BILL ANALYSIS Ó
AB 300
Page 1
ASSEMBLY THIRD READING
AB 300 (Perea)
As Amended June 3, 2013
2/3 vote. Urgency
UTILITIES & COMMERCE 14-0 REVENUE &
TAXATION 8-0
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|Ayes:|Bradford, Patterson, |Ayes:|Bocanegra, Dahle, Harkey, |
| |Bonilla, Buchanan, Fong, | |Mullin, Nestande, Pan, V. |
| |Beth Gaines, Garcia, | |Manuel Pérez, Ting |
| |Gorell, Roger Hernández, | | |
| |Jones, Quirk, Rendon, | | |
| |Skinner, Williams | | |
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Harkey, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, | | |
| |Donnelly, Eggman, Gomez, | | |
| |Hall, Linder, Pan, Quirk, | | |
| |Wagner, Weber | | |
| | | | |
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SUMMARY : Establishes a uniform, statewide retail point-of-sale
collection mechanism for prepaid wireless services.
Specifically, this bill :
1)Enacts the Prepaid Mobile Telephony Service Surcharge and
Collection Act (MTS).
2)Establishes a prepaid MTS surcharge based upon a percentage of
the sales price of each retail transaction that occurs in the
state for prepaid wireless service. The prepaid MTS surcharge
would include the 9-1-1 user surcharge, and California Public
Utilities Commission (PUC) surcharges and any applicable local
user utility tax.
3)Requires a retail seller to collect the prepaid MTS surcharge
from a prepaid consumer and remit the amounts collected to the
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State Board of Equalization (BOE).
4)Specifies BOE to deposit the amounts collected in specified
accounts, within the State Treasury, after deducting its
administrative expenses.
5)Requires PUC to annually compute PUC's reimbursement fee and
six universal service program fees, to post notice of those
fees on its Internet Web site and to notify the BOE of the
amounts, which would be adjusted, as specified.
6)Specifies the California Department of Technology (Department
of Technology) to annually compute the intrastate portion of
the 9-1-1 surcharge to be collected on prepaid wireless
services, to post notice of those charges and to notify BOE of
the amount for the 9-1-1 user surcharge.
7)States that on or after January 1, 2015, and before an
unspecified date, a local charge imposed on the consumption of
prepaid mobile telephony services shall be collected from the
prepaid consumer at the same time and in the same manner as
the prepaid MTS surcharge is collected, as specified, in lieu
of collection of those local charges by the city, county, or
city and county, including a charter city, county, or city and
county.
8)States that on or after January 1, 2015, and before an
unspecified date the authority of a city, county, or city and
county, which includes a charter city, county, or city and
county, to impose a utility user tax rate on the consumption
of prepaid mobile telephony service in the city, county, or
city and county at the rate as specified in an ordinance
authorized by law is suspended and would instead require the
user utility tax rate to be applied during that period under
any ordinance to be at specified tiered rates, to be collected
and administered as prescribed in MTS.
9)Specifies that a change in a utility user tax rate or access
charge rate resulting from either the rate limitations or the
end of the suspension period is not subject to voter approval
under either statute or the California Constitution.
10)Requires local charges imposed by a city, county, or city and
county can be administered and collected by BOE, deposited in
a specified fund, and transmitted to the city, county, or city
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and county.
11)Allows a consumer to rebut the presumed location of a retail
transaction for purposes of the collection of the local
charges by filing a claim and declaration under penalty of
perjury.
12)Requires MTS providers to continue, until January 1, 2015, to
comply with the current law prior to the bill's enactment.
13)Establishes specific accounts within the State Treasury for
the various surcharges, taxes and fees.
14)Specifies that excess charges paid by the prepaid consumer
shall be refunded even in the event when the surcharge amount
has already been remitted to the BOE.
15)Provides that any local charge collected from a prepaid
consumer that has not been remitted to the BOE shall be a debt
owned jointly to the state and local jurisdiction imposing the
local charge.
16)Require local jurisdictions that enact a local charge
applicable to prepaid MTS, or in the future enacts a local
charge, is responsible for notifying BOE in writing of the
amount of the local 9-1-1 charge or the applicable tiered rate
for User Utility Tax (UUT) by a specified date.
17)Allows local jurisdictions to request BOE to correct any
errors in geocoding in writing and also notify the local
jurisdiction that is improperly receiving the local charge in
error.
18)Establishes tiered UUT rate schedule so that retailers will
know how to assess the taxes.
19)Specifies how BOE shall deposit revenues and deduct an
administrative fee for expenses.
20)Authorizes BOE to contract with a third party to administer
the disbursement of the local charges.
21)Specifies that any city, county, or city and county that has
adopted an ordinance to impose a local charge applicable to
prepaid MTS to comply with certain requirements.
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22)Revises the definition of mobile telephony services and
incorporates that definition for the purposes of MTS Act.
23)Deletes the requirement that the BOE verify the validity and
accuracy of a local utility user tax, and requires local
governments to certify the applicability of a local utility
user tax to prepaid wireless services.
24)Requires local governments to indemnify the BOE from any
liability resulting from the collection of a local utility
user tax.
25)Clarifies that this bill does not impact any other service
other than prepaid wireless or have any impact on any federal
obligations on prepaid wireless services.
26)Limits BOE's audit responsibilities to verifying that the
seller of the prepaid services applied the correct surcharges
for that geographic area.
27)Defines terms and makes non-substantive changes.
FISCAL EFFECT : The Assembly Appropriations Committee estimates
slight increase or potential decrease up to several million
dollars from revenues generated under existing law.
Additionally, there will be increased administrative costs to
BOE and PUC and point of sale retailers. BOE and PUC estimate
potential net revenue losses in the $2 to $10 million range.
COMMENTS :
1)Background : The state's current system for collecting taxes
and fees is based on carriers
having a contractual relationship with customers and
collecting those taxes and fees on a monthly bill. These
consumers pay 9-1-1 fees that help fund the network costs
associated with the delivery of wireless 9-1-1 services. They
also pay state-imposed fees to fund telephone service for
low-income households, broadband for underserved areas and
more, and local government services such as police, fire,
parks and libraries through local utility user taxes.
According to CTIA-The Wireless Association, the prepaid
wireless market is anticipated to grow at a rate of 10% per
year. Out of 300 million nationwide wireless consumers, it is
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estimated that 20% use prepaid services and California's share
of the national wireless market is 20%.
2)Collection of fess and surcharges for prepaid wireless
services : Current law imposes the state 9-1-1 user surcharge
on intrastate communications service, administered by the
California Technology Agency, a PUC Reimbursement Fee to pay
for PUC's operations, and several surcharges to pay for state
universal service programs administered by PUC as follows:
a) California High Cost Fund A and B;
b) Deaf and Disabled Telecommunications program;
c) California Teleconnect Fund;
d) California Advanced Services Fund;
e) Lifeline Telephone Service.
These state fees total about 2.5% of intrastate service.
Local 9-1-1 fees and UUTs are assessed on service provided
within the jurisdiction of the city or county imposing the
tax. UUTs vary by jurisdiction but not all cities and
counties impose them.
Post-paid fees and surcharges are easily assessed as they are
reflected on customer bills after service is used. With
prepaid service, there is no billing process. It is
impossible for providers or retailers selling prepaid service
to determine ahead of time how many minutes will be intrastate
calls, nor where the transaction will occur.
3)Proposed collection method : This bill would require the
retail seller (or vendor) to collect
taxes and fees at the point-of-sale for prepaid wireless
service and remit funds collected to the BOE. The retail
seller will be permitted to deduct and retain 3% of the
amounts collected which represents their vendor compensation.
BOE would be responsible for depositing these surcharges, less
a 2% administrative fee, into the newly established Prepaid
Mobile Telephony Services Surcharge Fund (MTS) created in the
State Treasury. The Prepaid MTS 9-1-1 Account and the Prepaid
MTS PUC Account will be created in the fund to receive the
emergency telephone users surcharge and PUC universal service
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surcharges.
4)Reconciling challenges with local UUTs : Numerous
jurisdictions have adopted a
local UUT which is imposed by a city council or by vote of the
people. UUTs may be imposed as a special tax, earmarked for a
specific purpose, or a general tax to be used for a variety of
municipal service needs at the discretion of the local
government. Most of UUTs have been enacted as general taxes.
UUT revenues commonly fund police, fire, parks, library, and
long-range land use planning serves and other related
services. There are about 150 different Local 9-1-1 fees and
UUTs assessed on service provided within the jurisdiction of
the city or county imposing the tax. UUTs vary by
jurisdiction but not all cities and counties impose them.
Provisions in the bill establishes a tiered UUT rate schedule
so that retailers will know how to assess the taxes. Recent
amendments delete the requirement that the BOE verify the
validity and accuracy of a local utility user tax, and require
local governments to certify the applicability of a local
utility user tax to prepaid wireless services. Local
governments would be required to indemnify the BOE from any
liability resulting from the collection of a local UUT.
5)New amendments : Recent amendments clarify that this bill does
not impact any other service other than prepaid wireless nor
have any impact on any federal obligations on prepaid wireless
services. The amendments also limit BOE's audit
responsibilities to verifying that the seller of the prepaid
services applied the correct surcharges for that geographic
area.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0001087