ARIZONA STATE SENATE
REVISED
mobile telecommunications; taxation procedures
Reconciles state law with the Mobile Telecommunications Sourcing Act signed into federal law on July 28, 2000.
The Mobile Telecommunications Sourcing Act was signed into law on July 28, 2000. The Act changes the way state and local sales taxes and use taxes are imposed on wireless telecommunication companies. Currently, wireless taxes are imposed utilizing what is known as the Goldberg method that arose out of the Supreme Court decision known as Goldberg v. Sweet. The court ruled that for a state to have taxing authority over interstate telecommunications two things must occur. First, the call must originate or end in the state and second the service address must be located in that same state. This has caused problems for taxing jurisdictions due to the transitory nature of cellular phones.
The Mobile Telecommunications Sourcing Act changes the way that wireless use and sales taxes are imposed by creating a uniform method of sourcing telecommunications services to the appropriate taxing jurisdictions. This new method assumes for the purpose of the taxing jurisdictions all wireless calls are sourced to the subscriber’s primary residential or business address, also known as place of primary use. Additionally, the act allows states to create a database that can appropriately place every address in the state in the correct taxing jurisdiction. The database must be approved by the Multi-state Tax Commission and the Federation of Tax Administrators. If a state chooses not to provide a database, then providers must create a database of their own which uses zip codes to assigned addresses in the state to assign the appropriate taxing jurisdiction. The Mobile Telecommunications Souring Act, while currently enacted into law, contains a delayed effective date for the purpose of consumer billing of August 2002. This is intended to allow states, cities and towns time to implement the new law.
This measure codifies the federal guidelines into Arizona law as is required under the Mobile Telecommunications Sourcing Act.
According to the Department of Revenue, there is no fiscal impact associated with this measure.
1. Requires the Arizona Corporation Commission to comply with the Mobile Telecommunications Sourcing Act for the purpose of imposing any assessments or other charges on wireless telecommunication providers.
2. Specifies that the Department of Revenue and any city or town must abide the Mobile Telecommunications Sourcing Act for any taxes levied or collected.
3. Specifies consumer procedures for customers who believe they were overcharged for taxes relating to wireless service by a home service provider.
4. Specifies how home service providers must respond to these disputes.
5. Specifies that the home service provider has 60 days from the date of the postmark to review a customer’s records and any electronic data base or enhanced zip code that is used under the Mobile Telecommunications Sourcing Act.
6. Removes the requirement that the home service provider provide a written explanation of its findings.
7. Stipulates that no cause of action based on a dispute regarding the collection of taxes by the service provider may accrue until the customer has reasonably exercised the rights provided for regarding the disputed tax charges.
8. Defines customer, home service provider, mobile telecommunications services and place of primary use.
9. Makes technical changes.
10. Provides for a general effective date.
Amendments Adopted by Commerce Committee
1. Specifies that the home service provider has 60 days from the date of the postmark to review a customer’s records and any electronic data base or enhanced zip code that is used under the Mobile Telecommunications Sourcing Act.
2. Removes the requirement that the home service provider provide a written explanation of its findings
House Action Senate Action
EUT 2/14/01 DPA 10-0-0-0 FIN 3/26/01 DP 8-0-0-0
WM 2/27/01 DPA 10-0-0-0 COM 4/4/01 DPA 6-0-0-0
3rd Read 3/12/01 53-0-7-0
Prepared by Senate Staff
April 9, 2001