HBA-SEP C.S.H.B. 3595 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3595 By: Oliveira Ways & Means 4/8/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE As a result of some mobile telecommunications customers (customer) using service in various localities, several different state and local tax laws may apply. Federal law provides that a customer's place of primary use is the single source for determining tax revenue, regardless of where the call originates, passes through, or terminates. Conforming state law to federal law ensures that Texas limits the determination of tax revenue to a single source for a customer. C.S.H.B. 3595 conforms Texas law to federal law. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 3595 amends the Tax Code to create the Mobile Telecommunications Act applicable to state and local sales and use taxes. If a mobile telecommunications customer (customer) believes that an amount of tax or an assignment of place of primary or taxing jurisdiction included on a billing is erroneous, the customer is required to notify the home service provider in writing. The bill requires the customer to include in the written notification the street address for the customer's place of primary use, the account name and number for which the customer requests the correction, a description of the error, and any other information the home service provider (provider) reasonably requires to process the request. Not later than the 60th day after the date of receiving such a notice, the provider is required to determine the correct amount of the tax imposed customer's taxing jurisdiction and if there is an error, the provider is required to correct the error and refund or credit the amount of tax erroneously collected from the customer for a period of up to two years. Otherwise, the provider is required to provide a written explanation to the customer. The state is authorized to provide an electronic database to a provider or, if the state does not, the designated database provider is authorized to do so. The database provider is required to provide notice of the availability of the electronic database and any subsequent revisions thereof by publication in the specified manner. A provider using the data contained in an electronic database is required to be held harmless from any tax, charge, or fee liability (liability) that otherwise would be due solely as a result of any error or omission in such database. The provider is required to reflect changes made to such database during a calendar quarter not later than 30 days after the end of such calendar quarter. If neither the state nor the designated database provider provides an electronic database, a provider that exercises due diligence to ensure that each such street address is assigned to the correct taxing jurisdiction is required to be held harmless from any liability that otherwise would be due solely as a result of an assignment of a street address to an incorrect taxing jurisdiction. If an enhanced zip code overlaps boundaries of taxing jurisdictions of the same level, the provider must designate one specific jurisdiction within such enhanced zip code for use in taxing the activity. There is a rebuttable presumption that a provider has exercised due diligence if the provider demonstrates certain efforts. The bill sets forth applicability and responsibility provisions. A taxing jurisdiction is required to allow a provider to treat the address used by the provider for tax purposes for any customer under a service contract or agreement in effect two years after the enactment of the Mobile Telecommunications Sourcing Act as that customer's place of primary use for the remaining term of such a service contract or agreement excluding any extension or renewal. The state is authorized to determine that the address used for purposes of determining the taxing jurisdictions to which taxes, charges, or fees for services are remitted does not meet the definition of place of primary use and to determine that the assignment of a taxing jurisdiction by a provider does not reflect the correct taxing jurisdiction and give binding notice to the provider to change the place of primary use or assignment on a prospective basis from the date of notice of determination. Before the state gives such notice, the customer is required to be given an opportunity to demonstrate that the address is the customer's place of primary use. The provider is required to be given an opportunity to demonstrate that the assignment reflects the correct taxing jurisdiction. The bill sets forth provisions regarding taxing jurisdictions that does not subject charges for services to taxation. EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3595 modifies the original by adding that the state is authorized to provide an electronic database to a provider or if the state does not, the designated database provider is authorized to do so. The substitute provides for notice of the availability of the electronic database and sets forth provisions regarding the use of the database by a provider for taxing purposes. The substitute also includes the definition of electronic database.