II
106TH CONGRESS
2D SESSION
H. R. 4391
IN THE SENATE OF THE UNITED STATES
JULY 12, 2000
Received
AN ACT
To amend title 4 of the United States Code to establish
sourcing requirements for State and local taxation of
mobile telecommunication services.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Mobile Telecommuni-
cations Sourcing Act’’.
SEC. 2. AMENDMENTS TO TITLE 4 OF THE UNITED STATES
CODE.
(a) AMENDMENT RELATING TO THE STATES.—Chap-
ter 4 of title 4 of the United States Code is amended by
adding at the end the following:
‘‘§ 116. Rules for determining State and local govern-
ment treatment of charges related to mo-
bile telecommunications services
‘‘(a) APPLICATION OF THIS SECTION THROUGH SEC-
TION 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 telecommuni-
cations 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;
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‘‘(2) any tax, charge, or fee that is applied to
an equitably apportioned amount that is not deter-
mined on a transactional basis;
‘‘(3) any tax, charge, or fee that represents
compensation for a mobile telecommunications serv-
ice 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 tele-
communication services;
‘‘(4) any generally applicable business and occu-
pation 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 al-
lows the home service provider to elect to use the
sourcing method required in this section through
126 of this title;
‘‘(5) any fee related to obligations under section
254 of the Communications Act of 1934; or
‘‘(6) any tax, charge, or fee imposed by the
Federal Communications Commission.
‘‘(c) SPECIFIC EXCEPTIONS.—This section through
126 of this title—
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‘‘(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 pre-
clude 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.
‘‘§ 117. Sourcing rules
‘‘(a) TREATMENT OF CHARGES FOR MOBILE TELE-
COMMUNICATIONS SERVICES.—Notwithstanding the law
of any State or political subdivision of any State, mobile
telecommunications services provided in a taxing jurisdic-
tion to a customer, the charges for which are billed by
or for the customer’s home service provider, shall be
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deemed to be provided by the customer’s home service pro-
vider.
‘‘(b) JURISDICTION.—All charges for mobile tele-
communications 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 sub-
jected 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 telecommuni-
cation services originate, terminate, or pass through, and
no other taxing jurisdiction may impose taxes, charges, or
fees on charges for such mobile telecommunications serv-
ices.
‘‘§ 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 im-
pose; or
‘‘(2) modify, impair, supersede, or authorize the
modification, impairment, or supersession of the law
of any taxing jurisdiction pertaining to taxation ex-
cept as expressly provided in sections 116 through
126 of this title.
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‘‘§ 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 pro-
vider or, if a State does not provide such an elec-
tronic database to home service providers, then the
designated database provider may provide an elec-
tronic 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 ap-
proved by the American National Standards Insti-
tute’s Accredited Standards Committee X12, that,
allowing for de minimis deviations, designates for
each street address in the State, including to the ex-
tent practicable, any multiple postal street addresses
applicable to one street location, the appropriate tax-
ing jurisdictions, and the appropriate code for each
taxing jurisdiction, for each level of taxing jurisdic-
tion, identified by one nationwide standard numeric
code.
‘‘(B) Such electronic database shall also provide
the appropriate code for each street address with re-
spect to political subdivisions which are not taxing
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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 informa-
tional tax, charge, or fee notices to taxpayers in such
State.
‘‘(c) USER HELD HARMLESS.—A home service pro-
vider 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
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database provided by a State or designated database pro-
vider. 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 elec-
tronic database reflecting such changes under subsection
(b).
‘‘§ 120. Procedure if no electronic database provided
‘‘(a) SAFE HARBOR.—If neither a State nor des-
ignated 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 jurisdic-
tion. If an enhanced zip code overlaps boundaries of taxing
jurisdictions of the same level, the home service provider
must designate one specific jurisdiction within such en-
hanced zip code for use in taxing the activity for such en-
hanced zip code for each level of taxing jurisdiction. Any
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enhanced zip code assignment changed in accordance with
section 121 is deemed to be in compliance with this sec-
tion. 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 imple-
ment and maintain an appropriately detailed elec-
tronic database of street address assignments to tax-
ing jurisdictions;
‘‘(2) implemented and maintained reasonable
internal controls to promptly correct misassignments
of street addresses to taxing jurisdictions; and
‘‘(3) used all reasonably obtainable and usable
data 
pertaining 
to 
municipal 
annexations,
incorporations, 
reorganizations 
and 
any 
other
changes in jurisdictional boundaries that materially
affect the accuracy of such database.
‘‘(b) TERMINATION OF SAFE HARBOR.—Subsection
(a) applies to a home service provider that is in compliance
with the requirements of subsection (a), with respect to
a State for which an electronic database is not provided
under section 119 until the later of—
‘‘(1) 18 months after the nationwide standard
numeric code described in section 119(a) has been
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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 data-
base as prescribed in section 119(a).
‘‘§ 121. Correction of erroneous data for place of pri-
mary 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 pur-
poses of determining the taxing jurisdictions to
which taxes, charges, or fees for mobile tele-
communications 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 deter-
mination if—
‘‘(A) if the taxing jurisdiction making such
determination is not a State, such taxing juris-
diction obtains the consent of all affected taxing
jurisdictions within the State before giving such
notice of determination; and
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‘‘(B) before the taxing jurisdiction gives
such notice of determination, the customer is
given an opportunity to demonstrate in accord-
ance with applicable State or local tax, charge,
or fee administrative procedures that the ad-
dress is the customer’s place of primary use;
‘‘(2) determine that the assignment of a taxing
jurisdiction by a home service provider under section
120 does not reflect the correct taxing jurisdiction
and give binding notice to the home service provider
to change the assignment on a prospective basis
from the date of notice of determination if—
‘‘(A) if the taxing jurisdiction making such
determination is not a State, such taxing juris-
diction 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 ad-
ministrative procedures that the assignment re-
flects the correct taxing jurisdiction.
‘‘§ 122. Determination of place of primary use
‘‘(a) PLACE OF PRIMARY USE.—A home service pro-
vider shall be responsible for obtaining and maintaining
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the customer’s place of primary use (as defined in section
124). Subject to section 121, and if the home service pro-
vider’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 dif-
ferent determination of the place of primary use for
taxes, charges or fees that are customarily passed on
to the customer as a separate itemized charge.
‘‘(b) ADDRESS UNDER EXISTING AGREEMENTS.—
Except as provided in section 121, a taxing jurisdiction
shall allow a home service provider to treat the address
used by the home service provider for tax purposes for
any customer under a service contract or agreement in ef-
fect 2 years after the date of enactment of the Mobile
Telecommunications Sourcing Act as that customer’s
place of primary use for the remaining term of such serv-
ice contract or agreement, excluding any extension or re-
newal of such service contract or agreement, for purposes
of determining the taxing jurisdictions to which taxes,
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charges, or fees on charges for mobile telecommunications
services are remitted.
‘‘§ 123. Scope; special rules
‘‘(a) ACT DOES NOT SUPERSEDE CUSTOMER’S LI-
ABILITY TO TAXING JURISDICTION.—Nothing in sections
116 through 126 modifies, impairs, supersedes, or author-
izes 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 jurisdic-
tion does not subject charges for mobile telecommuni-
cations services to taxation, a customer may not rely upon
the nontaxability of charges for mobile telecommuni-
cations services unless the customer’s home service pro-
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vider separately states the charges for nontaxable mobile
telecommunications services from taxable charges or the
home service provider elects, after receiving a written re-
quest from the customer in the form required by the pro-
vider, to provide verifiable data based upon the home serv-
ice provider’s books and records that are kept in the reg-
ular course of business that reasonably identifies the non-
taxable charges.
‘‘§ 124. Definitions
‘‘In sections 116 through 126 of this title:
‘‘(1) CHARGES
FOR
MOBILE
TELECOMMUNI-
CATIONS SERVICES.—The term ‘charges for mobile
telecommunications services’ means any charge for,
or associated with, the provision of commercial mo-
bile 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 commer-
cial mobile radio service, that is billed to the cus-
tomer by or for the customer’s home service provider
regardless of whether individual transmissions origi-
nate or terminate within the licensed service area of
the home service provider.
‘‘(2) CUSTOMER.—
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‘‘(A) IN GENERAL.—The term ‘customer’
means—
‘‘(i) the person or entity that con-
tracts with the home service provider for
mobile telecommunications services; or
‘‘(ii) if the end user of mobile tele-
communications services is not the con-
tracting 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 telecommuni-
cations service; or
‘‘(ii) a serving carrier under an ar-
rangement to serve the customer outside
the home service provider’s licensed service
area.
‘‘(3) DESIGNATED DATABASE PROVIDER.—The
term ‘designated database provider’ means a cor-
poration, 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
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State has not provided such electronic database;
and
‘‘(B) approved by municipal and county as-
sociations or leagues of the State whose respon-
sibility it would otherwise be to provide such
database prescribed by sections 116 through
126 of this title.
‘‘(4) ENHANCED
ZIP
CODE.—The term ‘en-
hanced 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 serv-
ices.
‘‘(6) LICENSED SERVICE AREA.—The term ‘li-
censed service area’ means the geographic area in
which the home service provider is authorized by law
or contract to provide commercial mobile radio serv-
ice to the customer.
‘‘(7) MOBILE
TELECOMMUNICATIONS
SERV-
ICE.—The term ‘mobile telecommunications service’
means commercial mobile radio service, as defined in
section 20.3 of title 47 of the Code of Federal Regu-
lations as in effect on June 1, 1999.
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‘‘(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 judg-
ment.
‘‘§ 126. No inference
‘‘(a) INTERNET TAX FREEDOM ACT.—Nothing in
sections 116 through this section of this title shall be con-
strued as bearing on Congressional intent in enacting the
Internet Tax Freedom Act or to modify or supersede the
operation of such Act.
‘‘(b) TELECOMMUNICATIONS ACT OF 1996.—Nothing
in sections 116 through this section of this title shall limit
or otherwise affect the implementation of the Tele-
communications 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.
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‘‘125. Nonseverability.
‘‘126. No inference.’’.
SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENT.
(a) EFFECTIVE DATE..—Except as provided in sub-
section (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.
Passed the House of Representatives July 11, 2000.
Attest:
JEFF TRANDAHL,
Clerk.