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.