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.