03/18/2002 03:20 PM House L&C

HB 355-MOBILE TELECOMMUNICATIONS TAX                                                                                          
                                                                                                                                
CHAIR MURKOWSKI announced that the  first order of business would                                                               
be  HOUSE BILL  NO.  355, "An  Act relating  to  the taxation  of                                                               
mobile   telecommunications  services   by  municipalities;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0069                                                                                                                     
                                                                                                                                
AMY ERICKSON, Staff to Representative Murkowski, House Labor and                                                                
Commerce Standing Committee, Alaska State Legislature, provided                                                                 
the following testimony:                                                                                                        
                                                                                                                                
     State    and     local    governments     tax    mobile                                                                    
     telecommunications services  in a variety  of different                                                                    
     ways.    And  because   of  the  mobility  of  wireless                                                                    
     equipment,  determining  which  state and  local  taxes                                                                    
     apply to a  wireless call is complicated.   The process                                                                    
     of  determining  where  a  transaction  is  taxable  is                                                                    
     commonly  referred  to  as "sourcing."    In  order  to                                                                    
     create  a  more  uniform  system  for  taxing  wireless                                                                    
     calls,  Congress passed  the Mobile  Telecommunications                                                                    
     Sourcing Act the  crafting of which was  a joint effort                                                                    
     between  industry, state  and  local [government],  and                                                                    
     tax officials.   States have  until August 1st  of this                                                                    
     year to  conform to the  federal act.    And  if Alaska                                                                    
     fails  to conform,  the state  will be  pre-empted from                                                                    
     imposing taxes on most calls  made outside of where the                                                                    
     customer's  primary  use   occurs,  that  is  "roaming"                                                                    
     charges.                                                                                                                   
                                                                                                                                
     This  bill  conforms  Alaska Statutes  to  the  federal                                                                    
     Mobile Telecommunications  [Sourcing] Act to  allow for                                                                    
     the appropriate  taxes and  fees on  wireless services.                                                                    
     The bill  does not  impact the rates  of taxes  or fees                                                                    
     that  states  and  localities impose  on  the  wireless                                                                    
     calls.   Each jurisdiction  with taxing  authority will                                                                    
     continue to  determine whether the calls  are taxed and                                                                    
     at what rate.  House  Bill 355 creates the concept that                                                                    
     the customer  has a place  of primary use, that  is the                                                                    
     residential  or  business   street  address  where  the                                                                    
     customer's use of the  mobile service primarily occurs.                                                                    
     That  determines which  jurisdiction has  the right  to                                                                    
     tax  the call.    Implementation of  [HB] 355  prevents                                                                    
     multiple  taxation, achieves  administrative simplicity                                                                    
     and   cost   savings,   and  avoids   expensive   audit                                                                    
     litigation when  multiple states claim  jurisdiction to                                                                    
     tax the same call.  The  bill is a win-win for industry                                                                    
     and  for government.   There  is  no known  controversy                                                                    
     surrounding the bill.                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  informed the  committee that HB  355 was  a much                                                               
lengthier  bill when  introduced, but  the Department  of Revenue                                                               
suggested  that  the  bill  simply  reference  the  federal  act.                                                               
Therefore,  [CSHB  355(CRA)]  allows   for  compliance  with  the                                                               
federal act within the time period requested.                                                                                   
                                                                                                                                
Number 0295                                                                                                                     
                                                                                                                                
CHUCK HARLAMERT,  Juneau Section Chief, Tax  Division, Department                                                               
of Revenue, said  that in Alaska this  is a local tax  issue.  He                                                               
echoed earlier  testimony that  the bill  merely conforms  to the                                                               
federal  act,  which  controls what  telecommunications  can  and                                                               
cannot be taxed.                                                                                                                
                                                                                                                                
DARRELL BELL,  Director  of  Taxes, AT&T Wireless,  testified via                                                               
teleconference.    Mr.  Bell  informed  the  committee  that  the                                                               
National Governors Association, the  National Conference of State                                                               
Legislators,  the Federation  of Tax  Administrators, the  Multi-                                                               
State  Tax Commission,  and the  National League  of Cities  came                                                               
together with  the industry to  develop [the federal act].   [The                                                               
federal act], for  example, allows Seward to tax  all the revenue                                                               
of a  customer with a  place of primary  use in Seward  no matter                                                               
where that customer uses the  phone throughout the United States.                                                               
However, [the federal act] doesn't  allow Seward to tax customers                                                               
who are  roaming in  Seward.   This should  be fairly  simple and                                                               
revenue neutral.                                                                                                                
                                                                                                                                
CHAIR MURKOWSKI  turned to  the concept of  the primary  place of                                                               
use and  stressed that  [CSHB 255(CRA)] makes  it very  clear who                                                               
will assess the tax.                                                                                                            
                                                                                                                                
Number 0573                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  moved  to  report CSHB  355(CRA)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  note.  There  being no objection, CSHB  355(CRA) was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
The committee took a brief at-ease from 3:29 p.m. to 3:34 p.m.