I
106TH CONGRESS
2D SESSION
H. R. 4391
To amend title 4 of the United States Code to establish nexus requirements
for State and local taxation of mobile telecommunication services.
IN THE HOUSE OF REPRESENTATIVES
MAY 4, 2000
Mr. HYDE (for himself, Mr. CONYERS, Mr. GEKAS, and Mr. NADLER) intro-
duced the following bill; which was referred to the Committee on the Ju-
diciary
A BILL
To amend title 4 of the United States Code to establish
nexus 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,
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:
‘‘§ 117. 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 127.—This section through 127 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
127 of this title do not apply to—
‘‘(1) any tax, charge, or fee levied upon or
measured by the net income, capital stock, net
worth, or property value of the provider of mobile
telecommunications service;
‘‘(2) any tax, charge, or fee that is applied to
an equitably apportioned amount that is not 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 State-imposed
business and occupation tax that is applied to gross
receipts or gross proceeds, is the legal liability of the
carrier, and that statutorily allows the taxpayer
(carrier) to elect to use the sourcing method re-
quired in this section through 127 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
127 of this title —
‘‘(1) do not apply to the determination of the
taxing situs of prepaid telephone calling services;
‘‘(2) do not affect the taxability of either the
initial sale of mobile telecommunications services or
subsequent resale of such services, whether as sales
of such services alone or as a part of a bundled
product, if the Internet Tax Freedom Act would 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.
‘‘§ 118. 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
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
117 through 127 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.
‘‘§ 119. Limitations
‘‘Sections 117 through 127 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 117 through
127 of this title.
‘‘§ 120. 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
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
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).
‘‘§ 121. Procedure if no electronic database provided
‘‘(a) SAFE HARBOR.—If neither a State nor des-
ignated database provider provides an electronic database
under section 120, 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 122, 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
enhanced zip code assignment changed in accordance with
section 122 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 120 until the later of—
‘‘(1) 18 months after the nationwide standard
numeric code described in section 120(a) has been
approved by the Federation of Tax Administrators
and the Multistate Tax Commission; or
‘‘(2) 6 months after such State or a designated
database provider in such State provides such data-
base as prescribed in section 120(a).
‘‘§ 122. 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(3) 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) the taxing jurisdiction making such
determination is not a State and such taxing
jurisdiction obtains the consent of all affected
taxing jurisdictions within the State before giv-
ing such notice of determination; and
‘‘(B) the customer is given an opportunity,
before receiving such notice of determination, to
demonstrate in accordance with applicable State
or local tax, charge, or fee administrative proce-
dures that the address is the customer’s place
of primary use;