Legislature(2001 - 2002)
04/08/2002 01:40 PM Senate CRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 355-MOBILE TELECOMMUNICATIONS TAX
AMY ERICKSON, staff to Representative Murkowski and the House
Labor and Commerce Committee, read the following into the record:
HB 355 is the mobile telecommunications tax. State and
local governments tax mobile telecommunication services
in a variety of ways. Because of the mobility of
wireless equipment determining which state and local
taxes apply to a wireless call is complicated. The
process of determining wire transaction is commonly
referred to as sourcing. In order to create a more
uniform system for taxing wireless calls, Congress
passed the Mobile Communication Sourcing Act in 2000.
States have until August 1, 2002 to conform to the
federal act and those failing to conform will be
preempted from imposing taxes on most calls made
outside of where the customer's primary use occurs, so-
called roaming calls.
This bill conforms state law to federal law to clarify
that mobile telecommunications services are subject to
taxation in the users place of primary use. That is the
residential or business address where the customer's
use of the mobile service primarily occurs. Passage of
this bill prevents multiply taxation of services,
allows the state to appropriately tax wireless calls
and eliminates confusion as to where to tax the
wireless calls. The bill does not impact the rate of
taxes or fees that state's or localities impose on
wireless calls or the types of calls subject to taxes.
Each jurisdiction with taxing authority will continue
to determine whether to tax a call and at what rate.
The Mobile Telecommunication Sourcing Act was crafted
by industry, state, local and tax officials and is
endorsed by such entities as the National Governors
Association, League of Cities, and the Federal Tax
Administration.
SENATOR PHILLIPS asked Ms. Erickson if she knew why the Governor
from Montana vetoed the legislation.
MS. ERICKSON replied she didn't know the reason but either
Darrell Bell or Dan Youmans from AT&T Wireless probably would.
DARRELL BELL responded via teleconference and said the Montana
Governor ran for election on a strict no new taxes campaign and
she believed some might view her as supporting additional taxes
if she signed the bill.
SENATOR PHILLIPS asked how the law is currently being enforced in
Alaska or any other state.
MR. BELL explained that the service carrier that is handling the
roaming activity is applying the taxes where they have roamed to
and remitting them to the local governments. Those charges are
then passed on to the home carrier who collects them from the
customer. States applying the federal law will forgo revenue from
taxes on calls made within their state by visitors, but will gain
authority to tax calls made by residents while out-of-state. This
makes administration of the taxes much simpler and on a state-by-
state basis should be revenue neutral.
He added about 30 states have passes conforming language bills
and Montana is the only state that has had a problem.
CHAIRMAN TORGERSON asked where his charges would be taxed if he
traveled to Washington and made roaming calls.
MR. BELL explained if he went to Seattle, Washington and placed a
call today, the State of Washington would impose a sales tax and
the city of Seattle would impose both a sales tax and a utility
tax. The serving carrier would remit the taxes locally and then
pass them on to the home carrier who would then apply the taxes
to his bill. The charges might be buried in the roaming charges
but they would likely be there. Under this bill, all the calls
would be taxed to the primary-use taxing jurisdiction. No longer
would they be taxing people that roam into the state.
CHAIRMAN TORGERSON asked how it could be revenue neutral.
MR. BELL said the same amount of revenue would be lost from
customers roaming into Alaska as would be gained by customers
from Alaska roaming outside the state. Another part of the bill
is that either the state provides a database or the carrier uses
a nine digit zip code identification to enter users into the
correct jurisdiction. Additionally, if a customer believes they
are being taxed to the incorrect jurisdiction the home carrier
must respond to the complaint within 60 days to correct the
error.
States that don't pass this type of legislation before August 1,
2002 will lose money because they will no longer be able to tax
individuals that roam into the state but have primary use outside
the state.
CHAIRMAN TORGERSON asked for confirmation that the bill would be
revenue neutral.
CHUCK HARLAMERT, Department of Revenue representative, said at
present only local governments impose taxes on the revenues and
the bill should be revenue neutral in Alaska. It's a good bill
and the state should take every opportunity allowed by the
federal government.
SENATOR PHILLIPS made a motion to move CSHB 355(CRA) and attached
fiscal note from committee with individual recommendations.
There being no objection, it was so ordered.
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