting such

14 changes under subsection (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

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

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

23 subject to section 806, the home service provider employs

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

25 specific taxing jurisdiction for each level of taxing jurisdic-
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1 tion and exercises due diligence at each level of taxing ju2 risdiction to ensure that each such street address is as3 signed to the correct taxing jurisdiction. Where an en4 hanced zip code overlaps boundaries of taxing jurisdictions

5 of the same level, the home service provider must des6 ignate one specific jurisdiction within such enhanced zip

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

8 code for each level of taxing jurisdiction. Any enhanced

9 zip code assignment changed in accordance with section

10 806 is deemed to be in compliance with this section. For

11 purposes of this section, there is a rebuttable presumption

12 that a home service provider has exercised due diligence

13 if such home service provider demonstrates that it has—

14 ‘‘(1) expended reasonable resources to imple15 ment and maintain an appropriately detailed elec16 tronic database of street address assignments to tax17 ing jurisdictions;

18 ‘‘(2) implemented and maintained reasonable

19 internal controls to promptly correct misassignments

20 of 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

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

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

4 a State for which an electronic database is not provided

5 under section 804 until the later of—

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

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

8 approved by the Federation of Tax Administrators

9 and the Multistate Tax Commission; or

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

11 database provider in that State provides the elec12 tronic 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 pur19 poses of determining the taxing jurisdictions to

20 which taxes, charges, or fees for mobile tele21 communications services are remitted does not meet

22 the definition of place of primary use in section

23 809(3) and give binding notice to the home service

24 provider to change the place of primary use on a
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1 prospective basis from the date of notice of deter2 mination if—

3 ‘‘(A) where the taxing jurisdiction making

4 such determination is not a State, such taxing

5 jurisdiction obtains the consent of all affected

6 taxing jurisdictions within the State before giv7 ing such notice of determination; and

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

9 prior to such notice of determination, to dem10 onstrate in accordance with applicable State or

11 local tax, charge, or fee administrative proce12 dures that the address is the customer’s place

13 of primary use;

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

15 jurisdiction by a home service provider under section

16 805 does not reflect the correct taxing jurisdiction

17 and give binding notice to the home service provider

18 to change the assignment on a prospective basis

19 from the date of notice of determination if—

20 ‘‘(A) where the taxing jurisdiction making

21 such determination is not a State, such taxing

22 jurisdiction obtains the consent of all affected

23 taxing jurisdictions within the State before giv24 ing such notice of determination; and
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1 ‘‘(B) the home service provider is given an

2 opportunity to demonstrate in accordance with

3 applicable State or local tax, charge, or fee ad4 ministrative procedures that the assignment re5 flects the correct taxing jurisdiction.

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

7 PLACE OF PRIMARY USE.

8 ‘‘(a) PLACE OF PRIMARY USE.—A home service pro9 vider is responsible for obtaining and maintaining the cus10 tomer’s place of primary use (as defined in section 809).

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

12 reliance on information provided by its customer is in good

13 faith, a home service provider—

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

15 business street address supplied by the home service

16 provider’s customer; and

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

18 charges, or fees based on a different determination

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

20 that are customarily passed on to the customer as

21 a separate itemized charge.

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

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

24 may treat the address used by the home service provider

25 for tax purposes for any customer under a service contract
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1 or agreement in effect 2 years after the date of enactment

2 of the Mobile Telecommunications Sourcing Act as that

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

4 of such service contract or agreement, excluding any ex5 tension or renewal of such service contract or agreement,

6 for purposes of determining the taxing jurisdictions to

7 which taxes, charges, or fees on charges for mobile tele8 communications services are remitted.

9 ‘‘SEC. 808. SCOPE; SPECIAL RULES.

10 ‘‘(a) TITLE DOES NOT SUPERSEDE CUSTOMER’S LI11 ABILITY TO TAXING JURISDICTION.—Nothing in this title

12 modifies, impairs, supersedes, or authorizes the modifica13 tion, impairment, or supersession of, any law allowing a

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

15 customer that has failed to provide its place of primary

16 use.

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

18 jurisdiction does not otherwise subject charges for mobile

19 telecommunications services to taxation and if these

20 charges are aggregated with and not separately stated

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

22 for otherwise non-taxable mobile telecommunications serv23 ices may be subject to taxation unless the home service

24 provider can reasonably identify charges not subject to
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1 such tax, charge, or fee from its books and records that

2 are kept in the regular course of business.

3 ‘‘(c) NON-TAXABLE CHARGES.—If a taxing jurisdic4 tion does not subject charges for mobile telecommuni5 cations services to taxation, a customer may not rely upon

6 the non-taxability of charges for mobile telecommuni7 cations services unless the customer’s home service pro8 vider separately states the charges for non-taxable mobile

9 telecommunications services from taxable charges or the

10 home service provider elects, after receiving a written re11 quest from the customer in the form required by the pro12 vider, to provide verifiable data based upon the home serv13 ice provider’s books and records that are kept in the reg14 ular course of business that reasonably identifies the non15 taxable charges.

16 ‘‘(d) REFERENCES TO REGULATIONS.—Any ref17 erence in this title to the Commission’s regulations is a

18 reference to those regulations as they were in effect on

19 June 1, 1999.

20 ‘‘SEC. 809. DEFINITIONS.

21 ‘‘In this title:

22 ‘‘(1) CHARGES FOR MOBILE TELECOMMUNI23 CATIONS SERVICES.—The term ‘charges for mobile

24 telecommunications services’ means any charge for,

25 or associated with, the provision of commercial mo-
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1 bile radio service, as defined in section 20.3 of the

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

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

4 an adjunct to a commercial mobile radio service,

5 that is billed to the customer by or for the cus6 tomer’s home service provider regardless of whether

7 individual transmissions originate or terminate with8 in the licensed service area of the home service pro9 vider.

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

11 jurisdiction’ means any of the several States, the

12 District of Columbia, or any territory or possession

13 of the United States, any municipality, city, county,

14 township, parish, transportation district, or assess15 ment jurisdiction, or any other political subdivision

16 within the territorial limits of the United States with

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

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

19 of primary use’ means the street address representa20 tive of where the customer’s use of the mobile tele21 communications service primarily occurs, which must

22 be either—

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

24 primary business street address of the cus25 tomer; and
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1 ‘‘(B) within the licensed service area of the

2 home service provider.

3 ‘‘(4) LICENSED SERVICE AREA.—The term ‘li4 censed service area’ means the geographic area in

5 which the home service provider is authorized by law

6 or contract to provide commercial mobile radio serv7 ice to the customer.

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

9 ‘home service provider’ means the facilities-based

10 carrier or reseller with which the customer contracts

11 for the provision of mobile telecommunications serv12 ices.

13 ‘‘(6) CUSTOMER.—

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

15 means—

16 ‘‘(i) the person or entity that con17 tracts with the home service provider for

18 mobile telecommunications services; or

19 ‘‘(ii) where the end user of mobile

20 telecommunications services is not the con21 tracting party, the end user of the mobile

22 telecommunications service, but this clause

23 applies only for the purpose of determining

24 the place of primary use.
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1 ‘‘(B) The term ‘customer’ does not

2 include—

3 ‘‘(i) a reseller of mobile telecommuni4 cations service; or

5 ‘‘(ii) a serving carrier under an ar6 rangement to serve the customer outside

7 the home service provider’s licensed service

8 area.

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

10 term ‘‘designated database provider’’ means a cor11 poration, association, or other entity representing all

12 the political subdivisions of a State that is—

13 ‘‘(A) responsible for providing the elec14 tronic database prescribed in section 804(a) if

15 the State has not provided such electronic data16 base; and

17 ‘‘(B) sanctioned by municipal and county

18 associations or leagues of the State whose re19 sponsibility it would otherwise be to provide the

20 electronic database prescribed by this title.

21 ‘‘(8) PREPAID TELEPHONE CALLING SERV22 ICES.—The term ‘prepaid telephone calling service’

23 means the right to purchase exclusively tele24 communications services that must be paid for in

25 advance, that enables the origination of calls using
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1 an access number, authorization code, or both,

2 whether manually or electronically dialed, if the re3 maining amount of units of service that have been

4 prepaid is known by the provider of the prepaid

5 service on a continuous basis.

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

7 ‘‘(A) means a provider who purchases tele8 communications services from another tele9 communications service provider and then re10 sells, uses as a component part of, or integrates

11 the purchased services into a mobile tele12 communications service; but

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

14 with which a home service provider arranges for

15 the services to its customers outside the home

16 service provider’s licensed service area.

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

18 carrier’ means a facilities-based carrier providing

19 mobile telecommunications service to a customer

20 outside a home service provider’s or reseller’s li21 censed service area.

22 ‘‘(11) MOBILE TELECOMMUNICATIONS SERV23 ICE.—The term ‘mobile telecommunications service’

24 means commercial mobile radio service, as defined in
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1 section 20.3 of the Commission’s regulations (47

2 C.F.R. 20.3).

3 ‘‘(12) ENHANCED ZIP CODE.—The term ‘en4 hanced zip code’ means a United States postal zip

5 code of 9 or more digits.

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

7 TITLE.

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

9 Commission shall have no jurisidiction over the interpreta10 tion, implementation, or enforcement of this title.

11 ‘‘SEC. 811. NONSEVERABILITY.

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

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

14 which substantially limits or impairs the essential ele15 ments of this title based on Federal statutory or Federal

16 Constitutional grounds, or which determines that this title

17 violates the United States Constitution, then the provi18 sions of this title are null and void and of no effect.

19 ‘‘SEC. 812. NO INFERENCE.

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

21 this title may be construed as bearing on Congressional

22 intent in enacting the Internet Tax Freedom Act or as

23 affecting that Act in any way.

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

25 in this title shall limit or otherwise affect the implementa-
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1 tion of the Telecommunications Act of 1996 or the amend2 ments made by that Act.’’.

3 SEC. 4. EFFECTIVE DATE.

4 The amendment made by section 3 applies to cus5 tomer bills issued after the first day of the first month

6 beginning more than 2 years after the date of enactment

7 of this Act.

Æ