BILL ANALYSIS Ó
AB 300
Page 1
Date of Hearing: May 13, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 300 (Perea) - As Amended: April 16, 2013
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Telecommunications: prepaid mobile telephony
services: state surcharges and fees: local charges collection
SUMMARY : Establishes a new point of sale system for collecting
and remitting specified fees, surcharges, and taxes applicable
to prepaid mobile telephony services (MTS). Specifically, this
bill :
1)Contains the following legislative findings and declarations:
a) Providers of end-use communications services, including
providers of mobile voice telecommunications services,
which the Federal Communications Commission (FCC) terms
MTS, are required to collect and remit communications
taxes, fees, and surcharges on various types of
communication service revenues, as provided by existing
state or local law.
b) Consumers purchase prepaid MTS at a wide variety of
retail locations and other distribution channels, as well
as through service providers.
c) Prepaid MTS are an important and growing segment of the
communications industry. Such services are often the only
means by which persons with low incomes can obtain limited
access to the telecommunications system.
d) To ensure equitable contributions from end-use consumers
of postpaid and prepaid MTS in this state, there should be
standardization with respect to the method used to collect
communications taxes, fees, and surcharges from end-use
consumers of prepaid MTS.
e) Prepaid MTS are frequently sold by a third-party
retailer that is not the provider of MTS, and collecting
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taxes, fees, and surcharges from prepaid consumers of MTS
at the time of the retail transaction is necessary and the
most efficient and competitively neutral means of
collection.
f) An equitable distribution mechanism is necessary to
ensure that utility user taxes (UUTs) and other
telecommunication charges are collected on behalf of cities
and counties and are properly distributed to those
jurisdictions.
2)Enacts the Prepaid MTS Surcharge and Collection Act.
3)Imposes, on and after January 1, 2015, a "prepaid MTS
surcharge" on each prepaid consumer. Sellers shall collect
the surcharge from prepaid consumers at the time of each
retail transaction for prepaid MTS in the state.
4)Specifies that the "prepaid MTS surcharge" shall be collected
as a percentage of the amount of each retail transaction that
occurs in this state.
5)Provides that the "prepaid MTS surcharge" shall be in lieu of
any charges imposed under the Emergency Telephone Users
Surcharge Act and the "Public Utilities Commission (PUC)
surcharges" for prepaid MTS.
6)Defines the "prepaid MTS surcharge" as a unitary surcharge
consisting of the emergency telephone users surcharge and the
"PUC surcharges", as specified.
7)Defines the "PUC surcharges" to include:
a) The California High-Cost Fund-A Administrative Committee
Fund program surcharge;
b) The California High-Cost Fund-B Administrative Committee
Fund program surcharge;
c) The Deaf and Disabled Telecommunications Program
Administrative Committee Fund surcharge;
d) The California Teleconnect Fund Administrative Committee
Fund program surcharge;
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e) The California Advanced Services Fund program surcharge;
f) The Moore Universal Telephone Service Act; and,
g) PUC reimbursement fees.
8)Requires the PUC to compute annually, by October 1 of each
year beginning on October 1, 2014, the following:
a) A reimbursement fee as a percentage of the sales price
for prepaid MTS, to be effective on January 1 of the
following year and to be collected and remitted pursuant to
this bill; and,
b) The cumulative of the telecommunications universal
service surcharges as a percentage of the sales price for
prepaid MTS, to be effective on January 1 of the following
year and to be collected and remitted pursuant to this
bill.
9)Requires the State Board of Equalization (BOE) to calculate
annually the prepaid MTS surcharge by November 1 of each year
beginning on November 1, 2014, by adding the following:
a) The emergency telephone users surcharge rate established
for intrastate telephone communication service, multiplied
by the inverse of the interstate wireless safe harbor
percentage established by the FCC for federal universal
service contribution purposes; and,
b) The PUC surcharges, multiplied by the inverse of the
interstate wireless safe harbor percentage established by
the FCC for federal universal service contribution
purposes.
10)Permits sellers to deduct and retain 3% of the amounts
collected from prepaid consumers for the prepaid MTS surcharge
and local charges.
11)Requires the BOE to administer the prepaid MTS surcharge
pursuant to the Fee Collection Procedures Law.
12)Establishes the Prepaid MTS Surcharge Fund (Fund) in the
State Treasury. The Fund shall consist of all surcharges,
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interest, penalties, and other amounts collected and paid to
the BOE, less a deduction "in an amount not to exceed" 2% of
the collected amounts to reimburse the BOE for administrative
expenses incurred.
13)Enacts the Local Prepaid MTS Collection Act.
14)Requires any local agency that has enacted "local charges" to
provide the BOE with notice of the charges applicable to
prepaid MTS, expressed as a percentage of the sales price of
prepaid MTS, on or before October 15, beginning on October 15,
2014.
15)Provides that on and after January 1, 2015, and before an
unspecified date, a "local charge" imposed on the consumption
of prepaid MTS shall be collected from prepaid consumers in
the same manner as the prepaid MTS surcharge is collected, in
lieu of collection of those local charges by the city, county,
or city and county.
16)Defines "local charge" as UUTs, as specified, and charges for
access to communication services or to local "911" emergency
telephone systems, as specified.
17)Suspends, on and after January 1, 2015, and before an
unspecified date, the authority of any city, county, or city
and county to impose a UUT rate on the consumption of prepaid
MTS at the rate specified by ordinance. States that it is the
Legislature's intent to create a "tiered method" for
collection of the UUT rate.
18)Suspends, on and after January 1, 2015, and before an
unspecified date, the authority of any city, county, or city
and county to impose a charge applicable to prepaid MTS for
access to communication services or to local "911" emergency
telephone systems at the rate specified by ordinance.
Provides, instead, for a simplified but currently unspecified
rate structure.
19)Requires the amount of the combined prepaid MTS surcharge and
local charges to be separately stated on the invoice provided
to the prepaid consumer at the time of the retail transaction.
20)Authorizes the BOE to make software available to sellers to
enable sellers to match the location of a retail transaction
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to the applicable prepaid MTS surcharge amount and local
charges.
21)Provides that a seller that relies in good faith on
information provided by the BOE to match the location of a
point-of-sale transaction to the applicable prepaid MTS
surcharge amount and local charges, collects that amount from
the prepaid consumer, and remits the amount to the BOE, 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 BOE or to the prepaid consumer.
22)Provides that the prepaid MTS surcharge and local charges are
imposed on the prepaid consumer and not on the seller or on
any prepaid MTS provider, except that the seller shall collect
and remit the charges.
23)Provides that this is an urgency statute necessary for the
immediate preservation of the public peace, health or safety.
EXISTING LAW :
1)Imposes a surcharge, under the Emergency Telephone Users
Surcharge Act, on amounts paid for intrastate telephone
service. These surcharges provide revenues sufficient to fund
"911" emergency telephone system costs. Upon collection,
amounts are paid to the BOE on a monthly basis by the
telephone service supplier.
2)Grants the PUC regulatory authority over public utilities,
including telephone corporations. Specifically, the PUC is
authorized to fix just and reasonable rates and charges for
services provided by public utilities.
3)Establishes the PUC Utilities Reimbursement Account and
authorizes the PUC to determine annually a fee to be paid by
every public utility (except railroad corporations) providing
service directly to customers or subscribers and subject to
the PUC's jurisdiction.
4)Establishes the state's telecommunications universal service
programs and authorizes the PUC to impose charges to fund
those programs. Pursuant to this authority, the PUC has
established six end-user surcharges to fund six universal
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service programs.
FISCAL EFFECT : Unknown. The BOE's fiscal estimate for this
bill is pending.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
Everyone who uses phone services pays a small monthly fee
as part of their bill to help fund 911 and support other
important state and local programs. However, for the
fastest growing segment of wireless users, prepaid wireless
services, there is no collection mechanism for them to pay
these fees. Approximately 25% of all wireless customers
are now prepaid customers. The current system leaves state
and local governments without a reliable, predicable means
for ensuring collection of these revenues, depriving state
911, local governments and other public purpose programs of
critical funding.
By modernizing state [statutes] and implementing a method
of point-of-sale collection on prepaid wireless services,
AB 300 ensures revenue for 911 systems, local governments
and other public purpose programs. It would modernize our
collection system to ensure that prepaid wireless customers
pay the same, existing taxes and fees that all other phone
customers are currently required to pay. In doing so it
will ensure more funding to maintain effective and
efficient 911 systems, while also benefitting local
governments and other public purpose programs.
2)Proponents of this bill note the following:
This legislation will create a fair and equitable method of
collecting end user fees from the consumers of prepaid
wireless services.
Prepaid wireless service's unique business model offers
excellent wireless service to consumers at a very
affordable rate, often less expensive than post paid
service. Moreover, prepaid services are offered on a
"pay-as-you-go" basis with no required contracts, term or
volume commitments, early termination penalties, overage
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charges, or credit checks. These important factors make
prepaid services available to those consumers to whom the
security and convenience of mobile telephone service would
not be available. This business model offers reliable
service and affordable pricing. However, the fact that the
service is not billed creates a challenge as to how to
collect end user fees to fund programs such as 911, and the
various public purpose programs administered by the
California Public Utilities Commission.
AB 300 would establish a uniform, statewide retail
point-of-sale collection for taxes and fees on prepaid
wireless services. AB 300 will create a transparent and
predictable source of funding for critical 911 services.
AB 300 also promotes consumer equity and fairness by
ensuring that all wireless customers who use the same 911
services pay the same taxes and fees to fund those
services. In fact, point of sale collection methods have
been successfully enacted and implemented in at least 26
states.
3)Opponents of this bill note the following:
AB 300 will create significant harms for California's
low-income communities and communities of color. Consumers
who purchase pre-paid wireless services are more likely to
be low-income and more likely to be people of color. AB
300 would force those consumers to pay a higher portion of
telephone surcharges than consumers of postpaid services.
Additionally, AB 300 would unjustly enrich retailers of
prepaid wireless services at the expense of low-income
communities and communities of color.
[ . . . ]
[AB 300 also] provides for up to two percent of the
collected funds to be used to reimburse the Board of
Equalization for the actual costs of administering the
program. Retailers are entitled to retain three percent of
the collected funds. However, the funds retained by
retailers are not reimbursement for their actual costs of
administering the program. Rather, these funds are,
according to the bill analysis, "vendor compensation" for
administering the program.
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The three percent figure bears no apparent relation to
retailers' actual administrative costs. Large retailers
will likely be able to take advantage of economies of
scale, and have administrative costs significantly lower
than the 3% set amount. Those retailers will be able to
pocket the difference. As a result, pre-paid subscribers
will be paying a surcharge that partially supports state
telecommunications programs, and partially lines the
pockets of retailers and shareholders.
4)Committee Staff Comments
a) Where the law and market trends collide : In the case of
traditional "postpaid" services, carriers know the personal
identities of their customers and generally collect
surcharges and fees by levying a certain percentage on top
of the cost of monthly services billed.
In the case of "prepaid" services, however, carriers often
do not know the identity of individual purchasers,
especially where services are provided through third-party
retailers. This has rendered the "collection" and
"remittance" of surcharges for prepaid MTS a subject of
considerable controversy. The PUC asserts that carriers
are already collecting and remitting state surcharges and
fees from both their postpaid and prepaid customers,
thereby rendering this bill unnecessary. The wireless
telecommunications industry, on the other hand, asserts
that carriers are currently remitting the taxes, fees, and
surcharges with no standardized or feasible way to collect
them from prepaid customers. With the use of prepaid
services only expected to grow, carriers argue that it is
time to establish a uniform statewide method for collecting
and remitting fees and surcharges from prepaid consumers.
b) What would this bill do? : This bill would establish a
new point of sale system for collecting and remitting
specified fees, surcharges, and taxes applicable to prepaid
MTS. Beginning January 1, 2015, retailers would be
required to collect a unified "prepaid MTS surcharge" from
prepaid consumers at the time of sale. This unified
surcharge would be collected as a percentage of the retail
sales price, and would be imposed in lieu of any 911
surcharge or PUC-administered surcharges imposed for
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prepaid MTS. Retailers would be permitted to deduct and
retain 3% of the amounts collected as vendor compensation,
with the remainder paid to the BOE, which would be charged
with administering the new system. The BOE, in turn, would
be authorized to deduct up to 2% of the collected amounts
to reimburse its administrative expenses.
Essentially, prepaid MTS providers would no longer be
required to remit surcharges and fees out of their existing
(largely wholesale) revenue streams. Instead, carriers
would be able to keep their existing revenue streams whole,
by passing the surcharge and fee costs directly on to
prepaid MTS consumers.
This bill would also establish a new point of sale system
for collecting and remitting locally-imposed UUTs
applicable to prepaid MTS. While this section of the bill
appears to be something of a "work in progress", the most
recent set of amendments proposed by the author would
establish a tiered rate structure for locally-imposed UUTs.
This tiered structure is designed to ameliorate the
administrative complexity that would necessarily be
involved in collecting the multiple rates imposed by the
roughly 90 to 100 jurisdictions with UUT ordinances
applicable to MTS.
c) The policy arguments on both sides : On April 4, 2013,
the PUC voted unanimously to oppose AB 300. The PUC bases
its opposition to this bill on four main policy objections.
The discussion below outlines these four points, and
summarizes the wireless telecommunication industry's
response to each argument:
i) The PUC argues that this bill is unnecessary :
Specifically, the PUC states that carriers are already
collecting and remitting state surcharges and fees from
both their postpaid and prepaid customers. The PUC
intentionally does not prescribe a MTS collection method,
leaving carriers with discretion to implement the method
that best meets their needs. According to the PUC, there
are multiple non-legislative remedies that would make
prepaid collection methods more closely resemble postpaid
methods. For example, the PUC argues that carriers could
modify their contractual arrangements with retailers, and
deduct the requisite surcharges and fees from customers
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at the time of credit activation. The PUC argues that
carriers could alternatively charge state-specific rates.
The PUC acknowledges that such remedies put the onus on
carriers to develop a more sophisticated collection
system, which comes at a cost. The PUC notes, "Carriers
have made clear that their preferred alternative to
assuming additional costs is to shift any and all prepaid
collection expenses onto government, and, by extension,
ratepayers and taxpayers."
The wireless industry strongly objects to the assertion
that carriers are already collecting and remitting state
surcharges and fees from their prepaid customers.
Specifically, the industry states:
Carriers are currently remitting the taxes, fees and
surcharges with no standardized or feasible way to
collect them from prepaid customers. Over 70% of all
prepaid wireless transactions occur through third
party retail channels. In such instances, prepaid
products (i.e.: prepaid cards) are sold at wholesale
and distributed to retail outlets across the country.
At the time of the wholesale sale, the provider does
not know where the prepaid products will ultimately be
sold. Since prepaid products could be sold in
California or any other state, carriers do not know
which states' taxes, fees and surcharges to collect at
the time of the wholesale sale.
The wireless industry also takes issue with the PUC's
assertion that carriers could simply charge
state-specific rates for their prepaid products.
Carriers argue that such a solution could potentially
result in increased prices by eliminating economies of
scale associated with national pricing and distribution.
ii) The PUC argues that this bill would harm California
consumers : Specifically, the PUC argues that consumers
will likely see smaller contributions to the PUC user
fee, the universal service programs, and the state's 911
fee. Under the newly enacted Revenue and Taxation Code
(R&TC) Section 42010(b)(2), the PUC-mandated surcharges
would be applied to intrastate revenue defined as, "the
inverse of the interstate wireless safe harbor percentage
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established by the [FCC] . . . ." The PUC notes:
Under current FCC law, the safe harbor for the
intrastate/interstate allocation of revenue is
62.9%/37.1%. Staff is aware, however, that the
largest prepaid MTS carrier, TracFone, has (and is
currently remitting on) a "books and records"
allocation of 84%/16%. Thus, for that carrier, the
bill shrinks the surcharge base by over 20% (the delta
between 84% and 62.9% of total California revenue.)
New [R&TC] Section 42010 (a) also apparently extends
this 20% smaller surcharge base to carriers' online,
telephonic, or other direct sales which do not involve
a third party retailer (approximately 30% of total
sales).
All in all, the PUC estimates that revenues would drop by
as much as $16.3 million, which would need to be made up
for by raising fees and surcharges on all wireless
customers.
The wireless industry rejects this estimate and points to
evidence from other states suggesting that AB 300 will
actually generate more money for the PUC programs.
Specifically, the industry states:
At a minimum, all of the surcharges on the majority of
prepaid services sold by third party retailers would
be imposed at the retail price instead of at the
wholesale price under current practice. The PUC is
not the only revenue-receiving stakeholder to benefit
from [AB 300]. In fact, the PUC's opposition to the
point-of-sale collection mechanism proposed in [AB
300] threatens to jeopardize a proposal that will
benefit the state's 911 program and about 100 local
governments that have local utility user taxes that
apply to prepaid wireless. Without this point-of-sale
solution, locals, who are actively working with the
industry on a complicated mechanism to collect their
utility user taxes from prepaid customers, will stand
to be the biggest losers.
As to the PUC's assertion that the surcharge base will
shrink by applying the inverse of the FCC safe harbor
percentage, the industry states, "The PUC itself has
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sponsored the inverse approach and, in fact, argued
vociferously that it was completely reasonable and
acceptable to the PUC."
iii) The PUC argues that AB 300 establishes unfair
disparities between postpaid and prepaid consumers :
Specifically, the PUC notes that retailers would be
allowed to keep 3% of surcharges and fees, while the BOE
would be allowed to retain an additional 2% to cover its
administrative costs. The PUC notes:
If, under the new system, the surcharges for prepaid
consumers are set at the same level as those set for
postpaid consumers, the [PUC] will ultimately receive
from prepaid consumers only 95% of the revenues
necessary to fund existing universal services
[programs]. To reach 100% of the required revenue,
the [PUC] would need to set surcharges for prepaid
consumers higher than those for postpaid consumers,
which is fundamentally unfair. By adding 5% in
additional administrative expenses on top of the
required program revenues, prepaid consumers will be
burdened with paying for the additional and
unnecessary administrative expenses associated with
the bill.
Further complicating the equities involved, the PUC
points out that prepaid consumers are more likely than
postpaid consumers to be low-income and from minority
communities.
The wireless industry rejects the assertion that
collection allowances for retailers and the BOE will
result in a disparity between prepaid and postpaid
customers. The wireless industry instead argues that the
current system is responsible for creating a disparity
between prepaid and postpaid consumers. Specifically,
the industry notes, "Currently, no fees or surcharges are
collected from prepaid wireless customers, while postpaid
customers have the fees and surcharges collected on their
monthly bills."
In response to the PUC's assertion that AB 300's
collection method would be unfair to low-income and
minority consumers, the wireless industry notes that
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prepaid services comprise the fastest growing segment of
the market and that the demographics today are "far more
mainstream than in the early days of the service."
iv) The PUC asserts that AB 300 could interfere with
current and future enforcement cases against carriers :
In 2009, the PUC initiated an enforcement proceeding
against TracFone to address its alleged failure to
collect and remit state surcharges and fees. In
D.12-02-032, the PUC determined that TracFone was, in
fact, required to collect and remit universal service
program surcharges and rejected TracFone's defense that
collection was impossible. The PUC notes that, while a
subsequent lawsuit to overturn this decision was rejected
by the courts, Phase II of the proceeding continues, and
staff is currently seeking millions of dollars in unpaid
surcharges and fees, along with interest and penalties.
The PUC notes:
The strong implication (but not explicit statement) of
this bill is that collection and remittance of
surcharges is impossible at present, and would thus
set up a possible defense for TracFone on appeal. The
bill could also vitiate or remove the [PUC's]
authority to pursue such enforcement actions against
other carriers in the future.
The wireless industry counters that nothing in AB 300
will have any retroactive application that interferes
with the PUC's investigation of past collections.
Instead, the industry asserts that AB 300 simply
establishes a prospective method for collecting fees and
surcharges from prepaid customers.
d) Amendments suggested by Committee staff : The Committee
may wish to consider the following two amendments to this
bill:
i) On inferences and urgencies : This bill would go
into immediate effect as an urgency statute "necessary
for the immediate preservation of the public peace,
health, or safety . . . ." The bill states that this
immediacy is needed to provide a standardized collection
mechanism as soon as possible by which state and local
charges can be collected from consumers of prepaid MTS.
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As noted above, the PUC has raised concerns that this
urgency clause might impact its ongoing litigation with
TracFone by implicitly suggesting that, prior to this
legislation, it was impossible for prepaid MTS providers
to remit applicable fees and surcharges. To address this
specific issue, Committee staff suggests amending this
bill to include a standard "no inference" clause.
Specifically, this clause would provide that no inference
shall be drawn from this legislation's passage with
respect to the remittance obligations of prepaid MTS
providers under the law as it read prior to this bill's
enactment.
ii) On operative dates : This bill's urgency clause
raises a second and related issue. If this bill were
signed into law on October 1, 2013, its provisions would
go into immediate effect. Nevertheless, the prepaid MTS
surcharge would only begin being imposed on January 1,
2015. Thus, it is not entirely clear what law would
govern prepaid MTS sales during this 13-month transition
period. Would providers of prepaid MTS have to continue
complying with prior law until the imposition of the new
MTS surcharge on January 1, 2015? If not, would fees and
surcharge simply not apply to MTS services during this
period? Clearly, this later interpretation could have a
significant and negative impact on fee and surcharge
collections. Thus, Committee staff suggests language
requiring MTS providers to continue, until January 1,
2015, complying with the law as it read prior to this
bill's enactment.
e) Issues raised by the BOE : The BOE has raised a number
of policy and administrative concerns with this bill. For
a comprehensive discussion of these concerns, please refer
to the BOE's staff analysis, which notes, among other
things:
While the state component language is challenging, the
local component in its current form is impossible to
administer : "BOE staff has several concerns regarding
the bill, which are too numerous to list. However, staff
understands that the current version of the bill is a
work-in-progress. The BOE staff continues to participate
in stakeholder meetings, provide technical assistance,
meet with interested parties, and provide appropriate
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amendments."
"In part, BOE staff proposes to align the MTS state
surcharge with the BOE-administered sales and use tax
program to make the retailer's surcharge collection and
reporting as convenient as possible, and reduce
BOE-administrative costs."
"This measure also enacts the Local Act, which is most
problematic for the BOE. Currently, certain cities and
counties impose a utility user tax or 911 access charge
on MTS pursuant to voter approved ordinances. The Local
Act suspends the rates specified in these ordinances with
the intent to limit the number of rates imposed.
However, the Local Act does not suspend the ordinances'
imposition of taxes and charges on MTS, which can vary
among each locality. Accordingly, the local MTS
surcharge would not be uniform, thus making
administration of the Local Act problematic, if not
impossible."
f) Amendments proposed by the author : The author has also
proposed an extensive set of amendments to be taken in this
Committee. Among other things, these amendments:
i) Authorize a seller that has collected any amount of
prepaid MTS surcharge and local charges in excess of the
amount due to refund that amount to the prepaid consumer,
even though the surcharge amount has already been paid
over to the BOE and no corresponding credit or refund has
yet been secured.
ii) Provide that any local charge collected from a
prepaid consumer that has not been remitted to the BOE
shall be a debt owed jointly to the state and to the
local jurisdiction imposing the local charge by the
person required to collect and remit the local charge.
iii) Require any local agency that has enacted a local
charge applicable to prepaid MTS, or that, in the future
enacts a new or increased local charge, to provide the
BOE with written notice of the amount of the local 911
charge or the applicable tiered rate for the UUT, on or
before December 1, commencing December 1, 2014, and for
each year thereafter.
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iv) Allow any local agency to request the BOE to correct
an error in the geocoding of a seller with a physical
location within that local agency by submitting a written
declaration of the correction, which is also signed by
the local agency that is improperly receiving the local
charge due to the error.
v) Establish the Local Charge for Prepaid MTS Fund in
the State Treasury. Further establish the UUT Account
and the Local 911 Charges Account within that fund.
vi) Establish a detailed schedule of tiered UUT rates
that shall apply in lieu of the rate specified by local
ordinance. Specifically, the schedule sets forth 9
different rates, ranging between 0% and 9%.
vii) Provide that all local charges collected by the BOE
shall be deposited in the Local Charges for Prepaid MTS
Fund, and shall be held in trust for the local taxing
jurisdiction. Further provide that local charges shall
consist of all taxes, charges, interest, penalties, and
other amounts collected and paid to the BOE, less a
deduction in an amount not to exceed 2% of the collected
amounts to reimburse the BOE for administrative expenses.
viii) Authorize the BOE to contract with a third-party to,
among other things:
(1) Allocate collected local charges to the
appropriate local jurisdiction;
(2) Verify the applicability of a local ordinance
to prepaid MTS and the applicable tiered rate;
(3) Audit proper collection and remittance of the
local charge, including correct geocoding of sellers;
(4) Handle claims for refund, including exemption
claims under the local ordinance; and,
(5) Respond to requests from sellers, customers,
boards, and others regarding local charges.
ix) Provide that any city, county, or city and county
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that has adopted an ordinance to impose a charge
applicable to prepaid MTS shall be solely responsible
for:
(1) Defending any claim regarding the validity of
the ordinance in its application to prepaid MTS;
(2) Interpreting any provision of the ordinance,
except to the extent specifically superseded by this
statute; and,
(3) Responding to refund claims, including claims
of exemption under the ordinance.
g) Suggested technical amendments : Committee staff also
suggests the following technical amendments to this bill:
i) On page 5, in line 26, insert "Services" after
"Telephony";
ii) On page 5, in line 37, insert "Services" after
"Telephony";
iii) On page 6, in line 6, strike "requires" and insert
"require";
iv) On page 6, in line 34, insert "Services" after
"Telephony";
v) On page 7, in line 27, insert "Services" after
"Telephony";
vi) On page 12, in line 24, strike "Prepaidmobile" and
insert "Prepaid mobile";
vii) On page 15, in line 8, strike "the state" and insert
"this state"; and
viii) On page 18, in line 34, strike "tax" and insert
"charges".
h) Double-referral : This bill was double-referred to the
Assembly Committee on Utilities and Commerce, and passed
out of that Committee on a 14-0 vote on April 8, 2013. For
additional discussion of this bill's provisions, please
AB 300
Page 18
refer to that Committee's analysis.
i) Related legislation : Committee staff notes the
following related bills:
i) AB 2545 (De La Torre), of the 2009-10 legislative
session, would have required the PUC to conduct a public
process to develop recommendations for an equitable and
uniform method to collect state and local fees and
surcharges from consumers of prepaid MTS. AB 2545 died
on the Senate inactive file.
ii) AB 1050 (Ma), of the 2011-12 legislative session,
would have imposed an MTS surcharge similar to this bill.
AB 1050 died in the Senate Committee on Governance and
Finance.
REGISTERED SUPPORT / OPPOSITION :
Support
Boost
California Communications Association
Sprint
T-Mobile
TracFone Wireless, Inc.
Virgin Mobile
Opposition
California Grocers Association
California Public Utilities Commission
Consumer Federation of California
Greenlining Institute
TURN
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098