SB 1481: Prepaid Mobile Telephony Services Surcharge Collection Act.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2016-07-22
The Prepaid Mobile Telephony Services Surcharge Collection Act establishes a prepaid MTS surcharge, as defined, based upon a percentage of the sales price of each retail transaction that occurs in this state for prepaid mobile telephony services, as defined, that is imposed in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act and specified Public Utility Commission surcharges. The act requires, on and after January 1, 2016, and before January 1, 2020, the prepaid MTS surcharge imposed by that act on a prepaid consumer to be collected by a seller, as defined, from each prepaid consumer at the time of each retail transaction that occurs in this state. The act specifies the circumstances for determining when a transaction occurs in the state.
This bill would make correct an erroneous cross-reference and make minor revisions in the requirements relative to imposition of the prepaid MTS surcharge and the circumstances for determining when a transaction occurs in the state.
The act requires every seller to register with the State Board of Equalization. The act, commencing January 1, 2017, exempts a seller, other than a direct seller, with de minimis sales of prepaid mobile telephony services of less than $15,000 during the previous calendar year from collecting the prepaid MTS surcharge, and requires the Department of Finance to annually review and adjust that de minimis sales threshold, as provided.
This bill would exempt from the registration requirement those sellers with de minimis sales of prepaid mobile telephony services, but would not prevent those sellers from registering with the board on a voluntary basis to collect and remit the surcharge.
The Prepaid Mobile Telephony Services Surcharge Collection Act establishes a prepaid MTS surcharge, as defined, based upon a percentage of the sales price of each retail transaction that occurs in this state for prepaid mobile telephony services, as defined, that is imposed in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act and specified Public Utility Commission surcharges. The act requires, on and after January 1, 2016, and before January 1, 2020, the prepaid MTS surcharge imposed by that act on a prepaid consumer to be collected by a seller, as defined, from each prepaid consumer at the time of each retail transaction that occurs in this state. The act specifies the circumstances for determining when a transaction occurs in the state.
This bill would make correct an erroneous cross-reference and make minor revisions in the requirements relative to imposition of the prepaid MTS surcharge and the circumstances for determining when a transaction occurs in the state.
The act requires every seller to register with the State Board of Equalization. The act, commencing January 1, 2017, exempts a seller, other than a direct seller, with de minimis sales of prepaid mobile telephony services of less than $15,000 during the previous calendar year from collecting the prepaid MTS surcharge, and requires the Department of Finance to annually review and adjust that de minimis sales threshold, as provided.
This bill would exempt from the registration requirement those sellers with de minimis sales of prepaid mobile telephony services, but would not prevent those sellers from registering with the board on a voluntary basis to collect and remit the surcharge.
The Prepaid Mobile Telephony Services Surcharge Collection Act establishes a prepaid MTS surcharge, as defined, based upon a percentage of the sales price of each retail transaction that occurs in this state for prepaid mobile telephony services, as defined, that is imposed in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act and specified Public Utility Commission surcharges. The act requires, on and after January 1, 2016, and before January 1, 2020, the prepaid MTS surcharge imposed by that act on a prepaid consumer to be collected by a seller, as defined, from each prepaid consumer at the time of each retail transaction that occurs in this state. The act specifies the circumstances for determining when a transaction occurs in the state.
This bill would make correct an erroneous cross-reference and make minor revisions in the requirements relative to imposition of the prepaid MTS surcharge and the circumstances for determining when a transaction occurs in the state.
The act requires every seller to register with the State Board of Equalization. The act, commencing January 1, 2017, exempts a seller, other than a direct seller, with de minimis sales of prepaid mobile telephony services of less than $15,000 during the previous calendar year from collecting the prepaid MTS surcharge, and requires the Department of Finance to annually review and adjust that de minimis sales threshold, as provided.
This bill would exempt from the registration requirement those sellers with de minimis sales of prepaid mobile telephony services, but would not prevent those sellers from registering with the board on a voluntary basis to collect and remit the surcharge.
The Prepaid Mobile Telephony Services Surcharge Collection Act establishes a prepaid MTS surcharge, as defined, based upon a percentage of the sales price of each retail transaction that occurs in this state for prepaid mobile telephony services, as defined, that is imposed in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act and specified Public Utility Commission surcharges. The act requires, on and after January 1, 2016, and before January 1, 2020, the prepaid MTS surcharge imposed by that act on a prepaid consumer to be collected by a seller, as defined, from each prepaid consumer at the time of each retail transaction that occurs in this state. The act specifies the circumstances for determining when a transaction occurs in the state.
This bill would make correct an erroneous cross-reference and make minor revisions in the requirements relative to imposition of the prepaid MTS surcharge and the circumstances for determining when a transaction occurs in the state.
The act requires every seller to register with the State Board of Equalization. The act, commencing January 1, 2017, exempts a seller, other than a direct seller, with de minimis sales of prepaid mobile telephony services of less than $15,000 during the previous calendar year from collecting the prepaid MTS surcharge, and requires the Department of Finance to annually review and adjust that de minimis sales threshold, as provided.
This bill would exempt from the registration requirement those sellers with de minimis sales of prepaid mobile telephony services, but would not prevent those sellers from registering with the board on a voluntary basis to collect and remit the surcharge.
(a)(1)On and after January 1, 2016, a prepaid MTS surcharge shall be imposed on each prepaid consumer and shall be collected by a seller from each prepaid consumer at the time of each retail transaction in this state. The prepaid MTS surcharge shall be imposed as a percentage of the sales price of each retail transaction that occurs in this state.
(2)The prepaid MTS surcharge shall be in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) and the Public Utilities Commission surcharges for prepaid mobile telephony services.
(b)The prepaid MTS surcharge shall be annually calculated by the board by no later than November 1 of each year commencing November 1, 2015, by adding the following:
(1)The surcharge rate reported pursuant to subdivision (d) of Section 41030.
(2)The Public Utilities Commissions reimbursement fee and telecommunications universal service surcharges, established by the Public Utilities Commission pursuant to subdivisions (b) and (c) of Section 319 of the Public Utilities Code.
(c)(1)The board shall post, for each local jurisdiction, the combined total of the rates of prepaid MTS surcharge and the rate or rates of local charges, as calculated pursuant to Sections 42102 and 42102.5, that each local jurisdiction has adopted, not later than December 1 of each year, on its Internet Web site. The posted combined rate shall be the rate that applies to all retail transactions during the calendar year beginning April 1 following the posting.
(2)Notwithstanding paragraph (1), if a local agency notifies the board pursuant to subdivision (d) of Section 42101.5 that the posted rate is inaccurate or it no longer imposes a local charge or local charges or that the rate of its local charge or local charges has decreased, the board shall promptly post a recalculated rate that is applicable to the jurisdiction of that local agency. The change shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the local agency notifies the board of the inaccuracy or that it no longer imposes a local charge or that the rate of its local charge has decreased. Nothing in this section modifies the notice obligations of Section 799 of the Public Utilities Code. However, beginning January 1, 2016, the notification and implementation requirements of paragraphs (5) and (6) of subdivision (a) of Section 799 of the Public Utilities Code shall not apply to prepaid mobile telephony services.
(3)The board shall also separately post on its Internet Web site the individual rates for each of the following:
(A)Each of the Public Utilities Commission surcharges that make up the Public Utilities Commission surcharge portion of the prepaid MTS surcharge, as reported pursuant to Section 319 of the Public Utilities Code.
(B)The rate for the emergency telephone users surcharge reported pursuant to subdivision (d) of Section 41030.
(C)Each of the individual local charges reported pursuant to Section 42101.5.
(4)A seller collecting the prepaid MTS surcharge and local charges pursuant to this part and Part 21.1 (commencing with Section 42100) may rely upon the accuracy of the information posted on the boards Internet Web site in collecting and remitting all amounts of the prepaid MTS surcharge and local charges.
(d)(1)Except for amounts retained pursuant to subdivision (e), and except as provided in subdivision (f) for a seller that is a direct seller, all amounts of the prepaid MTS surcharge and local charges collected by sellers shall be remitted to the board pursuant to Chapter 3 (commencing with Section 42020).
(2)A seller that is authorized to provide lifeline service under the state lifeline program or federal lifeline program, that sells prepaid mobile telephony services directly to the prepaid customer, shall remit the prepaid MTS surcharge to the board, less any applicable exemption from the surcharge that is applicable to the retail transaction pursuant to Section 42012.
(e)A seller that is not a direct seller shall be permitted to deduct and retain an amount equal to 2 percent of the amounts that are collected by the seller from prepaid consumers for the prepaid MTS surcharge and local charges, on a pro rata basis, according to that portion of the revenues collected by the seller for each of the following:
(1)The emergency telephone users surcharge.
(2)The Public Utilities Commission surcharges.
(3)Local charges.
(f)A direct seller shall remit the prepaid MTS surcharge and local charges as follows:
(1)That portion of the prepaid MTS surcharge that consists of the Public Utilities Commission surcharges shall be remitted to the commission with those reports required by the commission. The amounts remitted to the Public Utilities Commission pursuant to this paragraph shall be deposited into the respective universal service funds created pursuant to Chapter 1.5 (commencing with Section 270) of Part 1 of Division 1 of the Public Utilities Code and to the Public Utilities Commission Utilities Reimbursement Account described in Chapter 2.5 (commencing with Section 401) of Part 1 of Division 1 of the Public Utilities Code.
(2)That portion of the prepaid MTS surcharge that consists of the emergency telephone users surcharge shall be remitted to the board pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) for those retail transactions with a prepaid consumer in the state, with a return filed with the board using electronic media. The amount remitted to the board pursuant to this paragraph shall be deposited into the State Emergency Telephone Number Account in the General Fund.
(3)Local charges, if applicable, shall be remitted to the local jurisdiction or local agency imposing the local charge. Remittance of the local charges shall be separately identified from any other local taxes or other charges that are remitted to the local jurisdiction or local entity imposing the local tax or other charge. The amounts remitted to the local jurisdiction or local agency imposing the local charge pursuant to this paragraph shall be deposited into the respective local jurisdiction or local agency account.
(g)A direct seller shall utilize the amounts posted by the board pursuant to subdivision (c) when determining what amounts to remit to the Public Utilities Commission, the board, and each local jurisdiction or local agency.
(h)A prepaid MTS provider shall offer prepaid consumers the option to make payment for additional prepaid usage directly to the prepaid MTS provider at the providers retail location or Internet Web site.
(i)The amount of the combined prepaid MTS surcharge and local charges shall be separately stated on an invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.
(j)The prepaid MTS surcharge that is required to be collected by a seller and any amount unreturned to the prepaid consumer of mobile telephony services that is not owed as part of the surcharge, but was collected from the prepaid consumer under the representation by the seller that it was owed as part of the surcharge, constitute debts owed by the seller to this state. The local charge that is required to be collected by a seller and any amounts unreturned to the prepaid consumer of mobile telephony services that are not owed as part of the local charge, but that were collected from the prepaid consumer under the representation by the seller that they were owed as part of the local charge, constitute debts owed by the seller jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing that local charge.
(k)A seller that has collected any amount of prepaid MTS surcharge and local charges in excess of the amount of the surcharge imposed by this part and actually due from a prepaid consumer may refund that amount to the prepaid consumer, even though the surcharge amount has already been paid over to the board and no corresponding credit or refund has yet been secured. Any seller making a refund of any charge to a prepaid consumer may repay therewith the amount of the surcharge paid.
(l)(1)Every prepaid consumer of mobile telephony services in this state is liable for the prepaid MTS surcharge and any local charges until they have been paid to this state, except that payment to a seller registered under this part relieves the prepaid consumer from further liability for the surcharge and local charges. Any surcharge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed to the state by the person required to collect and remit the surcharge. Any local charge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing the local charge by the person required to collect and remit the local charge. Nothing in this part shall impose any obligation upon a seller to take any legal action to enforce the collection of the surcharge or local charge imposed by this section.
(2)A credit shall be allowed against, but shall not exceed, the prepaid MTS surcharge and local charges imposed on any prepaid consumer of mobile telephony services by this part to the extent that the prepaid consumer has paid emergency telephone users charges, state utility regulatory commission fees, state universal service charges, or local charges on the purchase to any other state, political subdivision thereof, or the District of Columbia. The credit shall be apportioned to the charges against which it is allowed in proportion to the amounts of those charges.
(m)(1)A seller is relieved from liability to collect the prepaid MTS surcharge imposed by this part that became due and payable, insofar as the base upon which the surcharge is imposed is represented by accounts that have been found to be worthless and charged off for income tax purposes by the seller or, if the seller is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A seller that has previously paid the surcharge may, under rules and regulations prescribed by the board, take as a deduction on its return the amount found worthless and charged off by the seller. If any such accounts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the surcharge shall be paid with the return.
(2)The board may by regulation promulgate such other rules with respect to uncollected or worthless accounts as it shall deem necessary to the fair and efficient administration of this part.
SEC. 2.Section 42014 of the Revenue and Taxation Code is amended to read:42014.(a)For purposes of this part, a retail transaction occurs in the state under any of the following circumstances:
(1)The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).
(2)If paragraph (1) is not applicable, the prepaid consumers address is in the state (known-address transaction). A known-address transaction occurs in the state under any of the following circumstances:
(A)The retail sale involves shipping of an item to be delivered to, or picked up by, the prepaid consumer at a location in the state.
(B)If the prepaid consumers address is known by the seller to be in the state, including if the sellers records maintained in the ordinary course of business indicate that the prepaid consumers address is in the state and the records are not made or kept in bad faith.
(C)The prepaid consumer provides an address during consummation of the retail transaction that is in the state, including an address provided with respect to the payment instrument if no other address is available and the address is not given in bad faith.
(3)If an address is not available to the seller to determine whether any of the circumstances in paragraph (2) exist, the transaction will be deemed to be a known-address transaction occurring in this state if the mobile telephone number is associated with a location in this state.
(b)(1)A retail transaction shall occur at only one location for purposes of determining local charges. If the retail transaction is a point-of-sale transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at that location.
(2)If the retail transaction is a known-address transaction, the location shall be as determined in descending order beginning with subparagraph (A) of paragraph (2) of subdivision (a); if subparagraph (A) of that paragraph is inapplicable, then pursuant to subparagraph (B) of that paragraph; if both subparagraphs (A) and (B) of that paragraph are inapplicable, then subparagraph (C) of that paragraph; and if subparagraphs (A), (B), and (C) of that paragraph are inapplicable, then paragraph (3) of subdivision (a). In a known-address transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at the known address.
(c)(1)A seller that relies in good faith on information provided by the board to match the location of a point-of-sale transaction to the applicable prepaid MTS surcharge amount and local charges, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer.
(2)For a known-address transaction, the seller may collect the prepaid MTS surcharge and local charges that correspond to the five-digit postal ZIP Code of the prepaid consumers address. A seller that, with due diligence and in good faith, relies on credible information to match the five-digit postal ZIP Code of the prepaid consumers address to the applicable prepaid MTS surcharge and local charges amount, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer, even if the five-digit postal ZIP Code of the prepaid consumers address that the seller uses corresponds to more than one local charge.
SEC. 3.Section 42022 of the Revenue and Taxation Code is amended to read:42022.Every seller, except a seller that is not required to collect the prepaid MTS surcharge pursuant to Section 42010.7 and local charges pursuant to Section 42101.7, shall register with the board. Nothing in this section prevents a seller from registering with the board on a voluntary basis to collect and remit the surcharge even if the seller meets the de minimis sales threshold provided by Sections 42010.7 and 42101.7. The board shall establish a method for registration of sellers under this part that utilizes the existing registration process for a sellers permit established pursuant to Section 6066 of the Sales and Use Tax Law (Part 1 (commencing with Section 6001)). Every application for registration shall be made upon a form prescribed by the board and shall set forth the name under which the applicant transacts or intends to transact business, the location of its place or places of business, and such other information as the board may require. An application for registration shall be authenticated in a form or pursuant to methods as may be prescribed by the board.
(a)(1)On and after January 1, 2016, a prepaid MTS surcharge shall be imposed on each prepaid consumer and shall be collected by a seller from each prepaid consumer at the time of each retail transaction in this state. The prepaid MTS surcharge shall be imposed as a percentage of the sales price of each retail transaction that occurs in this state.
(2)The prepaid MTS surcharge shall be in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) and the Public Utilities Commission surcharges for prepaid mobile telephony services.
(b)The prepaid MTS surcharge shall be annually calculated by the board by no later than November 1 of each year commencing November 1, 2015, by adding the following:
(1)The surcharge rate reported pursuant to subdivision (d) of Section 41030.
(2)The Public Utilities Commissions reimbursement fee and telecommunications universal service surcharges, established by the Public Utilities Commission pursuant to subdivisions (b) and (c) of Section 319 of the Public Utilities Code.
(c)(1)The board shall post, for each local jurisdiction, the combined total of the rates of prepaid MTS surcharge and the rate or rates of local charges, as calculated pursuant to Sections 42102 and 42102.5, that each local jurisdiction has adopted, not later than December 1 of each year, on its Internet Web site. The posted combined rate shall be the rate that applies to all retail transactions during the calendar year beginning April 1 following the posting.
(2)Notwithstanding paragraph (1), if a local agency notifies the board pursuant to subdivision (d) of Section 42101.5 that the posted rate is inaccurate or it no longer imposes a local charge or local charges or that the rate of its local charge or local charges has decreased, the board shall promptly post a recalculated rate that is applicable to the jurisdiction of that local agency. The change shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the local agency notifies the board of the inaccuracy or that it no longer imposes a local charge or that the rate of its local charge has decreased. Nothing in this section modifies the notice obligations of Section 799 of the Public Utilities Code. However, beginning January 1, 2016, the notification and implementation requirements of paragraphs (5) and (6) of subdivision (a) of Section 799 of the Public Utilities Code shall not apply to prepaid mobile telephony services.
(3)The board shall also separately post on its Internet Web site the individual rates for each of the following:
(A)Each of the Public Utilities Commission surcharges that make up the Public Utilities Commission surcharge portion of the prepaid MTS surcharge, as reported pursuant to Section 319 of the Public Utilities Code.
(B)The rate for the emergency telephone users surcharge reported pursuant to subdivision (d) of Section 41030.
(C)Each of the individual local charges reported pursuant to Section 42101.5.
(4)A seller collecting the prepaid MTS surcharge and local charges pursuant to this part and Part 21.1 (commencing with Section 42100) may rely upon the accuracy of the information posted on the boards Internet Web site in collecting and remitting all amounts of the prepaid MTS surcharge and local charges.
(d)(1)Except for amounts retained pursuant to subdivision (e), and except as provided in subdivision (f) for a seller that is a direct seller, all amounts of the prepaid MTS surcharge and local charges collected by sellers shall be remitted to the board pursuant to Chapter 3 (commencing with Section 42020).
(2)A seller that is authorized to provide lifeline service under the state lifeline program or federal lifeline program, that sells prepaid mobile telephony services directly to the prepaid customer, shall remit the prepaid MTS surcharge to the board, less any applicable exemption from the surcharge that is applicable to the retail transaction pursuant to Section 42012.
(e)A seller that is not a direct seller shall be permitted to deduct and retain an amount equal to 2 percent of the amounts that are collected by the seller from prepaid consumers for the prepaid MTS surcharge and local charges, on a pro rata basis, according to that portion of the revenues collected by the seller for each of the following:
(1)The emergency telephone users surcharge.
(2)The Public Utilities Commission surcharges.
(3)Local charges.
(f)A direct seller shall remit the prepaid MTS surcharge and local charges as follows:
(1)That portion of the prepaid MTS surcharge that consists of the Public Utilities Commission surcharges shall be remitted to the commission with those reports required by the commission. The amounts remitted to the Public Utilities Commission pursuant to this paragraph shall be deposited into the respective universal service funds created pursuant to Chapter 1.5 (commencing with Section 270) of Part 1 of Division 1 of the Public Utilities Code and to the Public Utilities Commission Utilities Reimbursement Account described in Chapter 2.5 (commencing with Section 401) of Part 1 of Division 1 of the Public Utilities Code.
(2)That portion of the prepaid MTS surcharge that consists of the emergency telephone users surcharge shall be remitted to the board pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) for those retail transactions with a prepaid consumer in the state, with a return filed with the board using electronic media. The amount remitted to the board pursuant to this paragraph shall be deposited into the State Emergency Telephone Number Account in the General Fund.
(3)Local charges, if applicable, shall be remitted to the local jurisdiction or local agency imposing the local charge. Remittance of the local charges shall be separately identified from any other local taxes or other charges that are remitted to the local jurisdiction or local entity imposing the local tax or other charge. The amounts remitted to the local jurisdiction or local agency imposing the local charge pursuant to this paragraph shall be deposited into the respective local jurisdiction or local agency account.
(g)A direct seller shall utilize the amounts posted by the board pursuant to subdivision (c) when determining what amounts to remit to the Public Utilities Commission, the board, and each local jurisdiction or local agency.
(h)A prepaid MTS provider shall offer prepaid consumers the option to make payment for additional prepaid usage directly to the prepaid MTS provider at the providers retail location or Internet Web site.
(i)The amount of the combined prepaid MTS surcharge and local charges shall be separately stated on an invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.
(j)The prepaid MTS surcharge that is required to be collected by a seller and any amount unreturned to the prepaid consumer of mobile telephony services that is not owed as part of the surcharge, but was collected from the prepaid consumer under the representation by the seller that it was owed as part of the surcharge, constitute debts owed by the seller to this state. The local charge that is required to be collected by a seller and any amounts unreturned to the prepaid consumer of mobile telephony services that are not owed as part of the local charge, but that were collected from the prepaid consumer under the representation by the seller that they were owed as part of the local charge, constitute debts owed by the seller jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing that local charge.
(k)A seller that has collected any amount of prepaid MTS surcharge and local charges in excess of the amount of the surcharge imposed by this part and actually due from a prepaid consumer may refund that amount to the prepaid consumer, even though the surcharge amount has already been paid over to the board and no corresponding credit or refund has yet been secured. Any seller making a refund of any charge to a prepaid consumer may repay therewith the amount of the surcharge paid.
(l)(1)Every prepaid consumer of mobile telephony services in this state is liable for the prepaid MTS surcharge and any local charges until they have been paid to this state, except that payment to a seller registered under this part relieves the prepaid consumer from further liability for the surcharge and local charges. Any surcharge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed to the state by the person required to collect and remit the surcharge. Any local charge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing the local charge by the person required to collect and remit the local charge. Nothing in this part shall impose any obligation upon a seller to take any legal action to enforce the collection of the surcharge or local charge imposed by this section.
(2)A credit shall be allowed against, but shall not exceed, the prepaid MTS surcharge and local charges imposed on any prepaid consumer of mobile telephony services by this part to the extent that the prepaid consumer has paid emergency telephone users charges, state utility regulatory commission fees, state universal service charges, or local charges on the purchase to any other state, political subdivision thereof, or the District of Columbia. The credit shall be apportioned to the charges against which it is allowed in proportion to the amounts of those charges.
(m)(1)A seller is relieved from liability to collect the prepaid MTS surcharge imposed by this part that became due and payable, insofar as the base upon which the surcharge is imposed is represented by accounts that have been found to be worthless and charged off for income tax purposes by the seller or, if the seller is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A seller that has previously paid the surcharge may, under rules and regulations prescribed by the board, take as a deduction on its return the amount found worthless and charged off by the seller. If any such accounts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the surcharge shall be paid with the return.
(2)The board may by regulation promulgate such other rules with respect to uncollected or worthless accounts as it shall deem necessary to the fair and efficient administration of this part.
SEC. 2.Section 42014 of the Revenue and Taxation Code is amended to read:42014.(a)For purposes of this part, a retail transaction occurs in the state under any of the following circumstances:
(1)The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).
(2)If paragraph (1) is not applicable, the prepaid consumers address is in the state (known-address transaction). A known-address transaction occurs in the state under any of the following circumstances:
(A)The retail sale involves shipping of an item to be delivered to, or picked up by, the prepaid consumer at a location in the state.
(B)If the prepaid consumers address is known by the seller to be in the state, including if the sellers records maintained in the ordinary course of business indicate that the prepaid consumers address is in the state and the records are not made or kept in bad faith.
(C)The prepaid consumer provides an address during consummation of the retail transaction that is in the state, including an address provided with respect to the payment instrument if no other address is available and the address is not given in bad faith.
(3)If an address is not available to the seller to determine whether any of the circumstances in paragraph (2) exist, the transaction will be deemed to be a known-address transaction occurring in this state if the mobile telephone number is associated with a location in this state.
(b)(1)A retail transaction shall occur at only one location for purposes of determining local charges. If the retail transaction is a point-of-sale transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at that location.
(2)If the retail transaction is a known-address transaction, the location shall be as determined in descending order beginning with subparagraph (A) of paragraph (2) of subdivision (a); if subparagraph (A) of that paragraph is inapplicable, then pursuant to subparagraph (B) of that paragraph; if both subparagraphs (A) and (B) of that paragraph are inapplicable, then subparagraph (C) of that paragraph; and if subparagraphs (A), (B), and (C) of that paragraph are inapplicable, then paragraph (3) of subdivision (a). In a known-address transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at the known address.
(c)(1)A seller that relies in good faith on information provided by the board to match the location of a point-of-sale transaction to the applicable prepaid MTS surcharge amount and local charges, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer.
(2)For a known-address transaction, the seller may collect the prepaid MTS surcharge and local charges that correspond to the five-digit postal ZIP Code of the prepaid consumers address. A seller that, with due diligence and in good faith, relies on credible information to match the five-digit postal ZIP Code of the prepaid consumers address to the applicable prepaid MTS surcharge and local charges amount, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer, even if the five-digit postal ZIP Code of the prepaid consumers address that the seller uses corresponds to more than one local charge.
SEC. 3.Section 42022 of the Revenue and Taxation Code is amended to read:42022.Every seller, except a seller that is not required to collect the prepaid MTS surcharge pursuant to Section 42010.7 and local charges pursuant to Section 42101.7, shall register with the board. Nothing in this section prevents a seller from registering with the board on a voluntary basis to collect and remit the surcharge even if the seller meets the de minimis sales threshold provided by Sections 42010.7 and 42101.7. The board shall establish a method for registration of sellers under this part that utilizes the existing registration process for a sellers permit established pursuant to Section 6066 of the Sales and Use Tax Law (Part 1 (commencing with Section 6001)). Every application for registration shall be made upon a form prescribed by the board and shall set forth the name under which the applicant transacts or intends to transact business, the location of its place or places of business, and such other information as the board may require. An application for registration shall be authenticated in a form or pursuant to methods as may be prescribed by the board.
(a)(1)On and after January 1, 2016, a prepaid MTS surcharge shall be imposed on each prepaid consumer and shall be collected by a seller from each prepaid consumer at the time of each retail transaction in this state. The prepaid MTS surcharge shall be imposed as a percentage of the sales price of each retail transaction that occurs in this state.
(2)The prepaid MTS surcharge shall be in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) and the Public Utilities Commission surcharges for prepaid mobile telephony services.
(b)The prepaid MTS surcharge shall be annually calculated by the board by no later than November 1 of each year commencing November 1, 2015, by adding the following:
(1)The surcharge rate reported pursuant to subdivision (d) of Section 41030.
(2)The Public Utilities Commissions reimbursement fee and telecommunications universal service surcharges, established by the Public Utilities Commission pursuant to subdivisions (b) and (c) of Section 319 of the Public Utilities Code.
(c)(1)The board shall post, for each local jurisdiction, the combined total of the rates of prepaid MTS surcharge and the rate or rates of local charges, as calculated pursuant to Sections 42102 and 42102.5, that each local jurisdiction has adopted, not later than December 1 of each year, on its Internet Web site. The posted combined rate shall be the rate that applies to all retail transactions during the calendar year beginning April 1 following the posting.
(2)Notwithstanding paragraph (1), if a local agency notifies the board pursuant to subdivision (d) of Section 42101.5 that the posted rate is inaccurate or it no longer imposes a local charge or local charges or that the rate of its local charge or local charges has decreased, the board shall promptly post a recalculated rate that is applicable to the jurisdiction of that local agency. The change shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the local agency notifies the board of the inaccuracy or that it no longer imposes a local charge or that the rate of its local charge has decreased. Nothing in this section modifies the notice obligations of Section 799 of the Public Utilities Code. However, beginning January 1, 2016, the notification and implementation requirements of paragraphs (5) and (6) of subdivision (a) of Section 799 of the Public Utilities Code shall not apply to prepaid mobile telephony services.
(3)The board shall also separately post on its Internet Web site the individual rates for each of the following:
(A)Each of the Public Utilities Commission surcharges that make up the Public Utilities Commission surcharge portion of the prepaid MTS surcharge, as reported pursuant to Section 319 of the Public Utilities Code.
(B)The rate for the emergency telephone users surcharge reported pursuant to subdivision (d) of Section 41030.
(C)Each of the individual local charges reported pursuant to Section 42101.5.
(4)A seller collecting the prepaid MTS surcharge and local charges pursuant to this part and Part 21.1 (commencing with Section 42100) may rely upon the accuracy of the information posted on the boards Internet Web site in collecting and remitting all amounts of the prepaid MTS surcharge and local charges.
(d)(1)Except for amounts retained pursuant to subdivision (e), and except as provided in subdivision (f) for a seller that is a direct seller, all amounts of the prepaid MTS surcharge and local charges collected by sellers shall be remitted to the board pursuant to Chapter 3 (commencing with Section 42020).
(2)A seller that is authorized to provide lifeline service under the state lifeline program or federal lifeline program, that sells prepaid mobile telephony services directly to the prepaid customer, shall remit the prepaid MTS surcharge to the board, less any applicable exemption from the surcharge that is applicable to the retail transaction pursuant to Section 42012.
(e)A seller that is not a direct seller shall be permitted to deduct and retain an amount equal to 2 percent of the amounts that are collected by the seller from prepaid consumers for the prepaid MTS surcharge and local charges, on a pro rata basis, according to that portion of the revenues collected by the seller for each of the following:
(1)The emergency telephone users surcharge.
(2)The Public Utilities Commission surcharges.
(3)Local charges.
(f)A direct seller shall remit the prepaid MTS surcharge and local charges as follows:
(1)That portion of the prepaid MTS surcharge that consists of the Public Utilities Commission surcharges shall be remitted to the commission with those reports required by the commission. The amounts remitted to the Public Utilities Commission pursuant to this paragraph shall be deposited into the respective universal service funds created pursuant to Chapter 1.5 (commencing with Section 270) of Part 1 of Division 1 of the Public Utilities Code and to the Public Utilities Commission Utilities Reimbursement Account described in Chapter 2.5 (commencing with Section 401) of Part 1 of Division 1 of the Public Utilities Code.
(2)That portion of the prepaid MTS surcharge that consists of the emergency telephone users surcharge shall be remitted to the board pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) for those retail transactions with a prepaid consumer in the state, with a return filed with the board using electronic media. The amount remitted to the board pursuant to this paragraph shall be deposited into the State Emergency Telephone Number Account in the General Fund.
(3)Local charges, if applicable, shall be remitted to the local jurisdiction or local agency imposing the local charge. Remittance of the local charges shall be separately identified from any other local taxes or other charges that are remitted to the local jurisdiction or local entity imposing the local tax or other charge. The amounts remitted to the local jurisdiction or local agency imposing the local charge pursuant to this paragraph shall be deposited into the respective local jurisdiction or local agency account.
(g)A direct seller shall utilize the amounts posted by the board pursuant to subdivision (c) when determining what amounts to remit to the Public Utilities Commission, the board, and each local jurisdiction or local agency.
(h)A prepaid MTS provider shall offer prepaid consumers the option to make payment for additional prepaid usage directly to the prepaid MTS provider at the providers retail location or Internet Web site.
(i)The amount of the combined prepaid MTS surcharge and local charges shall be separately stated on an invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.
(j)The prepaid MTS surcharge that is required to be collected by a seller and any amount unreturned to the prepaid consumer of mobile telephony services that is not owed as part of the surcharge, but was collected from the prepaid consumer under the representation by the seller that it was owed as part of the surcharge, constitute debts owed by the seller to this state. The local charge that is required to be collected by a seller and any amounts unreturned to the prepaid consumer of mobile telephony services that are not owed as part of the local charge, but that were collected from the prepaid consumer under the representation by the seller that they were owed as part of the local charge, constitute debts owed by the seller jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing that local charge.
(k)A seller that has collected any amount of prepaid MTS surcharge and local charges in excess of the amount of the surcharge imposed by this part and actually due from a prepaid consumer may refund that amount to the prepaid consumer, even though the surcharge amount has already been paid over to the board and no corresponding credit or refund has yet been secured. Any seller making a refund of any charge to a prepaid consumer may repay therewith the amount of the surcharge paid.
(l)(1)Every prepaid consumer of mobile telephony services in this state is liable for the prepaid MTS surcharge and any local charges until they have been paid to this state, except that payment to a seller registered under this part relieves the prepaid consumer from further liability for the surcharge and local charges. Any surcharge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed to the state by the person required to collect and remit the surcharge. Any local charge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing the local charge by the person required to collect and remit the local charge. Nothing in this part shall impose any obligation upon a seller to take any legal action to enforce the collection of the surcharge or local charge imposed by this section.
(2)A credit shall be allowed against, but shall not exceed, the prepaid MTS surcharge and local charges imposed on any prepaid consumer of mobile telephony services by this part to the extent that the prepaid consumer has paid emergency telephone users charges, state utility regulatory commission fees, state universal service charges, or local charges on the purchase to any other state, political subdivision thereof, or the District of Columbia. The credit shall be apportioned to the charges against which it is allowed in proportion to the amounts of those charges.
(m)(1)A seller is relieved from liability to collect the prepaid MTS surcharge imposed by this part that became due and payable, insofar as the base upon which the surcharge is imposed is represented by accounts that have been found to be worthless and charged off for income tax purposes by the seller or, if the seller is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A seller that has previously paid the surcharge may, under rules and regulations prescribed by the board, take as a deduction on its return the amount found worthless and charged off by the seller. If any such accounts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the surcharge shall be paid with the return.
(2)The board may by regulation promulgate such other rules with respect to uncollected or worthless accounts as it shall deem necessary to the fair and efficient administration of this part.
SEC. 2.Section 42014 of the Revenue and Taxation Code is amended to read:42014.(a)For purposes of this part, a retail transaction occurs in the state under any of the following circumstances:
(1)The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).
(2)If paragraph (1) is not applicable, the prepaid consumers address is in the state (known-address transaction). A known-address transaction occurs in the state under any of the following circumstances:
(A)The retail sale involves shipping of an item to be delivered to, or picked up by, the prepaid consumer at a location in the state.
(B)If the prepaid consumers address is known by the seller to be in the state, including if the sellers records maintained in the ordinary course of business indicate that the prepaid consumers address is in the state and the records are not made or kept in bad faith.
(C)The prepaid consumer provides an address during consummation of the retail transaction that is in the state, including an address provided with respect to the payment instrument if no other address is available and the address is not given in bad faith.
(3)If an address is not available to the seller to determine whether any of the circumstances in paragraph (2) exist, the transaction will be deemed to be a known-address transaction occurring in this state if the mobile telephone number is associated with a location in this state.
(b)(1)A retail transaction shall occur at only one location for purposes of determining local charges. If the retail transaction is a point-of-sale transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at that location.
(2)If the retail transaction is a known-address transaction, the location shall be as determined in descending order beginning with subparagraph (A) of paragraph (2) of subdivision (a); if subparagraph (A) of that paragraph is inapplicable, then pursuant to subparagraph (B) of that paragraph; if both subparagraphs (A) and (B) of that paragraph are inapplicable, then subparagraph (C) of that paragraph; and if subparagraphs (A), (B), and (C) of that paragraph are inapplicable, then paragraph (3) of subdivision (a). In a known address known-address transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at the known address.
(c)(1)A seller that relies in good faith on information provided by the board to match the location of a point-of-sale transaction to the applicable prepaid MTS surcharge amount and local charges, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer.
(2)For a known-address transaction, the seller may collect the prepaid MTS surcharge and local charges that correspond to the five-digit postal ZIP Code of the prepaid consumers address. A seller that, with due diligence and in good faith, relies on credible information to match the five-digit postal ZIP Code of the prepaid consumers address to the applicable prepaid MTS surcharge and local charges amount, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer, even if the five-digit postal ZIP Code of the prepaid consumers address that the seller uses corresponds to more than one local charge.
SEC. 3.Section 42022 of the Revenue and Taxation Code is amended to read:42022.Every seller, except a seller that is not required to collect the prepaid MTS surcharge pursuant to Section 42010.7 and local charges pursuant to Section 42101.7, shall register with the board. Nothing in this section prevents a seller from registering with the board on a voluntary basis to collect and remit the surcharge even if the seller meets the de minimis sales threshold provided by Sections 42010.7 and 42101.7. The board shall establish a method for registration of sellers under this part that utilizes the existing registration process for a sellers permit established pursuant to Section 6066 of the Sales and Use Tax Law (Part 1 (commencing with Section 6001)). Every application for registration shall be made upon a form prescribed by the board and shall set forth the name under which the applicant transacts or intends to transact business, the location of its place or places of business, and such other information as the board may require. An application for registration shall be authenticated in a form or pursuant to methods as may be prescribed by the board.
(a)(1)On and after January 1, 2016, a prepaid MTS surcharge shall be imposed on each prepaid consumer and shall be collected by a seller from each prepaid consumer at the time of each retail transaction in this state. The prepaid MTS surcharge shall be imposed as a percentage of the sales price of each retail transaction that occurs in this state.
(2)The prepaid MTS surcharge shall be in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) and the Public Utilities Commission surcharges for prepaid mobile telephony services.
(b)The prepaid MTS surcharge shall be annually calculated by the board by no later than November 1 of each year commencing November 1, 2015, by adding the following:
(1)The surcharge rate reported pursuant to subdivision (d) of Section 41030.
(2)The Public Utilities Commissions reimbursement fee and telecommunications universal service surcharges, established by the Public Utilities Commission pursuant to subdivisions (a) and (b) (b) and (c) of Section 319 of the Public Utilities Code.
(c)(1)The board shall post, for each local jurisdiction, the combined total of the rates of prepaid MTS surcharge and the rate or rates of local charges, as calculated pursuant to Sections 42102 and 42102.5, that each local jurisdiction has adopted, not later than December 1 of each year, on its Internet Web site. The posted combined rate shall be the rate that applies to all retail transactions during the calendar year beginning April 1 following the posting.
(2)Notwithstanding paragraph (1), if a local agency notifies the board pursuant to subdivision (d) of Section 42101.5 that the posted rate is inaccurate or it no longer imposes a local charge or local charges or that the rate of its local charge or local charges has decreased, the board shall promptly post a recalculated rate that is applicable to the jurisdiction of that local agency. The change shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the local agency notifies the board of the inaccuracy or that it no longer imposes a local charge or that the rate of its local charge has decreased. Nothing in this section modifies the notice obligations of Section 799 of the Public Utilities Code. However, beginning January 1, 2016, the notification and implementation requirements of paragraphs (5) and (6) of subdivision (a) of Section 799 of the Public Utilities Code shall not apply to prepaid mobile telephony services.
(3)The board shall also separately post on its Internet Web site the individual rates for each of the following:
(A)Each of the Public Utilities Commission surcharges that make up the Public Utilities Commission surcharge portion of the prepaid MTS surcharge, as reported pursuant to Section 319 of the Public Utilities Code.
(B)The rate for the emergency telephone users surcharge reported pursuant to subdivision (d) of Section 41030.
(C)Each of the individual local charges reported pursuant to Section 42101.5.
(4)A seller collecting the prepaid MTS surcharge and local charges pursuant to this part and Part 21.1 (commencing with Section 42100) may rely upon the accuracy of the information posted on the boards Internet Web site in collecting and remitting all amounts of the prepaid MTS surcharge and local charges.
(d)(1)Except for amounts retained pursuant to subdivision (e), and except as provided in subdivision (f) for a seller that is a direct seller, all amounts of the prepaid MTS surcharge and local charges collected by sellers shall be remitted to the board pursuant to Chapter 3 (commencing with Section 42020).
(2)A seller that is authorized to provide lifeline service under the state lifeline program or federal lifeline program, that sells prepaid mobile telephony services directly to the prepaid customer, shall remit the prepaid MTS surcharge to the board, less any applicable exemption from the surcharge that is applicable to the retail transaction pursuant to Section 42012.
(e)A seller that is not a direct seller shall be permitted to deduct and retain an amount equal to 2 percent of the amounts that are collected by the seller from prepaid consumers for the prepaid MTS surcharge and local charges, on a pro rata basis, according to that portion of the revenues collected by the seller for each of the following:
(1)The emergency telephone users surcharge.
(2)The Public Utilities Commission surcharges.
(3)Local charges.
(f)A direct seller shall remit the prepaid MTS surcharge and local charges as follows:
(1)That portion of the prepaid MTS surcharge that consists of the Public Utilities Commission surcharges shall be remitted to the commission with those reports required by the commission. The amounts remitted to the Public Utilities Commission pursuant to this paragraph shall be deposited into the respective universal service funds created pursuant to Chapter 1.5 (commencing with Section 270) of Part 1 of Division 1 of the Public Utilities Code and to the Public Utilities Commission Utilities Reimbursement Account described in Chapter 2.5 (commencing with Section 401) of Part 1 of Division 1 of the Public Utilities Code.
(2)That portion of the prepaid MTS surcharge that consists of the emergency telephone users surcharge shall be remitted to the board pursuant to the Emergency Telephone Users Surcharge Act (Part 20 (commencing with Section 41001)) for those retail transactions with a prepaid consumer in the state, with a return filed with the board using electronic media. The amount remitted to the board pursuant to this paragraph shall be deposited into the State Emergency Telephone Number Account in the General Fund.
(3)Local charges, if applicable, shall be remitted to the local jurisdiction or local agency imposing the local charge. Remittance of the local charges shall be separately identified from any other local taxes or other charges that are remitted to the local jurisdiction or local entity imposing the local tax or other charge. The amounts remitted to the local jurisdiction or local agency imposing the local charge pursuant to this paragraph shall be deposited into the respective local jurisdiction or local agency account.
(g)A direct seller shall utilize the amounts posted by the board pursuant to subdivision (c) when determining what amounts to remit to the Public Utilities Commission, board, and each local jurisdiction or local agency.
(h)A prepaid MTS provider shall offer prepaid consumers the option to make payment for additional prepaid usage directly to the prepaid MTS provider at the providers retail location or Internet Web site.
(i)The amount of the combined prepaid MTS surcharge and local charges shall be separately stated on an invoice, receipt, or other similar document that is provided to the prepaid consumer of mobile telephony services by the seller, or otherwise disclosed electronically to the prepaid consumer, at the time of the retail transaction.
(j)The prepaid MTS surcharge that is required to be collected by a seller and any amount unreturned to the prepaid consumer of mobile telephony services that is not owed as part of the surcharge, but was collected from the prepaid consumer under the representation by the seller that it was owed as part of the surcharge, constitute debts owed by the seller to this state. The local charge shall is required to be collected by a seller, seller and any amount amounts unreturned to the prepaid consumer of mobile telephony services that is are not owed as part of the local charge charge, but that was were collected from the prepaid consumer under the representation by the seller that it was they were owed as part of the local charge constitutes a debt charge, constitute debts owed by the seller jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing that local charge.
(k)A seller that has collected any amount of prepaid MTS surcharge and local charges in excess of the amount of the surcharge imposed by this part and actually due from a prepaid consumer may refund that amount to the prepaid consumer, even though the surcharge amount has already been paid over to the board and no corresponding credit or refund has yet been secured. Any seller making a refund of any charge to a prepaid consumer may repay therewith the amount of the surcharge paid.
(l)(1)Every prepaid consumer of mobile telephony services in this state is liable for the prepaid MTS surcharge and any local charges until they have been paid to this state, except that payment to a seller registered under this part relieves the prepaid consumer from further liability for the surcharge and local charges. Any surcharge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed to the state by the person required to collect and remit the surcharge. Any local charge collected from a prepaid consumer that has not been remitted to the board shall be a debt owed jointly to the state, for purposes of collection on behalf of, and payment to, the local jurisdiction and to the local jurisdiction imposing the local charge by the person required to collect and remit the local charge. Nothing in this part shall impose any obligation upon a seller to take any legal action to enforce the collection of the surcharge or local charge imposed by this section.
(2)A credit shall be allowed against, but shall not exceed, the prepaid MTS surcharge and local charges imposed on any prepaid consumer of mobile telephony services by this part to the extent that the prepaid consumer has paid emergency telephone users charges, state utility regulatory commission fees, state universal service charges, or local charges on the purchase to any other state, political subdivision thereof, or the District of Columbia. The credit shall be apportioned to the charges against which it is allowed in proportion to the amounts of those charges.
(m)(1)A seller is relieved from liability to collect the prepaid MTS surcharge imposed by this part that became due and payable, insofar as the base upon which the surcharge is imposed is represented by accounts that have been found to be worthless and charged off for income tax purposes by the seller or, if the seller is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A seller that has previously paid the surcharge may, under rules and regulations prescribed by the board, take as a deduction on its return the amount found worthless and charged off by the seller. If any such accounts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the surcharge shall be paid with the return.
(2)The board may by regulation promulgate such other rules with respect to uncollected or worthless accounts as it shall deem necessary to the fair and efficient administration of this part.
SEC. 2.Section 42014 of the Revenue and Taxation Code is amended to read:42014.(a)For purposes of this part, a retail transaction occurs in the state under any of the following circumstances:
(1)The prepaid consumer makes the retail transaction in person at a business location in the state (point-of-sale transaction).
(2)If paragraph (1) is not applicable, the prepaid consumers address is in the state (known address (known-address transaction). A known-address transaction occurs in the state under any of the following circumstances:
(A)The retail sale involves shipping of an item to be delivered to, or picked up by, the prepaid consumer at a location in the state.
(B)If the prepaid consumers address is known by the seller to be in the state, including if the sellers records maintained in the ordinary course of business indicate that the prepaid consumers address is in the state and the records are not made or kept in bad faith.
(C)The prepaid consumer provides an address during consummation of the retail transaction that is in the state, including an address provided with respect to the payment instrument if no other address is available and the address is not given in bad faith.
(D)The
(3)If an address is not available to the seller to determine whether any of the circumstances in paragraph (2) exist, the transaction will be deemed to be a known-address transaction occurring in this state if the mobile telephone number is associated with a location in this state.
(b)(1)A retail transaction shall occur at only one location for purposes of determining local charges. If the retail transaction is a point-of-sale transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at that location.
(2)If the retail transaction is a known-address transaction, the location shall be as determined in descending order beginning with subparagraph (A) of paragraph (2) of subdivision (a); if subparagraph (A) of that paragraph is inapplicable, then pursuant to subparagraph (B) of that paragraph; if both subparagraphs (A) and (B) of that paragraph are inapplicable, then subparagraph (C) of that paragraph; and if subparagraphs (A), (B), and (C) of that paragraph are inapplicable, then subparagraph (D) of that paragraph. paragraph (3) of subdivision (a). In a known address transaction, the consumption of, use of, or access to, the prepaid mobile telephony service shall be presumed to be at the known address.
(c)(1)A seller that relies in good faith on information provided by the board to match the location of a point-of-sale transaction to the applicable prepaid MTS surcharge amount and local charges, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer.
(2)For a known-address transaction, the seller may collect the prepaid MTS surcharge and local charges that correspond to the five-digit postal ZIP Code of the prepaid consumers address. A seller that, with due diligence and in good faith, relies on credible information to match the five-digit postal ZIP Code of the prepaid consumers address to the applicable prepaid MTS surcharge and local charges amount, that collects that amount from the prepaid consumer, and that remits the amount to the board in compliance with this part, shall not be liable for any additional MTS surcharge or local charges and shall not be required to refund any amounts collected and paid to the board to the prepaid consumer, even if the five-digit postal ZIP Code of the prepaid consumers address that the seller uses corresponds to more than one local charge.
SEC. 3.Section 42022 of the Revenue and Taxation Code is amended to read:42022.Every seller seller, except a seller that is not required to collect the prepaid MTS surcharge pursuant to Section 42010.7 and local charges pursuant to Section 42101.7, shall register with the board. Nothing in this section prevents a seller from registering with the board on a voluntary basis to collect and remit the surcharge even if the seller meets the de minimis sales threshold provided by Sections 42010.7 and 42101.7. The board shall establish a method for registration of sellers under this part that utilizes the existing registration process for a sellers permit established pursuant to Section 6066 of the Sales and Use Tax Law (Part 1 (commencing with Section 6001)). Every application for registration shall be made upon a form prescribed by the board and shall set forth the name under which the applicant transacts or intends to transact business, the location of its place or places of business, and such other information as the board may require. An application for registration shall be authenticated in a form or pursuant to methods as may be prescribed by the board.
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Date
|
Status
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|---|---|
| May 12, 2016 | Referred to Com. on REV. & TAX. |
| Jul 22, 2016 | Chaptered by Secretary of State. Chapter 89, Statutes of 2016. |
| Jul 22, 2016 | Approved by the Governor. |
| Jul 13, 2016 | Enrolled and presented to the Governor at 4 p.m. |
| Jun 27, 2016 | Assembly amendments concurred in. (Ayes 38. Noes 0.) Ordered to engrossing and enrolling. |
| Jun 27, 2016 | Assembly amendments concurred in. (Ayes 38. Noes 0. Page 4549.) Ordered to engrossing and enrolling. |
| Jun 23, 2016 | Read third time. Passed. (Ayes 79. Noes 0. Page 5488.) Ordered to the Senate. |
| Jun 23, 2016 | Read third time. Passed. Ordered to the Senate. |
| Jun 23, 2016 | In Senate. Concurrence in Assembly amendments pending. |
| Jun 16, 2016 | Read second time. Ordered to consent calendar. |
| Jun 15, 2016 | From committee: Do pass. Ordered to consent calendar. (Ayes 9. Noes 0.) (June 13). |
| Jun 6, 2016 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX. |
| May 25, 2016 | June 6 hearing postponed by committee. |
| Mar 17, 2016 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| May 5, 2016 | Read third time. Passed. (Ayes 36. Noes 0.) Ordered to the Assembly. |
| May 5, 2016 | Read third time. Passed. (Ayes 36. Noes 0. Page 3776.) Ordered to the Assembly. |
| May 5, 2016 | In Assembly. Read first time. Held at Desk. |
| May 3, 2016 | Read second time. Ordered to consent calendar. |
| May 2, 2016 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8 and ordered to consent calendar. |
| Apr 22, 2016 | Set for hearing May 2. |
| Apr 20, 2016 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 7. Noes 0.) (April 20). Re-referred to Com. on APPR. |
| Apr 20, 2016 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 7. Noes 0. Page 3610.) (April 20). Re-referred to Com. on APPR. |
| Apr 5, 2016 | Set for hearing April 20. |
| Mar 31, 2016 | Referred to Com. on GOV. & F. |
| Mar 18, 2016 | From printer. May be acted upon on or after April 17. |
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Date
|
Description
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Location
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Votes
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|
|---|---|---|---|---|
| Jun 27, 2016 | Unfinished Business SB1481 Committee On GOV. & F. (Hertzberg) Concurrence | Senate Floor |
Passed |
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| Jun 23, 2016 | SB 1481 GOV.& F. Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Jun 13, 2016 | Do pass. To Consent Calendar. | Assembly Standing Committee on Revenue and Taxation |
Passed |
|
| May 5, 2016 | Consent Calendar 2nd SB1481 Committee On GOV. & F. (Hertzberg) | Senate Floor |
Passed |
|
| Apr 20, 2016 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Governance and Finance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| board of equalization | ** Support | Jun 27, 2016 |
| State Board of Equalization | ** Support | Jun 27, 2016 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 1481
:
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 36-0, 5/5/16 (Consent)
AYES: Allen, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Wieckowski, Wolk
NO VOTE RECORDED: Anderson, Moorlach, Runner, Vidak
ASSEMBLY FLOOR: 79-0, 6/23/16 (Consent) - See last page for vote
SOURCE: State Board of Equalization
DIGEST: This bill makes three changes to the Prepaid Mobile Telephony Services Surcharge (MTS) Collection Act recommended by the Board of Equalization (BOE) to assist implementation.
Assembly Amendments make technical and grammatical changes.
Existing law:
- Enacts the MTS Act, which requires purchasers of prepaid wireless services to pay a surcharge for each retail sale (MTS Fee) on and after January 1, 2016 (AB 1717, Perea, Chapter 885, Statutes of 2014).
- Provides that the rate of the MTS Fee is a percentage of the sales price of the prepaid wireless service, and that it is in-lieu of all other state and local fees and charges.
- Directs BOE to collect the MTS Fee pursuant to the Fee Collection Procedures Law.
- Requires BOE to calculate the rate of the MTS Fee by adding the state 911 surcharge rate as well as other fees imposed by the California Public Utilities Commission to local charges for communications access and 911, as well as utility user taxes.
- Requires all retailers to collect the MTS Fee from purchasers, and remit proceeds to BOE, except for those who sell a de minimis amount of prepaid wireless services, currently $15,000 per year; however, all retailers must register with BOE and submit quarterly returns regardless of the amount of sales.
- Requires retailers to collect and remit the MTS Fee whenever a retail transaction takes place in the state, including retail transactions made in person in the state, or if the transaction is a “known-address” transaction defined as:
- A retail sale involving an item that is shipped to, or picked up by, the prepaid customer in California,
- If the prepaid customer’s address is known by the seller to be in the state,
- The prepaid customer provides a California address during the sale, or
- The mobile telephone is associated with a location in the state, such as an area code.
- Requires retailers to collect the prepaid MTS surcharge and local charge at the time of the retail transaction and include necessary provisions, that allow for the BOE to efficiently and effectively administer the MTS Fee, such as providing that any amount collected by a retailer but unreturned to the consumer that is not owed as part of the surcharge, constitutes a seller’s debt to the state. However, the language for the MTS surcharge and the local charge are different.
This bill:
- Relieves retailers who sell a de minimis amount of prepaid wireless service from the requirement to register with BOE and file quarterly returns; however, this bill provides that it does not prevent a retailer from registering with BOE on a voluntary basis to collect and remit the charge.
- Provides that a “known-address transaction” will be deemed a retail transaction that takes place in the state when the mobile telephone is associated with a location in the state, such as an area code, only when an address is not available to the seller.
- Makes sections for state and local charges consistent with regard to providing that any amount collected by a retailer but unreturned to the consumer that is not owed as part of the surcharge, constitutes a seller’s debt to the state.
Background
Last year, the Legislature enacted several technical changes to the MTS Fee in a bill implementing the Budget Act (SB 84, Committee on Budget and Fiscal Review, Chapter 25, Statutes of 2015); however, BOE has identified three remaining issues which require correction, and recommended changes for each to assist in the effective implementation of the MTS Fee.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
State Board of Equalization (source)
OPPOSITION: (Verified 6/24/16)
None received
ARGUMENTS IN SUPPORT: BOE states that this bill will also help reduce its costs, and improve taxpayer communication. BOE additionally argues that requiring these smaller retailers to complete and submit quarterly returns to BOE is burdensome, and doesn’t result in any revenue, as they are exempt from collecting and remitting the MTS Fee. Additionally, clarifying known address transactions will relieve some individuals who have moved out of the state but want to maintain their phone numbers with California area codes from paying the fee so long as the individual supplies an out-of-state address.
ASSEMBLY FLOOR: 79-0, 6/23/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: O'Donnell
6/24/16 14:33:58
**** END ****
Date of Hearing: June 13, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
SBPCA Bill Id:SB 1481
Author:(Committee on Governance and Finance) – As Amended Ver:June 6, 2016
Majority vote. Fiscal committee.
SENATE VOTE: 36-0
SUBJECT: Prepaid Mobile Telephony Services Surcharge Collection Act
SUMMARY: Makes four largely technical changes to the Prepaid Mobile Telephony Services (MTS) Surcharge Collection Act (the "Act") to ease the Act's administration. Specifically, this bill:
- Corrects statutory cross-references in the Act.
- Makes conforming and technical changes to Revenue and Taxation Code (R&TC) Section 42010(j), which governs when the prepaid MTS surcharge and local charge constitute a seller's debt to California.
- Provides that, if an address is not available to the seller to determine whether the prepaid consumer's address is in California (i.e., a "known-address transaction"), the transaction will be deemed to be a known-address transaction occurring in California if the mobile telephone number is associated with a location in California.
- Clarifies that if a seller is exempt from collecting the prepaid MTS surcharge and local charges under existing law's de minimis sales provisions, the seller shall not be required to register with the State Board of Equalization (BOE).
EXISTING LAW:
- Establishes the Act, which imposes a prepaid MTS surcharge based on a percentage of the sales price of each retail transaction occurring in this state for prepaid MTS. The surcharge is imposed in lieu of any charges imposed under the Emergency Telephone Users Surcharge Act as well as specified Public Utilities Commission (PUC) surcharges.
- Requires, on and after January 1, 2016, and before January 1, 2020, the prepaid MTS surcharge imposed on prepaid consumers to be collected by the seller from each prepaid consumer at the time of each retail transaction occurring in this state. The Act specifies the circumstances for determining when a transaction occurs in this state.
- Requires every seller under the Act to register with the BOE. Beginning January 1, 2017, the Act exempts a seller, other than a direct seller, with de minimis sales of prepaid MTS of less than $15,000 during the previous calendar year from collecting the surcharge. The Act further requires the Department of Finance annually to review and adjust the de minimis sales threshold, as provided.
FISCAL EFFECT: According to the BOE, this bill would not impact state revenues.
COMMENTS:
- The Senate Committee on Governance and Finance notes the following in support of this bill:
SB 1481 makes . . . changes to the MTS Act to ensure that BOE can correctly implement it beginning later this year. BOE states that the measure will also help reduce costs, and improve taxpayer communication. SB 1481 only contains items with universal agreement; should anyone object to a provision in the measure, it will be removed.
- Committee Staff Comments:
- Overview of existing law: Existing law imposes a prepaid MTS surcharge on each prepaid consumer. The seller must collect the surcharge from each prepaid consumer at the time of each retail transaction in California. The prepaid MTS surcharge is imposed as a percentage of the sales price of each retail transaction that occurs in California. The prepaid MTS surcharge is imposed in lieu of any charges imposed under the Emergency Telephone Users Surcharge Act and the PUC surcharges for prepaid MTS.
- What would this bill do? This bill would make four largely technical changes to the Act to ease administration. Each of these changes is described below.
- Correcting erroneous cross-references: The Act requires the BOE to calculate the prepaid MTS surcharge annually by adding the following:
- The surcharge rate reported under R&TC Section 41030(d); and,
- The PUC's reimbursement fee and telecommunications universal service surcharges, established by the PUC under Public Utilities Code Section 319(a) and (b).
- Correcting erroneous cross-references: The Act requires the BOE to calculate the prepaid MTS surcharge annually by adding the following:
This bill, in turn, would delete the reference to Public Utilities Code Section 319(a), given that Section 319(a) merely includes definitional terms, and would correctly reference both Section 319(b) and (c).
- Making conforming and technical changes to R&TC Section 42010(j): This bill would make conforming and technical changes to R&TC Section 42010(j), which governs when the prepaid MTS surcharge and local charge constitute a seller's debt to this state. Specifically, R&TC Section 42010(j) provides that the prepaid MTS surcharge a seller must collect and any amount unreturned to the consumer that is not owed as part of the surcharge, constitute a seller's debt to California. Section 42010(j) also contains similar, but not identical, language related to local charges. The BOE notes, however, that the local charge provision is not consistent with either the prepaid MTS surcharge provision, or other similar provisions in the R&TC. Thus, this bill makes conforming changes to this section, which the BOE states are necessary for the efficient and effective administration of both the Act and the Local Prepaid MTS Collection Act.
- Modifying the language governing "known-address transactions": For purposes of the Act, a retail transaction is considered to occur in California under specified circumstances. Specifically, a retail transaction occurs in California if the prepaid consumer makes the retail transaction in person at a business location in California (i.e., a point-of-sale transaction). If a transaction is not a point-of-sale transaction, it is still considered to occur in California if the prepaid consumer's address is in California (i.e., a known-address transaction). A known-address transaction, in turn, occurs in California under any of the following circumstances:
- The retail sale involves shipping an item to the prepaid consumer at a location in California;
- If the prepaid consumer's address is known by the seller to be in California, as specified;
- The prepaid consumer provides an address during the purchase transaction that is in California, as specified; or,
- The mobile telephone number is associated with a location in California.
This bill would specify that if an address is not available to the seller to determine whether any of the circumstances in examples (1) through (3) above exist, the transaction will be deemed to be a known-address transaction occurring in California if the mobile telephone number is associated with a location in California. The BOE notes the following as justification for this change in law:
Under existing law, a known out-of-state resident may be charged the prepaid MTS surcharge on their prepaid MTS purchase, even if the product is shipped from an out-of-state seller to the prepaid consumer's out-of-state address. For example, a Sacramento, California resident moves to Oregon. The resident wants to maintain an existing wireless telephone number with the (916) area code, which is now common practice. If that Oregon resident purchases prepaid MTS in a transaction where their address is not available to the retailer, the Prepaid MTS surcharge applies, even if the retailer knows the prepaid consumer has an Oregon address.
- Altering the Act's registration requirements: The Act requires every seller to register with the BOE. The Act also provides, however, that beginning January 1, 2017, specified sellers with de minimis sales of prepaid MTS of less than $15,000 during the previous calendar year are exempt from collecting the prepaid MTS surcharge.
This bill would clarify that if a seller is exempt from collecting the prepaid MTS surcharge under the Act's de minimis sales provision, the seller shall not be required to registers with the BOE. This bill, however, would also provide that nothing shall prevent a seller from registering with the BOE on a voluntary basis to collect and remit the surcharge even if the seller meets the de minimis sales threshold. The BOE notes the following as justification for this change in law:
The [Act] requires a seller to register with the BOE whether or not they make [de minimis] prepaid MTS sales. These [de minimis] sellers registered with the BOE must continue to file returns with the BOE although they are not required to collect the prepaid MTS surcharge. This creates a burden to small sellers that the [de minimis] provisions are intended to address.
REGISTERED SUPPORT / OPPOSITION:
Support
State Board of Equalization (Sponsor)
Opposition
None on file
Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
CONSENT
Bill No: SB 1481
:
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
DIGEST: This bill makes three changes to the Prepaid Mobile Telephony Services Surcharge (MTS) Collection Act recommended by the Board of Equalization (BOE) to assist implementation.
Existing law:
- Enacts the MTS Act, which requires purchasers of prepaid wireless services to pay a surcharge for each retail sale (MTS Fee) on and after January 1, 2016 (AB 1717, Perea, Chapter 885, Statutes of 2014).
- Provides that the rate of the MTS Fee is a percentage of the sales price of the prepaid wireless service, and that it is in-lieu of all other state and local fees and charges.
- Directs BOE to collect the MTS Fee pursuant to the Fee Collection Procedures Law.
- Requires BOE to calculate the rate of the MTS Fee by adding the state 911 surcharge rate as well as other fees imposed by the California Public Utilities Commission to local charges for communications access and 911, as well as utility user taxes.
- Requires all retailers to collect the MTS Fee from purchasers, and remit proceeds to BOE, except for those who sell a de minimis amount of prepaid wireless services, currently $15,000 per year; however, all retailers must register with BOE and submit quarterly returns regardless of the amount of sales.
- Requires retailers to collect and remit the MTS Fee whenever a retail transaction takes place in the state, including retail transactions made in person in the state, or if the transaction is a “known-address” transaction defined as:
- A retail sale involving an item that is shipped to, or picked up by, the prepaid customer in California,
- If the prepaid customer’s address is known by the seller to be in the state,
- The prepaid customer provides a California address during the sale, or
- The mobile telephone is associated with a location in the state, such as an area code.
- Requires retailers to collect the prepaid MTS surcharge and local charge at the time of the retail transaction and include necessary provisions, that allow for the BOE to efficiently and effectively administer the MTS Fee, such as providing that any amount collected by a retailer but unreturned to the consumer that is not owed as part of the surcharge, constitutes a seller’s debt to the state. However, the language for the MTS surcharge and the local charge are different.
This bill:
- Relieves retailers who sell a de minimis amount of prepaid wireless service from the requirement to register with BOE and file quarterly returns; however, this bill provides that it does not prevent a retailer from registering with BOE on a voluntary basis to collect and remit the charge.
- Provides that a “known-address transaction” will be deemed a retail transaction that takes place in the state when the mobile telephone is associated with a location in the state, such as an area code, only when an address is not available to the seller.
- Makes sections for state and local charges consistent with regard to providing that any amount collected by a retailer but unreturned to the consumer that is not owed as part of the surcharge, constitutes a seller’s debt to the state.
Background
Last year, the Legislature enacted several technical changes to the MTS Fee in a bill implementing the Budget Act (SB 84, Committee on Budget and Fiscal Review, Chapter 25, Statutes of 2015); however, BOE has identified three remaining issues which require correction, and recommended changes for each to assist in the effective implementation of the MTS Fee.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
Board of Equalization (source)
None received
ARGUMENTS IN SUPPORT: BOE states that this bill will also help reduce its costs, and improve taxpayer communication. BOE states that requiring these smaller retailers to complete and submit quarterly returns to BOE is burdensome, and doesn’t result in any revenue, as they are exempt from collecting and remitting the MTS Fee. Additionally, clarifying known address transactions will relieve some individuals who have moved out of the state but want to maintain their phone numbers with California area codes from paying the fee so long as the individual supplies an out-of-state address.
5/4/16 14:58:15
**** END ****
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
Bill No: | SB 1481 | Hearing Date: | 4/20/16 |
Author: | Committee on Governance and Finance | Tax Levy: | No |
Version: | 3/17/16 | Fiscal: | Yes |
Consultant: | Grinnell | ||
Prepaid Mobile Telephony Services Surcharge Collection Act
Enacts three changes to the Mobile Telephony Surcharge.
Background and Proposed Law
In 2014, the Legislature enacted the Prepaid Mobile Telephony Services Surcharge Collections Act, which requires purchasers of prepaid wireless to pay a surcharge for each retail sale (MTS Fee) on and after January 1, 2016 (AB 1717, Perea). The MTS Fee is a percentage of the sales price, and is in-lieu of all other state and local charges, fees, and taxes that currently apply. The Board of Equalization (BOE) administers the MTS Fee according to the Fee Procedures Collections Law, and must calculate the rate according to the bill each year no later than November 1, commencing on November 1, 2015 by adding:
- The 911 Surcharge rate, and
- The CPUC reimbursement and cumulative universal service fees.
Additionally, AB 1717 also required the seller to also collect at the point of sale, from consumers of prepaid wireless an amount equal to adding the following according to rate approximations in the bill:
- Local Utility User Taxes, and
- Charges for access to communications services or local 911 emergency telephone systems.
Last year, the Legislature enacted several technical changes to the MTS Fee in a bill implementing the Budget Act (SB 84, Committee on Budget and Fiscal Review, 2015); however, BOE has identified three remaining issues which require correction, and recommended changes for each to assist in the effective implementation of the MTS Fee.
I. De Minimis exemption. Currently, all retailers of prepaid wireless services have to register with BOE, but those selling a de minimis amount of MTS services don’t have to collect and remit the MTS, set in state law as $15,000 in sales per calendar year. BOE states that requiring these smaller retailers to complete and submit quarterly returns to BOE is burdensome, and doesn’t result in any revenue, as they are exempt from collecting and remitting the fee. Senate Bill 1481 exempts sellers of prepaid wireless services that meet the de minimis standard from the registration requirement, but allows them to voluntarily register and remit the MTS. Retailers whose sales increase above the threshold would have to register with BOE, and collect the MTS in the following calendar year.
II. Known address transactions. The MTS applies to sales of prepaid wireless services that take place within the state, which include in-person retail sales, as well as “known address” transactions, where the seller is aware that the buyer has a California address, or the phone is associated with a location in this state, such as an area code. However, some individuals who have moved out of the state want to maintain their phone numbers with California area codes, but the retailer must collect and remit the MTS in these cases because it’s associated with a location in the state, even if the individual supplies an out-of-state address. SB 1481 instead provides that the transaction will only be deemed a “known-address” transaction for phones associated with a location in this state when an address isn’t available.
III. Consistency between MTS and local charges. State law requires retailers to collect the prepaid MTS surcharge and local charge at the time of the retail transaction and include necessary provisions, that allow for the BOE to efficiently and effectively administer the bill, such as providing that any amount collected by a retailer but unreturned to the consumer that is not owed as part of the surcharge, constitutes a seller’s debt to the state. However, the language for the MTS surcharge and the local charge are different. SB 1481 makes the two consistent by amending the section on local charges to conform with the state charge.
State Revenue Impact
BOE states that SB 1481 does not impact state revenues.
Comments
1. Purpose of the bill. SB 1481 makes three changes to the MTS Act to ensure that BOE can correctly implement it beginning later this year. BOE states that the measure will also help reduce its costs, and improve taxpayer communication. Senate Rule 23 requires all members of the Committee to sign Committee Bills prior to introduction, so SB 1481 can only contain items with universal agreement; should anyone object to a provision in the measure, it will be removed.
Support and Opposition
(4/14/16)
Support: State Board of Equalization.
Opposition: None received.
-- END --
Discussed in Hearing
1MIN
Assembly Standing Committee on Environmental Safety and Toxic Materials
2MIN
Senate Floor
Bill Author
Bill Co-Author(s):