AN
ACT Relating to implementing the federal mobile telecommunications sourcing
act; amending RCW 82.04.065, 82.08.0289, 82.14.020, 82.14B.030, 35.21.714, and
35A.82.060; adding new sections to chapter 82.04 RCW; adding a new section to
chapter 82.08 RCW; adding new sections to chapter 82.32 RCW; adding a new
section to chapter 35.21 RCW; creating new sections; and providing an effective
date.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
legislature finds that the United States congress has enacted the mobile
telecommunications sourcing act for the purpose of establishing uniform
nationwide sourcing rules for state and local taxation of mobile
telecommunications services. The legislature desires to adopt implementing
legislation governing taxation by the state and by affected local taxing
jurisdictions within the state. The legislature recognizes that the federal
act is intended to provide a clarification of sourcing rules that is revenue-neutral
among the states, and that the clarifications required by the federal act are
likely in fact to be revenue-neutral at the state level. The legislature also
desires to take advantage of a provision of the federal act that allows a state
with a generally applicable business and occupation tax, such as this state, to
make certain of the uniform sourcing rules elective for such tax.
Sec.
2. RCW
82.04.065 and 1997 c 304 s 5 are each amended to read as follows:
(1)
"Competitive telephone service" means the providing by any person of
telecommunications equipment or apparatus, or service related to that equipment
or apparatus such as repair or maintenance service, if the equipment or
apparatus is of a type which can be provided by persons that are not subject to
regulation as telephone companies under Title 80 RCW and for which a separate
charge is made.
(2)
"Network telephone service" means the providing by any person of
access to a ((local)) telephone network, ((local)) telephone
network switching service, toll service, or coin telephone services, or the
providing of telephonic, video, data, or similar communication or transmission
for hire, via a ((local)) telephone network, toll line or channel,
cable, microwave, or similar communication or transmission system. (("Network
telephone service" includes interstate service, including toll service,
originating from or received on telecommunications equipment or apparatus in
this state if the charge for the service is billed to a person in this state.))
"Network telephone service" includes the provision of transmission to
and from the site of an internet provider via a ((local)) telephone
network, toll line or channel, cable, microwave, or similar communication or
transmission system. "Network telephone service" does not include
the providing of competitive telephone service, the providing of cable
television service, the providing of broadcast services by radio or television
stations, nor the provision of internet service as defined in RCW 82.04.297,
including the reception of dial-in connection, provided at the site of the
internet service provider.
(3)
"Telephone service" means competitive telephone service or network
telephone service, or both, as defined in subsections (1) and (2) of this
section.
(4)
"Telephone business" means the business of providing network
telephone service, as defined in subsection (2) of this section. It includes
cooperative or farmer line telephone companies or associations operating an
exchange.
(5)
"Charges for mobile telecommunications services" means any charge
for, or associated with, the provision of commercial mobile radio service, as
defined in section 20.3, Title 47 C.F.R. as in effect on June 1, 1999, or any
charge for, or associated with, a service provided as an adjunct to a
commercial mobile radio service, regardless of whether individual transmissions
originate or terminate within the licensed service area of the mobile
telecommunications service provider.
(6)
"Customer" means: (a) The person or entity that contracts with the
home service provider for mobile telecommunications services; or (b) the end
user of the mobile telecommunications service, if the end user of mobile
telecommunications services is not the contracting party, but this subsection
(6)(b) applies only for the purpose of determining the place of primary use.
The term does not include a reseller of mobile telecommunications service, or a
serving carrier under an arrangement to serve the customer outside the home service
provider's licensed service area.
(7)
"Designated data base provider" means a person representing all the
political subdivisions of the state that is:
(a)
Responsible for providing an electronic data base prescribed in 4 U.S.C. Sec.
119(a) if the state has not provided an electronic data base; and
(b)
Approved by municipal and county associations or leagues of the state whose
responsibility it would otherwise be to provide a data base prescribed by 4
U.S.C. Secs. 116 through 126.
(8)
"Enhanced zip code" means a United States postal zip code of nine or
more digits.
(9)
"Home service provider" means the facilities-based carrier or
reseller with whom the customer contracts for the provision of mobile
telecommunications services.
(10)
"Licensed service area" means the geographic area in which the home
service provider is authorized by law or contract to provide commercial mobile
radio service to the customer.
(11)
"Mobile telecommunications service" means commercial mobile radio
service, as defined in section 20.3, Title 47 C.F.R. as in effect on June 1,
1999.
(12)
"Mobile telecommunications service provider" means a home service
provider or a serving carrier.
(13)
"Place of primary use" means the street address representative of
where the customer's use of the mobile telecommunications service primarily
occurs, which must be:
(a)
The residential street address or the primary business street address of the
customer; and
(b)
Within the licensed service area of the home service provider.
(14)
"Prepaid telephone calling service" means the right to purchase
exclusively telecommunications services that must be paid for in advance, that
enables the origination of calls using an access number, authorization code, or
both, whether manually or electronically dialed, if the remaining amount of
units of service that have been prepaid is known by the provider of the prepaid
service on a continuous basis.
(15)
"Reseller" means a provider who purchases telecommunications services
from another telecommunications service provider and then resells, uses as a
component part of, or integrates the purchased services into a mobile
telecommunications service. "Reseller" does not include a serving
carrier with whom a home service provider arranges for the services to its
customers outside the home service provider's licensed service area.
(16)
"Serving carrier" means a facilities-based carrier providing mobile
telecommunications service to a customer outside a home service provider's or
reseller's licensed service area.
(17)
"Taxing jurisdiction" means any of the several states, the District
of Columbia, or any territory or possession of the United States, any
municipality, city, county, township, parish, transportation district, or
assessment jurisdiction, or other political subdivision within the territorial
limits of the United States with the authority to impose a tax, charge, or fee.
NEW
SECTION. Sec. 3. A
new section is added to chapter 82.04 RCW to read as follows:
A
telephone business other than a mobile telecommunications service provider must
calculate gross proceeds of sales by including all charges for network
telephone services originating from or received on telecommunications equipment
or apparatus in this state if the charge for the service is billed to a person
in this state.
NEW
SECTION. Sec. 4. A
new section is added to chapter 82.04 RCW to read as follows:
(1)
Unless a mobile telecommunications service provider elects to be taxed under
subsection (2) of this section, the mobile telecommunications service provider
must calculate gross proceeds of sales by reporting all sales to, or sales
between carriers for, customers with a place of primary use within this state,
regardless of where the mobile telecommunications services originate, are
received, or are billed, consistent with the mobile telecommunications sourcing
act, P.L. 106-252, 4 U.S.C. Secs. 116 through 126.
(2)
A mobile telecommunications service provider may elect to calculate gross
proceeds of sales by including all charges for mobile telecommunications
services provided to all consumers, whether the consumers are the mobile
telecommunications service provider's customers or not, if the services
originate from or are received on telecommunications equipment or apparatus in
this state and are billed to a person in this state.
(3)
If a mobile telecommunications service provider elects to be taxed under
subsection (2) of this section, the mobile telecommunications service provider
must provide written notice of the election before the effective date of this
section, or before the beginning date of any tax year thereafter in which it
wishes to change its reporting and make this election.
(4)
The department may provide, by rule, for formulary reporting as necessary to
implement this section.
NEW
SECTION. Sec. 5. A
new section is added to chapter 82.08 RCW to read as follows:
For
the purposes of this chapter, mobile telecommunications services are deemed to
have occurred at the customer's place of primary use, regardless of where the
mobile telecommunications services originate, terminate, or pass through,
consistent with the mobile telecommunications sourcing act, P.L. 106-252, 4
U.S.C. Secs. 116 through 126. The definitions in RCW 82.04.065 apply to this
section.
Sec.
6. RCW
82.08.0289 and 1983 2nd ex.s. c 3 s 30 are each amended to read as follows:
(1)
The tax levied by RCW 82.08.020 shall not apply to sales of:
(a)
Network telephone service, other than toll service, to residential customers((.));
(b)
Network telephone service which is paid for by inserting coins in coin-operated
telephones((.));
(c)
Mobile telecommunications services, including any toll service, provided to a
customer whose place of primary use is outside this state.
(2)
((As used in this section:)) The definitions in RCW 82.04.065, as
well as the definitions in this subsection, apply to this section.
(a)
(("Network telephone service" has the meaning given in RCW
82.04.065.
(b)))
"Residential customer" means an individual subscribing to a
residential class of telephone service.
(((c)))
(b) "Toll service" does not include customer access line
charges for access to a toll calling network.
Sec.
7. RCW
82.14.020 and 2001 c 186 s 3 are each amended to read as follows:
For
purposes of this chapter:
(1)
A retail sale consisting solely of the sale of tangible personal property shall
be deemed to have occurred at the retail outlet at or from which delivery is
made to the consumer;
(2)
A retail sale consisting essentially of the performance of personal business or
professional services shall be deemed to have occurred at the place at which
such services were primarily performed, except that for the performance of a
tow truck service, as defined in RCW 46.55.010, the retail sale shall be deemed
to have occurred at the place of business of the operator of the tow truck
service;
(3)
A retail sale consisting of the rental of tangible personal property shall be
deemed to have occurred (a) in the case of a rental involving periodic rental
payments, at the ((primary)) place of primary use by the lessee
during the period covered by each payment, or (b) in all other cases, at the
place of first use by the lessee;
(4)
A retail sale within the scope of RCW 82.04.050(2), and a retail sale of
taxable personal property to be installed by the seller shall be deemed to have
occurred at the place where the labor and services involved were primarily
performed;
(5)(a)
A retail sale consisting of the providing to a consumer of telephone service,
as defined in RCW 82.04.065, other than a sale of tangible personal property
under subsection (1) of this section or a rental of tangible personal property
under subsection (3) of this section or a sale of mobile telecommunications
services, shall be deemed to have occurred at the situs of the telephone or
other instrument through which the telephone service is rendered;
(b)
A retail sale consisting of the providing to a consumer of mobile
telecommunications services is deemed to have occurred at the customer's place
of primary use, regardless of where the mobile telecommunications services
originate, terminate, or pass through, consistent with the mobile
telecommunications sourcing act, P.L. 106-252, 4 U.S.C. Secs. 116 through 126;
(6)
A retail sale of linen and uniform supply services is deemed to occur as
provided in RCW 82.08.0202;
(7)
"City" means a city or town;
(8)
The meaning ascribed to words and phrases in chapters 82.04, 82.08 and 82.12
RCW, as now or hereafter amended, insofar as applicable, shall have full force
and effect with respect to taxes imposed under authority of this chapter;
(9)
"Taxable event" shall mean any retail sale, or any use of an article
of tangible personal property, upon which a state tax is imposed pursuant to
chapter 82.08 or 82.12 RCW, as they now exist or may hereafter be amended:
PROVIDED, HOWEVER, That the term shall not include a retail sale taxable
pursuant to RCW 82.08.150, as now or hereafter amended;
(10)
"Treasurer or other legal depository" shall mean the treasurer or
legal depository of a county or city.
Sec.
8. RCW
82.14B.030 and 1998 c 304 s 3 are each amended to read as follows:
(1)
The legislative authority of a county may impose a county enhanced 911 excise
tax on the use of switched access lines in an amount not exceeding fifty cents
per month for each switched access line. The amount of tax shall be uniform
for each switched access line. Each county shall provide notice of such tax to
all local exchange companies serving in the county at least sixty days in
advance of the date on which the first payment is due.
(2)
The legislative authority of a county may also impose a county 911 excise tax
on the use of radio access lines located within the county in an amount not
exceeding twenty-five cents per month for each radio access line. The amount
of tax shall be uniform for each radio access line. The location of a radio
access line is the customer's place of primary use as defined in RCW 82.04.065.
The county shall provide notice of such tax to all radio communications service
companies serving in the county at least sixty days in advance of the date on
which the first payment is due. Any county imposing this tax shall include in
its ordinance a refund mechanism whereby the amount of any tax ordered to be
refunded by the judgment of a court of record, or as a result of the resolution
of any appeal therefrom, shall be refunded to the radio communications service
company or local exchange company that collected the tax, and those companies
shall reimburse the subscribers who paid the tax. The ordinance shall further
provide that to the extent the subscribers who paid the tax cannot be
identified or located, the tax paid by those subscribers shall be returned to
the county.
(3)
A state enhanced 911 excise tax is imposed on all switched access lines in the
state. The amount of tax shall not exceed twenty cents per month for each
switched access line. The tax shall be uniform for each switched access line.
The tax imposed under this subsection shall be remitted to the department of
revenue by local exchange companies on a tax return provided by the
department. Tax proceeds shall be deposited by the treasurer in the enhanced
911 account created in RCW 38.52.540.
(4)
By August 31st of each year the state enhanced 911 coordinator shall recommend
the level for the next year of the state enhanced 911 excise tax, based on a
systematic cost and revenue analysis, to the utilities and transportation
commission. The commission shall by the following October 31st determine the
level of the state enhanced 911 excise tax for the following year.
Sec.
9. RCW
35.21.714 and 1989 c 103 s 1 are each amended to read as follows:
(1)
Any city which imposes a license fee or tax upon the business activity of
engaging in the telephone business((, as defined in RCW 82.04.065,))
which is measured by gross receipts or gross income may impose the fee or tax,
if it desires, on one hundred percent of the total gross revenue derived from
intrastate toll telephone services subject to the fee or tax: PROVIDED, That
the city shall not impose the fee or tax on that portion of network telephone
service((, as defined in RCW 82.04.065,)) which represents charges to
another telecommunications company, as defined in RCW 80.04.010, for connecting
fees, switching charges, or carrier access charges relating to intrastate toll
telephone services, or for access to, or charges for, interstate services, or
charges for network telephone service that is purchased for the purpose of
resale, or charges for mobile telecommunications services provided to
customers whose place of primary use is not within the city.
(2)
Any city that imposes a license tax or fee under subsection (1) of this section
has the authority, rights, and obligations of a taxing jurisdiction as provided
in sections 11 through 15 of this act.
(3)
The definitions in RCW 82.04.065 apply to this section.
Sec.
10. RCW
35A.82.060 and 1989 c 103 s 3 are each amended to read as follows:
(1)
Any code city which imposes a license fee or tax upon the business activity of
engaging in the telephone business((, as defined in RCW 82.04.065,))
which is measured by gross receipts or gross income may impose the fee or tax,
if it desires, on one hundred percent of the total gross revenue derived from
intrastate toll telephone services subject to the fee or tax: PROVIDED, That
the city shall not impose the fee or tax on that portion of network telephone service((,
as defined in RCW 82.04.065,)) which represents charges to another
telecommunications company, as defined in RCW 80.04.010, for connecting fees,
switching charges, or carrier access charges relating to intrastate toll
telephone services, or for access to, or charges for, interstate services, or
charges for network telephone service that is purchased for the purpose of
resale, or charges for mobile telecommunications services provided to
customers whose place of primary use is not within the city.
(2)
Any city that imposes a license tax or fee under subsection (1) of this section
has the authority, rights, and obligations of a taxing jurisdiction as provided
in sections 11 through 15 of this act.
(3)
The definitions in RCW 82.04.065 apply to this section.
NEW
SECTION. Sec. 11. A
new section is added to chapter 82.32 RCW to read as follows:
(1)(a)
The department may provide an electronic data base as described in this section
to a mobile telecommunications service provider, or if the department does not
provide an electronic data base to mobile telecommunications service providers,
then the designated data base provider may provide an electronic data base to a
mobile telecommunications service provider.
(b)(i)
An electronic data base, whether provided by the department or the designated
data base provider, shall be provided in a format approved by the American
national standards institute's accredited standards committee X12, that after
allowing for de minimis deviations, designates for each street address in the
state, including to the extent practicable, any multiple postal street
addresses applicable to one street location, the appropriate taxing
jurisdictions, and the appropriate code for each taxing jurisdiction, for each
level of taxing jurisdiction, identified by one nationwide standard numeric
code.
(ii)
An electronic data base shall also provide the appropriate code for each street
address with respect to political subdivisions that are not taxing jurisdictions
when reasonably needed to determine the proper taxing jurisdiction.
(iii)
The nationwide standard numeric codes shall contain the same number of numeric
digits with each digit or combination of digits referring to the same level of
taxing jurisdiction throughout the United States using a format similar to FIPS
55-3 or other appropriate standard approved by the federation of tax
administrators and the multistate tax commission, or their successors. Each
address shall be provided in standard postal format.
(2)
The department or designated data base provider, as applicable, that provides
or maintains an electronic data base described in subsection (1) of this
section shall provide notice of the availability of the then-current electronic
data base, and any subsequent revisions, by publication in the manner normally
employed for the publication of informational tax, charge, or fee notices to
taxpayers in the state.
(3)
A mobile telecommunications service provider using the data contained in an
electronic data base described in subsection (1) of this section shall be held
harmless from any tax, charge, or fee liability that otherwise would be due
solely as a result of any error or omission in the data base provided by the
department or designated data base provider. The mobile telecommunications
service provider shall reflect changes made to the data base during a calendar
quarter not later than thirty days after the end of the calendar quarter if the
department or designated data base provider, as applicable, has issued notice
of the availability of an electronic data base reflecting the changes under
subsection (2) of this section.
NEW
SECTION. Sec. 12. A
new section is added to chapter 82.32 RCW to read as follows:
(1)
If neither the department nor the designated data base provider provides an
electronic data base under section 11 of this act, a mobile telecommunications
service provider shall be held harmless from any tax, charge, or fee liability
in any taxing jurisdiction in this state that otherwise would be due solely as
a result of an assignment of a street address to an incorrect taxing
jurisdiction if, subject to section 13 of this act, the home service provider
employs an enhanced zip code to assign each street address to a specific taxing
jurisdiction for each level of taxing jurisdiction and exercises due diligence
at each level of taxing jurisdiction to ensure that each street address is
assigned to the correct taxing jurisdiction. If an enhanced zip code overlaps
boundaries of taxing jurisdictions of the same level, the home service provider
must designate one specific jurisdiction within the enhanced zip code for use
in taxing the activity for such enhanced zip code for each level of taxing
jurisdiction. Any enhanced zip code assignment changed in accordance with
section 13 of this act is deemed to be in compliance with this section. For
purposes of this section, there is a rebuttable presumption that a home service
provider has exercised due diligence if the home service provider demonstrates
that it has:
(a)
Expended reasonable resources to implement and maintain an appropriately
detailed electronic data base of street address assignments to taxing
jurisdictions;
(b)
Implemented and maintained reasonable internal controls to correct
misassignments of street addresses to taxing jurisdictions promptly; and
(c)
Used all reasonably obtainable and usable data pertaining to municipal
annexations, incorporations, reorganizations, and any other changes in
jurisdictional boundaries that materially affect the accuracy of the data base.
(2)
Subsection (1) of this section applies to a mobile telecommunications service
provider that is in compliance with the requirements of subsection (1) of this
section, if in this state an electronic data base has not been provided under
section 11 of this act, until the later of:
(a)
Eighteen months after the nationwide standard numeric code described in section
11(1) of this act has been approved by the federation of tax administrators and
the multistate tax commission; or
(b)
Six months after the department or a designated data base provider in this
state provides the data base as prescribed in section 11(1) of this act.
NEW
SECTION. Sec. 13. A
new section is added to chapter 82.32 RCW to read as follows:
A
taxing jurisdiction, or the department on behalf of any taxing jurisdiction or
taxing jurisdictions within this state, may:
(1)
Determine that the address used for purposes of determining the taxing
jurisdictions to which taxes, charges, or fees for mobile telecommunications
services are remitted does not meet the definition of place of primary use in
RCW 82.04.065 and give binding notice to the home service provider to change
the place of primary use on a prospective basis from the date of notice of
determination. If the authority making the determination is not the
department, the taxing jurisdiction must obtain the consent of all affected
taxing jurisdictions within the state before giving the notice of
determination. Before the taxing jurisdiction gives the notice of
determination, the customer must be given an opportunity to demonstrate, in
accordance with applicable state or local tax, charge, or fee administrative
procedures, that the address is the customer's place of primary use; and
(2)
Determine that the assignment of a taxing jurisdiction by a home service
provider under section 12 of this act does not reflect the correct taxing
jurisdiction and give binding notice to the home service provider to change the
assignment on a prospective basis from the date of notice of determination. If
the authority making the determination is not the department, the taxing
jurisdiction must obtain the consent of all affected taxing jurisdictions
within the state before giving the notice of determination. The home service provider
must be given an opportunity to demonstrate, in accordance with applicable
state or local tax, charge, or fee administrative procedures, that the
assignment reflects the correct taxing jurisdiction.
NEW
SECTION. Sec. 14. A
new section is added to chapter 82.32 RCW to read as follows:
(1)
A home service provider is responsible for obtaining and maintaining
information regarding the customer's place of primary use as defined in RCW
82.04.065. Subject to section 13 of this act, and if the home service
provider's reliance on information provided by its customer is in good faith, a
taxing jurisdiction shall:
(a)
Allow a home service provider to rely on the applicable residential or business
street address supplied by the home service provider's customer; and
(b)
Not hold a mobile telecommunications service provider liable for any additional
taxes, charges, or fees based on a different determination of the place of
primary use.
(2)
Except as provided in section 13 of this act, a taxing jurisdiction shall allow
a home service provider to treat the address used by the home service provider
for tax purposes for any customer under a service contract or agreement in
effect on August 1, 2002, as that customer's place of primary use for the
remaining term of the service contract or agreement, excluding any extension or
renewal of the service contract or agreement, for purposes of determining the
taxing jurisdictions to which taxes, charges, or fees on charges for mobile
telecommunications services are remitted.
NEW
SECTION. Sec. 15. A
new section is added to chapter 82.32 RCW to read as follows:
(1)
This act does not modify, impair, supersede, or authorize the modification,
impairment, or supersession of any law allowing a taxing jurisdiction to
collect a tax, charge, or fee from a customer that has failed to provide its
place of primary use.
(2)
If a taxing jurisdiction does not otherwise subject charges for mobile
telecommunications services to taxation and if these charges are aggregated
with and not separately stated from charges that are subject to taxation, then
the charges for nontaxable mobile telecommunications services may be subject to
taxation unless the mobile telecommunications service provider can reasonably
identify charges not subject to the tax, charge, or fee from its books and
records that are kept in the regular course of business.
(3)
If a taxing jurisdiction does not subject charges for mobile telecommunications
services to taxation, a customer may not rely upon the nontaxability of charges
for mobile telecommunications services unless the customer's home service
provider separately states the charges for nontaxable mobile telecommunications
services from taxable charges or the home service provider elects, after
receiving a written request from the customer in the form required by the
provider, to provide verifiable data based upon the home service provider's
books and records that are kept in the regular course of business that reasonably
identifies the nontaxable charges.
NEW
SECTION. Sec. 16. A
new section is added to chapter 35.21 RCW to read as follows:
If
a customer believes that an amount of city tax or an assignment of place of
primary use or taxing jurisdiction included on a billing for mobile
telecommunications services is erroneous, the customer shall notify the home
service provider in writing. The customer shall include in this written
notification the street address for the customer's place of primary use, the
account name and number for which the customer seeks a correction, and a
description of the error asserted by the customer. Within sixty days of
receiving a notice under this section, the home service provider shall review
its records and the electronic data base or enhanced zip code used pursuant to
sections 11 and 12 of this act to determine the customer's taxing
jurisdiction. The home service provider shall notify the customer in writing
of the results of its review.
The
procedures in this section shall be the first remedy available to customers
seeking correction of assignment of place of primary use or taxing
jurisdiction, or a refund of or other compensation for taxes, charges, and fees
erroneously collected by the home service provider, and no cause of action
based upon a dispute arising from such taxes, charges, or fees shall accrue to
the extent otherwise permitted by law until a customer has reasonably exercised
the rights and procedures set forth in this section.
NEW
SECTION. Sec. 17. A
new section is added to chapter 82.32 RCW to read as follows:
The
definitions in RCW 82.04.065 apply to sections 11 through 16 of this act.
NEW
SECTION. Sec. 18. If a
court of competent jurisdiction enters a final judgment on the merits that is
based on federal or state law, is no longer subject to appeal, and
substantially limits or impairs the essential elements of P.L. 106-252 Secs.
116 through 126, or this act, then this act is null and void in its entirety.
NEW
SECTION. Sec. 19. This
act takes effect August 1, 2002.
