04/11/2002 01:37 PM Senate L&C

              HB 355-MOBILE TELECOMMUNICATIONS TAX                                                                          
                                                                                                                                
CHAIRMAN STEVENS announced HB 355 to be up for consideration.                                                                   
                                                                                                                                
MS. AMY ERICKSON, Staff to Representative Murkowski, said:                                                                      
                                                                                                                                
     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 can  be                                                                   
     very  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  a   Mobile                                                                   
     Telecommunications  Act in 2000.  States now have  until                                                                   
     August 1 of this year to conform  to the federal act and                                                                   
     those states  failing to conform will be  preempted from                                                                   
     imposing taxes  on most calls made outside  of where the                                                                   
     customers' primary use occurs  - those so-called roaming                                                                   
     customers - to another jurisdiction.                                                                                       
                                                                                                                                
     HB  355 conforms  state law  to federal  law to  clarify                                                                   
     that mobile  telecommunications services are  subject to                                                                   
     taxation  in  the  users'  primary  place  of  use,  the                                                                   
     residential  or business  address  where the  customers'                                                                   
     use  of the  mobile  service primarily  occurs.  Passage                                                                   
     will prevent  multiple taxation  and allow the  state to                                                                   
     appropriately   tax  wireless  services   and  eliminate                                                                   
     confusion as  to where to  tax the wireless  calls. This                                                                   
     bill  does not  impact the rate  of taxes  or fees  that                                                                   
     state  and localities  impose on the  wireless calls  or                                                                   
     the  types  of  calls subject  to  taxes.  It's  revenue                                                                   
     neutral.  Each jurisdiction  with taxing authority  will                                                                   
     continue to determine to tax calls and at what rates.                                                                      
                                                                                                                                
     The Mobile  Telecommunications Sourcing Act  was crafted                                                                   
     by  industries, state  and local  tax  officials and  is                                                                   
     endorsed  by such  entities as  the National  Governor's                                                                   
     Association,  the League of  Cities and the  Federal Tax                                                                   
     Administration.                                                                                                            
                                                                                                                                
MR.  DARRELL  BELL,   AT&T,  said  he  was  available   to  answer                                                              
questions.                                                                                                                      
                                                                                                                                
CHAIRMAN  STEVENS wanted  to make  sure that  this bill  clarifies                                                              
that there is only one jurisdiction.                                                                                            
                                                                                                                                
MS. ERICKSON  explained  further that  if as a  customer, she  had                                                              
established Anchorage as her home,  that means she could "roam" to                                                              
Seattle and Phoenix  and Anchorage will always be  able to tax her                                                              
call. Conversely, we can't tax anyone  making a call from here who                                                              
lives in Seattle.                                                                                                               
                                                                                                                                
SENATOR  LEMAN moved  to pass  CSHB 355(CRA)  from committee  with                                                              
individual recommendations  and the  accompanying $0  fiscal note.                                                              
There were no objections and it was so ordered.