BILL NUMBER: AB 1717 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 2014
AMENDED IN ASSEMBLY APRIL 2, 2014
INTRODUCED BY Assembly Member Perea
FEBRUARY 13, 2014
An act to amend Sections 224.4 and 431 of, and to add Section 319
to, the Public Utilities Code, and to amend Sections 41020 and 41030
of, and to add Part 21 (commencing with Section
42001) and Part 21.1 (commencing with Section 42100) of Division 2
to, and to add and repeal Section 41033 of, the Revenue
and Taxation Code, relating to telecommunications, and declaring the
urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1717, as amended, Perea. Telecommunications: prepaid mobile
telephony services: state surcharge and fees: local charges
collection.
(1) The existing Emergency Telephone Users Surcharge Act generally
imposes a surcharge on amounts paid by every person in the state for
intrastate telephone service to provide revenues sufficient to fund
"911" emergency telephone system costs. Amounts are determined
annually by the Office of Emergency Services, and upon collection are
paid to the State Board of Equalization on a monthly basis by the
telephone service supplier and are deposited into the State Treasury
to the credit of the State Emergency Telephone Number Account in the
General Fund, to be expended for limited purposes, including to pay
the Department of General Services for its costs in administration of
the "911" emergency telephone number system.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including telephone corporations,
and is authorized to fix just and reasonable rates and charges for
services provided by those public utilities. Existing law establishes
the Public Utilities Commission Utilities Reimbursement Account and
authorizes the commission to annually determine a fee to be paid by
every public utility providing service directly to customers or
subscribers and subject to the jurisdiction of the commission, except
for a railroad corporation. The commission is required to establish
the fee, with the approval of the Department of Finance, to produce a
total amount equal to that amount established in the authorized
commission budget for the same year, and an appropriate reserve to
regulate public utilities, less specified sources of funding.
Existing law establishes the state's telecommunications universal
service programs and authorizes the commission to impose charges for
the purpose of funding those programs. Pursuant to this authority,
the commission has established 6 end-user surcharges to fund 6
universal service programs.
This bill would enact the Prepaid Mobile Telephony Service
Surcharge Collection Act. The bill would establish 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. The prepaid MTS surcharge would
include the emergency telephone users surcharge, as defined, and PUC
surcharges, as defined. The bill would require a seller, as defined,
to collect the prepaid MTS surcharge, as provided, from a prepaid
consumer, as defined, and remit the amounts collected to the State
Board of Equalization pursuant to the Fee Collection Procedures Law.
The bill would require the board, after deducting its administrative
expenses, to deposit the amounts collected for the emergency
telephone users surcharge into the Prepaid MTS 911 Account and to
deposit the amounts collected for PUC surcharges into the Prepaid MTS
PUC Account in the Prepaid Mobile Telephony Services Surcharge Fund,
which the bill would establish in the State Treasury. The bill would
require the commission to annually compute for prepaid mobile
telephony services the commission's reimbursement fee and 6 universal
service program surcharges, to post notice of those fees and
surcharges on its Internet Web site, and to notify the State Board of
Equalization and the Office of Emergency Services of the amounts and
the computation method used to determine the amounts, which would be
adjusted, as specified, and together would be the PUC surcharges.
The bill would require that beginning with the calendar year
beginning January 1, 2016, and ending with an unspecified calendar
year, not less than $9,900,000 be paid to the Prepaid MTS 911 Account
for each calendar year for prepaid mobile telephony services and
that any deficiency in payment to the Prepaid MTS 911 Account, below
this amount, resulting from retail transactions by sellers during
each calendar year would be the responsibility of prepaid MTS
providers.
The bill would require the commission, 30 days prior to adopting
any adjustment to a reimbursement fee or universal service surcharge
on both postpaid and prepaid intrastate service to prepare a
prescribed resolution or other public document proposing the fee or
surcharge adjustment and explaining the calculation of the new fee or
surcharge, as specified, and would require the commission to make it
available to the public and on the commission's Internet Web site.
The Moore Universal Telephone Service Act establishes the
Universal Lifeline Telephone Service program in order to provide
low-income households with access to affordable basic residential
telephone service. Existing decisions of the commission exempt
lifeline services from the commission's reimbursement fee and the 6
end-user surcharges that fund the state's 6 universal service
programs.
This bill would exempt the purchase in a retail transaction in
this state of prepaid mobile telephony services, either alone or in
combination with mobile data or other services, by a consumer from
the prepaid MTS surcharge and specified local charges if certain
conditions are met, including that the prepaid consumer is certified
as eligible for the state lifeline program or federal lifeline
program.
The bill would require the Office of Emergency Services to
annually compute, as specified, the intrastate portion of the 911
surcharge to be collected on prepaid mobile telephony services, to
post notice of those charges, and to notify the State Board of
Equalization of the amount, which would be the emergency telephone
users surcharge. The bill would require the Office of Emergency
Services to prepare a prescribed summary of the calculation of the
proposed 911 surcharge and make the summary available to the public
and on its Internet Web site, as specified. Local charges would be
computed pursuant to the Local Prepaid Mobile Telephony Services
Collection Act, discussed below.
Existing law defines mobile telephony services for purposes of the
Public Utilities Code.
This bill would revise that definition and incorporate that
definition for purposes of the Prepaid Mobile Telephony Service
Surcharge Collection Act.
(2) Existing law generally provides that the legislative body of
any charter city may make and enforce all ordinances and regulations
with respect to municipal affairs, as provided, including, but not
limited to, a utility user tax in that municipality. Existing law
generally provides that the legislative body of a city may levy any
tax that may be levied by a charter city. Existing law further
provides that the board of supervisors of any county may levy a
utility user tax on the consumption of, among other things, telephone
service, in the unincorporated area of the county.
This bill would, on and after January 1, 2016, suspend the
authority of a city, county, or city and county, including any
charter city, county, or city and county, to impose a utility user
tax on the consumption of prepaid communications service at the rate
specified in an ordinance adopted pursuant to existing law, and would
instead require the utility user 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 the Prepaid Mobile
Telephony Services Surcharge Collection Act. In addition, the bill
would, on or after January 1, 2016, suspend the authority of a city,
county, or city and county, including any charter city, county, or
city and county, to impose a charge, that applies to prepaid mobile
telephony service, on access to communication services or access to
local "911" emergency telephone systems, in the city, county, or city
and county at the rate as specified in an ordinance adopted pursuant
to existing law, and would instead require the charge rate to be
applied during that period under any ordinance to be at specified
rates, to be collected and administered as prescribed in the Prepaid
Mobile Telephony Services Surcharge Collection Act. This bill would
specify 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 Article XIII C of the California Constitution. This bill
would require these local charges imposed by a city, county, or a
city and county be administered and collected by the State Board of
Equalization, deposited in the Local Charges for Prepaid Mobile
Telephony Services Fund, which this bill would create, and
transmitted to the city, county, or a city and county, as provided.
This bill would allow 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.
By expanding the crime of perjury, this bill would impose a
state-mandated local program.
(3) The Fee Collection Procedures Law makes a violation of any
provision of the law, or of certain requirements imposed by the board
pursuant to the law, a crime.
By expanding the application of the Fee Collection Procedures Law,
the violation of which is a crime, this bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(4) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 224.4 of the Public Utilities Code is amended
to read:
224.4. (a) "Mobile data service" means the delivery of nonvoice
information over a radio band licensed by the Federal Communications
Commission, to a mobile device and includes nonvoice information
communicated to a mobile telephony services handset, nonvoice
information communicated to handheld personal digital assistant (PDA)
devices and laptop computers, and mobile paging service carriers
offering services on pagers and two-way messaging devices. "Mobile
data service" includes mobile broadband service offering connectivity
over a radio band licensed by the Federal Communications Commission.
Unless specified to the contrary, "mobile data service" does not
include nonvoice information communicated through a wireless local
area network operating in the unlicensed radio bands, commonly known
as a "Wi-Fi" network.
(b) "Mobile paging service" means the transmission of coded radio
signals over a radio band licensed by the Federal Communications
Commission, for the purpose of activating specific small radio
receivers designed to be carried by a person and to give an aural,
visual, or tactile indication when activated.
(c) "Mobile satellite telephone service" means voice communication
to end users over a mobile satellite service involving the provision
of commercial mobile radio service, pursuant to Parts 20 and 25 of
Title 47 of the Code of Federal Regulations.
(d) "Mobile telephony service" means commercially available
interconnected mobile phone services that provide voice communication
access to the public switched telephone network (PSTN), or a
successor network, by way of mobile communication devices employing
radiowave technology to transmit calls, including cellular
radiotelephone, broadband Personal Communications Services (PCS),
digital Specialized Mobile Radio (SMR), or another radio band
licensed by the Federal Communications Commission. "Mobile telephony
services" does not include mobile satellite telephone services or
mobile data services used exclusively for the delivery of nonvoice
information to a mobile device.
SEC. 2. Section 319 is added to the Public Utilities Code, to
read:
319. (a) The commission shall annually, on or before October 1 of
each year, commencing October 1, 2015, compute a reimbursement fee
as a percentage of the sales price for prepaid mobile telephony
services, to be effective on January 1 of the following year and to
be collected and remitted pursuant to the Prepaid Mobile Telephony
Services Surcharge Collection Act (Part 21 (commencing with Section
42001) of Division 2 of the Revenue and Taxation Code). On or before
October 8 of each year, commencing October 8, 2015, the commission
shall post notice of the reimbursement fee on its Internet Web site
and notify both the Office of Emergency Services and the State Board
of Equalization of this information as well as the computation method
used to determine the reimbursement fee.
(b) The commission shall annually, on or before October 1 of each
year, commencing October 1, 2015, compute the cumulative amount of
the telecommunications universal service surcharges as a percentage
of the sales price for prepaid mobile telephony services, to be
effective on January 1 of the following year and to be collected and
remitted pursuant to the Prepaid Mobile Telephony Services Surcharge
Collection Act (Part 21 (commencing with Section 42001) of Division 2
of the Revenue and Taxation Code). On or before October 8 of each
year, commencing October 8, 2015, the commission shall post notice of
the cumulative surcharge on its Internet Web site and notify both
the Office of Emergency Services and the State Board of Equalization
of this information as well as the computation method used to
determine the cumulative surcharge.
(c) (1) Except for the fees and surcharges computed pursuant to
subdivisions (a) and (b), this section neither restricts the
commission's authority to adjust reimbursement fees or universal
service surcharges nor requires that they only be adjusted once
annually.
(2) In annually computing reimbursement fees and universal service
surcharges to be collected and remitted to the commission pursuant
to this section, the commission shall adjust the fees and surcharges
to account for any past overcollection of fees or surcharges from
prepaid mobile telephony service customers resulting from a reduction
in fees or surcharges made subsequent to December 31 of the previous
year.
(3) In annually computing reimbursement fees and universal service
surcharges to be collected and remitted to the commission pursuant
to this section, the commission may adjust the fees and surcharges to
account for any past undercollection of fees or surcharges from
prepaid mobile telephony service customers resulting from an increase
in fees or surcharges made subsequent to December 31 of the previous
year.
(4) If both upward and downward adjustments are made to
reimbursement fees and universal service surcharges subsequent to
December 31, the commission may adjust how collections are deposited
into the reimbursement and universal service accounts so that
overcollections or undercollections are minimized.
(5) It is the intent of the Legislature that reimbursement fees
and universal service surcharges be applied, as much as possible, in
a competitively neutral manner that does not favor either prepaid or
postpaid payment for mobile telephony services, and that, over time,
collections of state charges from prepaid and postpaid mobile
telephony service customers balance out so that neither pay a
disproportionate amount.
(6) At least 30 days prior to adopting any adjustment to a
reimbursement fee or universal service surcharge to be collected and
remitted to the commission on both postpaid and prepaid intrastate
service, the commission shall prepare a resolution or other public
document proposing the fee or surcharge adjustment and explaining the
calculation of the fee or surcharge. The commission shall make the
resolution or other public document available to the public and on
the commission's Internet Web site and it shall include all of the
following:
(A) The prior year revenues from the fee or surcharge, including,
but not limited to, revenues from prepaid service.
(B) Projected expenses and revenues from all sources, including,
but not limited to, prepaid service, for the purposes of the fee or
surcharge.
(C) The rationale for adjustment to the reimbursement fee or
universal service surcharge, including, but not limited to, all
impacts from prepaid service surcharge collection.
(d) The commission shall have enforcement authority to ensure the
proper remittances over retail transactions, pursuant to the Prepaid
Mobile Telephony Services Surcharge Collection Act (Part 21
(commencing with Section 42001) of Division 2 of the Revenue and
Taxation Code), where the prepaid mobile telephony services (prepaid
MTS) provider is also the seller. The commission shall collaborate
with the State Board of Equalization in exercising its enforcement
authority pursuant to this subdivision.
(e) (1) Carriers providing prepaid mobile telephony service shall
remit to the commission the fee established for telephone
corporations pursuant to subdivision (a) of Section 431 on the
intrastate portion of the revenues received for prepaid mobile
telephony service through December 31, 2015.
(2) Carriers providing prepaid mobile telephony service shall
remit to the commission the telecommunications universal service
surcharges established for telephone corporations on the intrastate
portion of the revenues received for prepaid mobile telephony service
through December 31, 2015.
(f) (1) This section does not relieve carriers providing prepaid
mobile telephony service of their continuing obligation to report
prepaid mobile telephony service revenues to the commission in a
manner prescribed by the commission.
(2) When reporting prepaid mobile telephony service revenues to
the commission, carriers providing prepaid mobile telephony service
shall report the intrastate revenue portion subject to the
reimbursement fee and the telecommunications universal service
surcharges, as well as total state wireless revenue.
(3) Reports made pursuant to this subdivision are subject to
Section 583 and any related orders of the commission.
SEC. 3. Section 431 of the Public Utilities Code is amended to
read:
431. (a) The commission shall annually determine a fee to be paid
by every electrical, gas, telephone, telegraph, water, sewer system,
and heat corporation and every other public utility providing
service directly to customers or subscribers and subject to the
jurisdiction of the commission other than a railroad, except as
otherwise provided in Article 2 (commencing with Section 421), for
common carriers and related businesses, and as otherwise provided in
Section 319, for prepaid mobile telephony service providers.
(b) The annual fee shall be established to produce a total amount
equal to that amount established in the authorized commission budget
for the same year, including adjustments for increases in employee
compensation, other increases appropriated by the Legislature, and an
appropriate reserve to regulate public utilities less the amount to
be paid from special accounts or funds pursuant to Section 402,
reimbursements, federal funds, and any other revenues, and the amount
of unencumbered funds from the preceding year.
(c) This article shall not apply to any electrical cooperative as
defined in Chapter 5 (commencing with Section 2776) of Part 2.
SEC. 4. Section 41020 of the Revenue and Taxation Code is amended
to read:
41020. (a) A surcharge is hereby imposed on amounts paid by every
person in the state for both of the following:
(1) (A) Intrastate telephone communication service in this state.
(B) Notwithstanding subparagraph (A), on and after January 1,
2016, in lieu of the surcharge imposed under subparagraph (A), a
surcharge shall be imposed on amounts paid for prepaid mobile
telephony services pursuant to the Prepaid Mobile Telephony Services
Surcharge Collection Act (Part 21 (commencing with Section 42001)).
(2) VoIP service that provides access to the "911" emergency
system by utilizing the digits 9-1-1 by any service user in this
state commencing on January 1, 2009. The surcharge shall not apply to
charges for VoIP service where any point of origin or destination is
outside of this state.
(b) (1) Notwithstanding Section 41025, charges not subject to the
surcharge may be calculated by a service supplier based upon books
and records kept in the regular course of business, and, for purposes
of calculating the interstate revenue portion not subject to the
surcharge, a service supplier may also choose a reasonable and
verifiable method from the following:
(A) Books and records kept in the regular course of business.
(B) Traffic or call pattern studies representative of the service
supplier's business within California.
(C) For VoIP service only, the VoIP safe harbor factor established
by the FCC to be used to calculate the service supplier's
contribution to the federal Universal Service Fund. The FCC safe
harbor factor in effect for VoIP service on September 1 of each year
shall apply for the period of January 1 to December 31, inclusive, of
the next succeeding calendar year for purposes of this method. At
the time the FCC establishes a safe harbor factor for the federal
Universal Service Fund for VoIP service that is greater than 75
percent for interstate revenue or abolishes the safe harbor factor
applicable to VoIP service, this method shall become void and of no
effect, in which case a VoIP service supplier may use an alternative
method approved in advance by the board, which shall be available to
all VoIP service suppliers. The FCC safe harbor factor applicable to
VoIP service, as described in this subparagraph, is used solely as a
mechanism to calculate the charges not subject to the surcharge for
VoIP service and is not necessarily reflective of the intrastate
portion of VoIP service. The use of the FCC safe harbor factor
authorized by this subdivision shall not be interpreted to permit
application of any intrastate requirement, other than the surcharge
imposed under this part, upon VoIP service suppliers.
(2) Any method chosen by a service supplier shall remain in effect
for at least one calendar year.
(3) If a service supplier reasonably relies upon books and
records kept in the regular course of business or any documentation
that satisfies the reasonable and verifiable method, then the service
supplier's determination of the portion of the billed amount
attributable to services not subject to the surcharge shall be
rebuttably presumed to be correct. The service supplier's choice of
books and records or other method and surcharge billing practice
shall also be rebuttably presumed to be fair and legal business
practices.
(4) It is the intent of the Legislature that the provisions of
subparagraph (C) shall not be considered to be a precedent for the
application of the surcharge or any other tax or fee where a person
is required to collect a tax or fee imposed upon another.
(c) The surcharge imposed shall be at the rate of one-half of 1
percent of the charges made for the services to and including
November 1, 1982, and thereafter at a rate fixed pursuant to Article
2 (commencing with Section 41030).
(d) The surcharge shall be paid by the service user as hereinafter
provided.
(e) The surcharge imposed shall not apply to either of the
following:
(1) In accordance with the Mobile Telecommunications Sourcing Act
(Public Law 106-252), which is incorporated herein by reference, to
any charges for mobile telecommunications services billed to a
customer where those services are provided, or deemed provided, to a
customer whose place of primary use is outside this state. Mobile
telecommunications services shall be deemed provided by a customer's
home service provider to the customer if those services are provided
in a taxing jurisdiction to the customer, and the charges for those
services are billed by or for the customer's home service provider.
(2) To any charges for VoIP service billed to a customer where
those services are provided to a customer whose place of primary use
of VoIP service is outside this state.
(f) For purposes of this section:
(1) "Charges for mobile telecommunications services" means any
charge for, or associated with, the provision of commercial mobile
radio service, as defined in Section 20.3 of Title 47 of the Code of
Federal Regulations, as in effect on June 1, 1999, or any charge for,
or associated with, a service provided as an adjunct to a commercial
mobile radio service, that is billed to the customer by or for the
customer's home service provider, regardless of whether individual
transmissions originate or terminate within the licensed service area
of the home service provider.
(2) "Customer" means (A) the person or entity that contracts with
the home service provider for mobile telecommunications services, or
with a VoIP service provider for VoIP service, or (B) if the end user
of mobile telecommunications services or VoIP service is not the
contracting party, the end user of the mobile telecommunications
service or VoIP service. This paragraph applies only for the purpose
of determining the place of primary use. The term "customer" does not
include (A) a reseller of mobile telecommunications service or VoIP
communication service, or (B) a serving carrier under an arrangement
to serve the mobile customer outside the home service provider's
licensed service area.
(3) "Home service provider" means the facilities-based carrier or
reseller with which the customer contracts for the provision of
mobile telecommunications services.
(4) "Licensed service area" means the geographic area in which the
home service provider is authorized by law or contract to provide
commercial mobile radio service to the customer.
(5) "Mobile telecommunications service" means commercial mobile
radio service, as defined in Section 20.3 of Title 47 of the Code of
Federal Regulations, as in effect on June 1, 1999.
(6) "Place of primary use" means the street address representative
of where the customer's use of the mobile telecommunications service
or VoIP service primarily occurs, that must be:
(A) The residential street address or the primary business street
address of the customer.
(B) With respect to mobile telecommunications service, within the
licensed service area of the home service provider.
(7) (A) "Reseller" means a provider who purchases
telecommunications services or VoIP service from another
telecommunications service provider or VoIP service and then resells
the services, or uses the services as a component part of, or
integrates the purchased services into, a mobile telecommunications
service or VoIP service.
(B) "Reseller" does not include a serving carrier with which a
home service provider arranges for the services to its customers
outside the home service provider's licensed service area.
(8) "Serving carrier" means a facilities-based carrier providing
mobile telecommunications service to a customer outside a home
service provider's or reseller's licensed area.
(9) "Taxing jurisdiction" means any of the several states, the
District of Columbia, or any territory or possession of the United
States, any municipality, city, county, township, parish,
transportation district, or assessment jurisdiction, or any other
political subdivision within the territorial limits of the United
States with the authority to impose a tax, charge, or fee.
(10) "VoIP service provider" means that provider of VoIP service
with whom the end user customer contracts for the provision of VoIP
services for the customer's own use and not for resale.
(11) "Prepaid mobile telephony services" has the same meaning as
in subdivision (j) of Section 42004.
SEC. 5. Section 41030 of the Revenue and Taxation Code is amended
to read:
41030. (a) The Office of Emergency Services shall determine
annually, on or before October 1, to be effective on January 1 of the
following year, a surcharge pursuant to subdivision (b) that it
estimates will produce sufficient revenue to fund the current fiscal
year's 911 costs.
(b) (1) Commencing with the calculation made on October 1, 2014,
the surcharge rate shall be determined by dividing the costs
(including incremental costs) the Office of Emergency Services
estimates for the current fiscal year of 911 plans approved pursuant
to Section 53115 of the Government Code, less the available balance
in the State Emergency Telephone Number Account in the General Fund,
by its estimate of the charges for intrastate telephone
communications services and VoIP service to which the surcharge will
apply for the period of January 1, 2015, to December 31, 2015,
inclusive, but in no event shall the surcharge rate in any year be
greater than three-quarters of 1 percent or less than one-half of 1
percent.
(2) Commencing with the calculation made October 1, 2015, to be
effective January 1, 2016, the surcharge shall be determined by
dividing the costs (including incremental costs) the Office of
Emergency Services estimates for the current fiscal year of 911 plans
approved pursuant to Section 53115 of the Government Code, less the
available balance in the State Emergency Telephone Number Account in
the General Fund, by its estimate of the charges for intrastate
telephone communications services, the intrastate portion of prepaid
mobile telephony services, and VoIP service to which the surcharge
will apply for the period of January 1 to December 31, inclusive, of
the next succeeding calendar year, but in no event shall the
surcharge rate in any year be greater than three-quarters of 1
percent or less than one-half of 1 percent. In making its computation
of the charges that are applicable to the intrastate portion of
prepaid mobile telephony services, the Office of Emergency Services
shall use the computation method developed by the Public Utilities
Commission and reported to the Office of Emergency Services pursuant
to subdivisions (a) and (b) of Section 319 of the Public Utilities
Code.
(c) The Office of Emergency Services shall notify the board of the
surcharge amount collected pursuant to this part and the surcharge
amount applicable to prepaid mobile telephony services by October 15
of each year.
(d) At least 30 days prior to determining the surcharge pursuant
to subdivision (a), the Office of Emergency Services shall prepare a
summary of the calculation of the proposed surcharge and make it
available to the public and on its Internet Web site. The summary
shall contain all of the following:
(1) The prior year revenues to fund 911 costs, including, but not
limited to, revenues from prepaid service.
(2) Projected expenses and revenues from all sources, including,
but not limited to, prepaid service to fund 911 costs.
(3) The rationale for adjustment to the surcharge determined
pursuant to subdivision (b), including, but not limited to, all
impacts from the surcharge collected pursuant to Part 21 (commencing
with Section 42001).
SEC. 6. Section 41033 is added to the
Revenue and Taxation Code , to read:
41033. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Prepaid mobile telephony services" has the same meaning as
defined in Section 42004.
(2) "Prepaid MTS provider" has the same meaning as defined in
Section 42004.
(3) "Prepaid MTS 911 Account" means the Prepaid MTS 911 Account
created in the Prepaid Mobile Telephony Services Surcharge Fund
pursuant to Section 42023.
(4) "Retail transaction" has the same meaning as defined in
Section 42004.
(5) "Seller" has the same meaning as defined in Section 42004.
(b) Beginning with the calendar year beginning January 1, 2016,
and ending with the calendar year ending December 31,____, not less
than nine million nine-hundred thousand dollars ($9,900,000) shall be
paid to the Prepaid MTS 911 Account for each calendar year for
prepaid mobile telephony services. Any deficiency in payment to the
Prepaid MTS 911 Account, below this amount, resulting from retail
transactions by sellers during each calendar year, shall be the
responsibility of prepaid MTS providers.
(c) On November 15, 2017, and by November 15 of each year
thereafter, the board shall determine whether nine million
nine-hundred thousand dollars ($9,900,000) was paid to the Prepaid
MTS 911 Account pursuant to Section 42023, for retail transactions
occurring during the previous calendar year. If in any calendar year
less than nine million nine-hundred thousand dollars ($9,900,000) was
paid to the Prepaid MTS 911 Account, the board shall calculate the
deficiency and bill each prepaid MTS provider its pro rata share of
that deficiency. A prepaid MTS provider's pro rata share shall be
calculated based upon each provider's percentage share of total
California intrastate prepaid mobile telephony services revenue.
(d) A prepaid MTS provider shall remit the amount billed to it
pursuant to subdivision (c) to the board and the board shall deposit
all amounts remitted to the Prepaid MTS 911 Account.
(e) This section shall remain in effect only until January 1,
____, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, ____, deletes or extends
that date.
SEC. 6. SEC. 7. Part 21 (commencing
with Section 42001) is added to Division 2 of the Revenue and
Taxation Code, to read:
PART 21. Prepaid Mobile Telephony Services Surcharge
Collection Act
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
42001. This part shall be known, and may be cited, as the Prepaid
Mobile Telephony Services Surcharge Collection Act.
42002. The Legislature finds and declares all of the following:
(a) Maintaining effective and efficient communications services,
911 emergency systems, communications-related public policy programs
to promote universal service, and various local programs across the
state benefits all persons with access to the telecommunications
system.
(b) Providers of end-use communications services, including
providers of mobile voice telecommunications services, which the
Federal Communications Commission terms mobile telephony service, 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.
(c) Consumers purchase prepaid mobile telephony services at a wide
variety of retail locations and other distribution channels, as well
as through service providers.
(d) Prepaid mobile telephony services are an important and growing
segment of the communications industry. Prepaid mobile telephony
services are often the only means by which persons with low incomes
can obtain limited access to the telecommunications system.
(e) To ensure equitable contributions from end-use consumers of
postpaid and prepaid mobile telephony services 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 mobile telephony services.
(f) Prepaid mobile telephony services are frequently sold by a
third-party retailer that is not the provider of mobile telephony
services, and collecting taxes, fees, and surcharges from prepaid
consumers of mobile telephony services at the time of the retail
transaction is necessary and the most efficient and competitively
neutral means of collection.
(g) An equitable distribution mechanism is necessary to ensure
that utility user taxes and other telecommunication charges are
collected on behalf of cities and counties and are properly
distributed to those jurisdictions.
42004. For purposes of this part, the following terms have the
following meanings:
(a) "Board" means the State Board of Equalization.
(b) "Emergency telephone users surcharge" means surcharges
authorized pursuant to the Emergency Telephone Users Surcharge Act
(Part 20 (commencing with Section 41001)) to be collected from
prepaid consumers of mobile telephony services.
(c) "In this state" means within the exterior limits of the
State of California and includes all territory within those limits
owned by or ceded to the United States of America.
(d) "Local charges" means those charges described in subdivision
(a) of Section 42101.
(e) "Local jurisdiction" or "local agency" means a city, county,
or city and county, which includes a charter city, county, or city
and county.
(f) "Mobile data service" has the same meaning as defined in
Section 224.4 of the Public Utilities Code.
(g) "Mobile telephony service" or "MTS" has the same meaning as
defined in Section 224.4 of the Public Utilities Code.
(h) "Person" includes any individual, firm, partnership, joint
venture, limited liability company, association, social club,
fraternal organization, corporation, estate, trust, business trust,
receiver, assignee for the benefit of creditors, trustee, trustee in
bankruptcy, syndicate, the United States, this state, any city,
county, city and county, municipality, district, or other political
subdivision of the state, or any other group or combination acting as
a unit.
(i) "Prepaid consumer" or "consumer" means a person who purchases
prepaid mobile telephony services in a retail transaction.
(j) "Prepaid mobile telephony services" means the right to utilize
a mobile device authorized by the Federal Communications Commission
for mobile telecommunications services or information services,
including the download of digital products delivered electronically,
content, and ancillary services, or both telecommunications services
and information services, that must be purchased in advance of usage
in predetermined units or dollars. For these purposes,
"telecommunications service" and "information service" have the same
meanings as defined in Section 153 of Title 47 of the United States
Code.
(k) "Prepaid MTS provider" means a person that provides prepaid
mobile telephony services pursuant to a license issued by the Federal
Communications Commission.
(l) "Prepaid MTS surcharge" means the surcharge that consists of
the emergency telephone users surcharge and the Public Utilities
Commission surcharges, as calculated pursuant to subdivision (b) of
Section 42010, that is required to be collected by a seller from a
prepaid consumer.
(m) "Public Utilities Commission surcharges" means surcharges
authorized by the Public Utilities Commission to be billed and
collected from end-use consumers of wireless communications services,
and of which the commission provides the board with notice pursuant
to Section 319 of the Public Utilities Code, including:
(1) The California High-Cost Fund-A Administrative Committee Fund
program surcharge (Section 275.6 of the Public Utilities Code).
(2) The California High-Cost Fund-B Administrative Committee Fund
program surcharge (Section 739.3 of the Public Utilities Code).
(3) The Deaf and Disabled Telecommunications Program
Administrative Committee Fund surcharge (Section 2881 of the Public
Utilities Code).
(4) The California Teleconnect Fund Administrative Committee Fund
program surcharge (Section 280 of the Public Utilities Code).
(5) The California Advanced Services Fund program surcharge
(Section 281 of the Public Utilities Code).
(6) The Moore Universal Telephone Service Act (Article 8
(commencing with Section 871) of Chapter 4 of Part 1 of Division 1 of
the Public Utilities Code).
(7) Public Utilities Commission reimbursement fees imposed
pursuant to Chapter 2.5 (commencing with Section 401) of Part 1 of
Division 1 of the Public Utilities Code.
(n) "Retail transaction" means the purchase of prepaid mobile
telephony services, either alone or in combination with mobile data
or other services, from a seller for any purpose other than resale in
the regular course of business. For these purposes, a "purchase"
means any transfer of title or possession, exchange, or barter,
conditional or otherwise.
(o) "Seller" means a person that sells prepaid mobile telephony
service to a person in a retail transaction.
CHAPTER 2. THE PREPAID MOBILE TELEPHONY SERVICES SURCHARGE
42010. (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 (c) of
Section 41030.
(2) The Public Utilities Commission's reimbursement fee and
telecommunications universal service surcharges, established by the
Public Utilities Commission pursuant to subdivisions (a) and (b) 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) 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
board's Internet Web site in collecting the state surcharge and local
charges.
(d) (1) Except for amounts retained pursuant to subdivision (e),
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 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, except in a retail transaction that involves both of the
following:
(1) The seller is the provider of prepaid mobile telephony
services pursuant to Section 224.4 of the Public Utilities Code, or a
telephone corporation pursuant to Section 234 of the Public
Utilities Code.
(2) The seller sells the prepaid mobile telephony services
directly to the prepaid consumer.
(f) 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.
(g) The prepaid MTS surcharge 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 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 local
charge but that was collected from the prepaid consumer under the
representation by the seller that it was owed as part of the local
charge constitutes a debt 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.
(h) 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.
(i) (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.
(j) (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.
42012. (a) For purposes of this section, "state lifeline program"
means the program furnishing lifeline voice communication service
pursuant to the Moore Universal Telephone Service Act (Article 8
(commencing with Section 871) of Chapter 4 of Part 1 of Division 1 of
the Public Utilities Code).
(b) The purchase in a retail transaction in this state of prepaid
mobile telephony services, either alone or in combination with mobile
data or other services, by a consumer is exempt from the prepaid MTS
surcharge if all of the following apply:
(1) The prepaid consumer is certified as eligible for the state
lifeline program or federal lifeline program.
(2) The seller is authorized to provide lifeline service under the
state lifeline program or federal lifeline program.
(3) The exemption is applied only to the amount paid for the
portion of the prepaid mobile telephony service that the lifeline
program specifies is exempt from the surcharges and fees that
comprise the prepaid MTS surcharge.
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 consumer's
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 consumer's address is known by the seller to be
in the state, including if the seller's records maintained in the
ordinary course of business indicate that the prepaid consumer's
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 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. 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 consumer's 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
consumer's 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 consumer's address that the seller
uses corresponds to more than one local charge.
42018. (a) Except as provided in subdivisions (b) and (c), if
prepaid mobile telephony services are sold in combination with mobile
data services or any other services or products for a single price,
then the prepaid MTS surcharge and local charges shall apply to the
entire price.
(b) If prepaid mobile telephone services are sold with a mobile
telephone service communication device, commonly termed a cellular
telephone, for a single, nonitemized price, then the prepaid MTS
surcharge and local charges shall apply to the entire nonitemized
price, except if the purchase price for the cellular phone component
of the bundled charge is disclosed to the prepaid consumer on a
receipt, invoice, or other written or electronic documentation
provided to the prepaid consumer, the prepaid MTS surcharge and local
charges may be calculated excluding the separately stated price of
the cellular telephone.
(c) If a minimal amount of prepaid mobile telephony service is
sold for a single, nonitemized price with a mobile telephony service
communications device, the seller shall not apply the prepaid MTS
surcharge or local charges to the transaction. For these purposes, a
service allotment denominated as 10 minutes or less, or five dollars
($5) or less, is a minimal amount.
CHAPTER 3. ADMINISTRATION
42020. (a) (1) The board shall administer and collect the prepaid
MTS surcharge imposed by this part pursuant to the Fee Collection
Procedures Law (Part 30 (commencing with Section 55001)). For
purposes of this part, the references in the Fee Collection
Procedures Law to "fee" shall include the prepaid MTS surcharge
imposed by this part, and references to "feepayer" shall include a
person required to pay the surcharge imposed by this part, which
includes the seller, who shall be required to register with the
board.
(2) Notwithstanding Article 1.1 (commencing with Section 55050) of
Chapter 3 of Part 30, any person required, or that elects, to remit
amounts due under Part 1 (commencing with Section 6001) by electronic
funds transfer pursuant to Article 1.2 (commencing with Section
6479.3) of Chapter 5 of Part 1 shall remit prepaid MTS surcharge
amounts due under this section by electronic funds transfer.
(b) (1) The board may prescribe, adopt, and enforce regulations
relating to the administration and enforcement of this part,
including, but not limited to, collections, reporting, refunds, and
appeals.
(2) The board may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and, for purposes of that chapter, including Section 11349.6 of
the Government Code, the adoption of the regulation is an emergency
and shall be considered by the Office of Administrative Law as
necessary for the immediate preservation of the public peace, health
and safety, and general welfare.
(c) The board shall establish procedures to be utilized by a
seller to document that a sale is not a retail transaction.
(d) The board shall establish procedures for sharing of
information, other than information protected under Section 19542,
related to the collection of the prepaid MTS surcharge upon the
request of the Public Utilities Commission or the Office of Emergency
Services.
(e) The total combined annual expenses incurred for administration
and collection by the board pursuant to this part and Part 21.1
(commencing with Section 42100) shall be allocated by the board on a
pro rata basis according to revenues collected by the board for: (1)
that portion of the prepaid MTS surcharge that is for the emergency
telephone users surcharge, (2) that portion of the prepaid MTS
surcharge that is for the Public Utilities Commission surcharges, and
(3) local charges.
42021. The board shall establish remittance schedules and methods
for payment of the prepaid MTS surcharge that utilize existing
methods established under the Sales and Use Tax Law (Part 1
(commencing with Section 6001)), including all of the following:
(a) The prepaid MTS surcharge, minus the amount retained by the
seller pursuant to subdivision (e) of Section 42010, is due and
payable to the board quarterly on or before the last day of the month
following each calendar quarter.
(b) On or before the last day of the month following each calendar
quarter, a return for the preceding calendar quarter shall be filed
using electronic media with the board.
(c) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
42022. Every seller shall register with the board. The board
shall establish a method for registration of sellers under this part
that utilizes the existing registration process for a seller's 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.
42023. (a) The Prepaid Mobile Telephony Services Surcharge Fund
is hereby created in the State Treasury. The Prepaid MTS 911 Account
and the Prepaid MTS PUC Account are hereby created in the fund. The
Prepaid Mobile Telephony Services Surcharge Fund shall consist of all
surcharges, interest, penalties, and other amounts collected and
paid to the board pursuant to this part, less payments of refunds and
reimbursements to the board for expenses incurred in the
administration and collection of the prepaid MTS surcharge.
(b) All moneys in the Prepaid Mobile Telephony Services Surcharge
Fund attributable to the prepaid MTS surcharge shall be deposited as
follows:
(1) That portion of the prepaid MTS surcharge that is for the
emergency telephone users surcharge shall be deposited into the
Prepaid MTS 911 Account.
(2) That portion of the prepaid MTS surcharge that is for the
Public Utilities Commission surcharges shall be deposited into the
Prepaid MTS PUC Account.
(c) Moneys in the Prepaid MTS 911 Account and the Prepaid MTS PUC
Account may be appropriated by the Legislature only for the purposes
for which the moneys were collected. All moneys collected pursuant to
this part shall be allocated only to the entities specified in this
section and shall not be used for any other purpose, including, but
not limited to, loans, transfers, or uses for any other purpose,
fund, or account.
SEC. 7. SEC. 8. Part 21.1
(commencing with Section 42100) is added to Division 2 of the Revenue
and Taxation Code, to read:
PART 21.1. Local Prepaid Mobile Telephony Services Collection
Act
42100. (a) This part shall be known and may be cited as the Local
Prepaid Mobile Telephony Services Collection Act.
(b) The Legislature finds and declares all of the following:
(1) Maintaining effective and efficient communications services,
911 emergency systems, communications-related public policy programs
to promote universal service, and various local programs across the
state benefit all persons with access to the telecommunications
system.
(2) Providers of end-use communications services, including
providers of mobile voice telecommunications services, which the
Federal Communications Commission terms mobile telephony service, are
required to collect and remit utility users taxes and local 911 or
access charges (local charges) imposed by over 150 cities and
counties in California on end-users of such mobile telephony
services, as required by existing state or local law.
(3) Local charges on telecommunication services represent an
important source of tax revenue for many cities and counties and are
used to pay for such essential governmental services as public
safety, streets, parks, libraries, senior centers, and many more.
(4) Prepaid mobile telephony services are an important and growing
segment of the communications industry. Prepaid mobile telephony
services, unlike postpaid mobile telephony services, are frequently
sold by a third-party seller that is not the provider of mobile
telephony services, and collecting local charges from prepaid
consumers of mobile telephony services at the time of the retail
transaction is necessary and the most efficient and competitively
neutral means for the collection of those local charges.
(5) The collection of prepaid mobile telephony services by
third-party sellers and the remittance of those local charges to the
board involves administrative costs and responsibilities that are
unique to prepaid mobile telephony services, and therefore justify
unique reimbursement and tax rate simplification measures, which are
fair and reasonable.
(c) It is a matter of statewide concern that the local charges for
local prepaid mobile telephony services be collected in a uniform
manner in order for the collection to be fair and uniform on a
statewide basis.
(d) It is the intention of the Legislature that this part shall
preempt the provisions pertaining to the tax or charge rate, base,
and method of collection contained in all local ordinances, rules, or
regulations concerning the imposition of a local charge upon the
consumption of prepaid mobile telephony services to the extent those
provisions are inconsistent with the provisions of this part and Part
21 (commencing
with Section 42001). It is not the intent of the Legislature to
otherwise preempt, limit, or affect the general authority of local
jurisdictions to impose a utility user tax, local 911 charge, or any
other local charges.
42101. For purposes of this part, all of the following
definitions shall apply:
(a) "Local agency" means a city, county, or city and county, which
includes a charter city, county, or city and county.
(b) "Local charge" means the utility user taxes as described in
Section 42102, and charges for access to communication services or to
local "911" emergency telephone systems, as described in Section
42102.5.
(c) "Ordinance" refers to an ordinance of a local agency imposing
a local charge, including any local enactment relating to the filing
of a refund or a claim arising under the ordinance.
(d) "Board," "local jurisdiction," "mobile telephony service,"
"person," "prepaid consumer," "Prepaid mobile telephony service,"
"prepaid MTS provider," and "prepaid MTS surcharge" have the same
meaning as those terms are defined in the Prepaid Mobile Telephony
Services Surcharge Collection Act (Part 21 (commencing with Section
42001)).
42101.5. (a) On and after January 1, 2016, a local charge imposed
by a local agency on prepaid mobile telephony services shall be
collected from the prepaid consumer by a seller at the same time and
in the same manner as the prepaid MTS surcharge is collected under
Part 21 (commencing with Section 42001) if, on or before September 1,
2015, the local agency shall enter into a contract with the board
for the board to perform the functions set forth in Section 42103. In
the contract, the local agency shall: (1) certify to the board that
its ordinance applies its local charge to prepaid mobile telephony
services and that the local agency agrees to indemnify, and hold and
save harmless, the board, its officers, agents, and employees for any
and all liability for damages that may result from collection
pursuant to the contract; and, (2) certify to the board the amount of
the local 911 charge, as set out in Section 42102.5, or the
applicable tiered rate for a utility user tax, as set out in Section
42102.
(b) In the event that a local agency adopts a new local charge
that is imposed on prepaid mobile telephony services after September
1, 2015, the local agency shall enter into a contract with the board
to perform the functions set forth in Section 42103, on or before
December 1, with collection of the local charge to commence April 1
of the next calendar year. In the contract, the local agency shall
certify to the board: (1) that its ordinance applies its local charge
to prepaid mobile telephony services and that the local agency
agrees to indemnify, and hold and save harmless, the board, its
officers, agents, and employees for any and all liability for damages
that may result from collection pursuant to the contract; and, (2)
the amount of the local 911 charge, as set out in Section 42102.5, or
the applicable tiered rate for a utility user tax, as set out in
Section 42102.
(c) In the event that a local agency increases its local charge
after September 1, 2015, the local agency shall provide the board
with written notice of the increased local charge on or before
December 1, with collection of the local charge to commence April 1
of the next calendar year.
(d) In the event that a local agency reduces or eliminates a local
charge on prepaid mobile telephony services, the local agency shall
provide the board with written notice pursuant to subdivision (c) of
Section 42010.
(e) Notwithstanding subdivision (a), through and including
December 31, 2015, a prepaid MTS provider may elect to remit the
local charge to the appropriate local taxing jurisdiction based on
the applicable tax rate of Section 42102, Section 42102.5, or both,
and those remittances shall be deemed to be in full compliance with
the local ordinance imposing a local charge on prepaid mobile
telephony service.
42102. (a) Notwithstanding any other law, on and after January 1,
2016, 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 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 pursuant to Section 7284.2 or
any other law is suspended, and the utility user tax rate to be
applied instead during the period under any ordinance as so adopted
is the applicable of the following:
(1) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of less than 1.5 percent, the rate shall be 0
percent.
(2) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 1.5 percent or more but less than 2.5 percent,
the rate shall be 1.5 percent.
(3) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 2.5 percent or more but less than 3.5 percent,
the rate shall be 2.5 percent.
(4) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 3.5 percent or more but less than 4.5 percent,
the rate shall be 3.5 percent.
(5) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 4.5 percent or more but less than 5.5 percent,
the rate shall be 4.5 percent.
(6) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 5.5 percent or more but less than 6.5 percent,
the rate shall be 5.5 percent.
(7) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 6.5 percent or more but less than 7.5 percent,
the rate shall be 6.5 percent.
(8) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 7.5 percent or more but less than 9 percent,
the rate shall be 7.5 percent.
(9) In the case of a city, county, or city and county that has
adopted an ordinance to impose a utility user tax on the consumption
of prepaid communication services in the city, county, or city and
county at the rate of 9 percent or more, the rate shall be 9 percent.
(b) Subdivision (a) is a self-executing provision that operates
without regard to any decision or act on the part of any city,
county, or city and county. A change in a utility user tax rate
resulting from either the suspension of, or the termination of the
suspension of, a utility user rate adopted by a city, county, or city
and county set forth in subdivision (a) is not subject to voter
approval under either statute or Article XIII C of the California
Constitution.
(c) Notwithstanding subdivision (a), a city, county, or city and
county may levy, increase, or extend a utility user tax at any rate
on the consumption of communication services, including a utility
user tax on the consumption of prepaid mobile telephony service,
except that during the period on and after January 1, 2016, any
utility user tax rate on prepaid mobile telephony service under any
ordinance as so adopted shall be the applicable rate specified in
subdivision (a).
(d) On and after January 1, 2016, this part shall be all of the
following:
(1) The exclusive method for both of the following:
(A) Collecting the local utility user taxes, local 911 charges,
and any other local charges imposed on consumers using prepaid mobile
telephony services.
(B) Defining the scope of the tax or charge with respect to
prepaid mobile telephony services.
(2) The complete substitute for the utility user tax rate set out
in the local ordinance with the applicable tiered rate as established
by the Legislature.
(3) This part shall not preempt, limit, or affect the general
authority of local jurisdictions to impose a utility user tax, local
911 charge, or any other local charges.
42102.5. (a) Notwithstanding any other law, on and after January
1, 2016, the authority of a city, county, or city and county, which
includes a charter city, county, or city and county, to impose a
charge, that applies to prepaid mobile telephony service, for access
to communication services or access to local "911" emergency
telephone systems in the city, county, or city and county at the rate
as specified in an ordinance is suspended, and the rate to be
applied instead during that period under any ordinance as so adopted
is the applicable of the following:
(1) In the case of a city, county, or city and county that has
adopted an ordinance to impose a charge that applies to prepaid
mobile telephony service for access to communication services or
access to local "911" emergency telephone systems in the city,
county, or city and county at the rate of less than one dollar ($1)
per month per access line, including any adjustments for inflation,
the rate shall be 0 percent.
(2) In the case of a city, county, or city and county that has
adopted an ordinance to impose a charge that applies to prepaid
mobile telephony service for access to communication services or
access to local "911" emergency telephone systems in the city,
county, or city and county at a specified percentage or at the rate
of one dollar ($1) per month per access line, including any
adjustments for inflation, or more, the rate shall be the specified
percentage or the rate obtained by dividing the dollar amount by 50,
rounded to the nearest one-tenth of 1 percent.
(b) Subdivision (a) is a self-executing provision that operates
without regard to any decision or act on the part of any city,
county, or city and county. A change in an access charge rate
resulting from either the suspension of, or the termination of the
suspension of, a charge adopted by a city, county, or city and county
set forth in subdivision (a) is not subject to voter approval under
either statute or Article XIII C of the California Constitution.
(c) Notwithstanding subdivision (a), a city, county, or city and
county may levy, increase, or extend a charge at any rate, that
applies to prepaid mobile telephony services, for access to
communication services or access to local "911" emergency telephone
systems in the city, county, or city and county, except that during
the period on and after January 1, 2016, any charge on prepaid mobile
telephony service under any ordinance as so adopted shall be the
applicable rate specified in subdivision (a).
42103. (a) The board shall perform all functions incident to the
collection of the local charges of a city, county, or a city and
county, and shall collect and administer the local charges in the
manner prescribed for the collection of the prepaid MTS surcharge in
the Prepaid Mobile Telephony Services Surcharge Collection Act (Part
21 (commencing with Section 42001)), subject to the limitations set
forth in Section 42105. For purposes of this part, the references in
the Fee Collection Procedures Law to "fee" shall include the local
charge imposed by this part, and references to "feepayer" shall
include a person required to pay the local charge imposed by this
part, which includes the seller.
(b) All local charges collected by the board shall be deposited in
the Local Charges for Prepaid Mobile Telephony Services Fund which
is hereby created in the State Treasury, and shall be held in trust
for the local taxing jurisdiction, and shall not be used for any
other purpose. Local charges shall consist of all taxes, charges,
interest, penalties, and other amounts collected and paid to the
board, less payments for refunds and reimbursement to the board for
expenses incurred in the administration and collection of the local
charges. The board shall transmit the funds to the local
jurisdictions periodically as promptly as feasible. The transmittals
required under this section shall be made at least once in each
calendar quarter. The board shall furnish a quarterly statement
indicating the amounts paid and withheld for expenses of the
board and subject to subdivision (e) of Section
42020 .
(c) The board shall prescribe and adopt rules and regulations as
may be necessary or desirable for the administration and collection
of local charges and the distribution of the local charges collected.
(d) The board's audit duties under this part shall be limited to
verification that the seller complied with this part.
(e) The board may contract with a third party for purposes of this
part, solely in connection with the following board duties:
(1) To allocate and transmit collected local charges in the Local
Charges for Prepaid Mobile Telephony Services Fund pursuant to
subdivision (b) to the appropriate local jurisdictions.
(2) To audit proper collection and remittance of the local charge
pursuant to this part.
(3) To respond to requests from sellers, consumers, boards, and
others regarding issues pertaining to local charges that are within
the scope of the board's duties.
(f) For purposes of this part, any third-party contract under
subdivision (e) shall be subject to the following limitations:
(1) Any third party shall, to the same extent as the board, be
subject to subdivision (b) of Section 55381, relating to unlawful
disclosures.
(2) A third-party contract shall not provide, in whole or in part,
in any manner a contingent fee arrangement as payment for services
rendered. For purposes of this section, "contingent fee" includes,
but is not limited to, a fee that is based on a percentage of the tax
liability reported on a return, a fee that is based on a percentage
of the taxes owed, or a fee that depends on the specific tax result
attained.
42105. (a) The city, county, or city and county that has adopted
an ordinance to impose a local charge that applies to prepaid mobile
telephony service shall be solely responsible for:
(1) Defending any claim regarding the validity of the ordinance in
its application to prepaid mobile telephony service.
(2) Interpreting any provision of the ordinance, except to the
extent specifically superseded by this statute.
(3) Responding to any claim for refund by a customer arising under
subdivision (b), (c), or (d). The claim shall be processed in
accordance with the provisions of the local enactment that allows the
claim to be filed.
(4) Certifying that the city, county, or city and county ordinance
applies the local charge to prepaid mobile telephony services and
agreeing to indemnify and hold harmless the board, its officers,
agents, and employees for any and all liability for damages that may
result from collection of the local charge.
(5) Reallocation of local charges as a result of correcting errors
relating to the location of the point of sale of a seller or the
known address of a consumer, for up to two past quarters from the
date of knowledge.
(b) A consumer may rebut the presumed location of the retail
transaction to the city or county clerk of the local jurisdiction, as
provided in subdivision (b) of Section 42014, by filing a claim and
declaration under penalty of perjury on a form established by the
city or county clerk of the local jurisdiction indicating the actual
location of the retail sale. The claim shall be processed in
accordance with the provisions of the local enactment that allows the
claim to be filed.
(c) A consumer that is exempt from the local charge under the
local enactment may file a claim for a refund from the local
jurisdiction in accordance with the refund provisions of the local
enactment that allows the claim to be filed.
(d) In connection with any actions or claims relating to or
arising from the invalidity of a local tax ordinance, in whole or in
part, the seller shall not be liable to any consumer as a consequence
of collecting the tax. In the event a local jurisdiction is ordered
to refund the tax, it shall be the sole responsibility of the local
jurisdiction to refund the tax. In any action seeking to enjoin
collection of a local charge by a seller, in any action seeking
declaratory relief concerning a local charge, in any action seeking a
refund of a local charge, or in any action seeking to otherwise
invalidate a local charge, the sole necessary party defendant in the
action shall be the local jurisdiction on whose behalf the local
charge is collected, and the seller collecting the local charge shall
not be named as a party in the action. There shall be no recovery
from the state for the imposition of any unconstitutional or
otherwise invalid local charge that is collected pursuant to this
part.
42106. (a) For purposes of this section:
(1) "Quarterly local charges" means the total amount of local
charges transmitted by the board to a city, county, or city and
county for a calendar quarter.
(2) "Refund" means the amount of local charges deducted by the
board from a city's, county's, or city and county's quarterly local
charges in order to pay the city's, county's, or city and county's
share of a local charge refund due to one taxpayer.
(3) "Offset portion" means that portion of the refund which
exceeds the greater of fifty thousand dollars ($50,000) or 20 percent
of the city's, county's, or city and county's quarterly local
charges.
(b) Except as provided in subdivision (c), if the board has
deducted a refund from a city's, county's, or city and county's
quarterly local charges which includes an offset portion, then the
following provisions apply:
(1) Within three months after the board has deducted an offset
portion, the city, county, or city and county may request the board
to transmit the offset portion to the city, county, or city and
county.
(2) As promptly as feasible after the board receives the city's,
county's, or city and county's request, the board shall transmit to
the city, county, or city and county the offset portion as part of
the board's periodic transmittal of local charges.
(3) The board shall thereafter deduct a pro rata share of the
offset portion from future transmittals of local charges to the city,
county, or city and county over a period to be determined by the
board, but not less than two calendar quarters and not more than
eight calendar quarters, until the entire amount of the offset
portion has been deducted.
(c) The board shall not transmit the offset portion of the refund
to the city, county, or city and county if that transmittal would
reduce or delay either the board's payment of the refund to the
taxpayer or the board's periodic transmittals of local charges to
other cities, counties, or city and county.
42107. The city, county, or city and county shall pay to the
board its costs of preparation to administer and collect local
charges. The city, county, or city and county shall pay costs monthly
as are incurred and billed by the board. The costs include all
preparatory costs, including costs of developing procedures,
programming for data processing, developing and adopting appropriate
regulations, designing and printing of forms, developing instructions
for the board's staff and for taxpayers, and other necessary
preparatory costs which shall include the board's direct and indirect
costs as specified by Section 11256 of the Government Code. Any
disputes as to the amount of preparatory costs incurred shall be
resolved by the Director of Finance, and his or her decision shall be
final.
42109. The board shall annually prepare a report showing the
amount of both reimbursed and unreimbursed costs incurred by it in
administering the collection of local charges pursuant to this part.
42110. (a) Notwithstanding Section 55381, it is unlawful for any
person, other than an officer or employee of a county, city and
county, city, or district, who obtains access to information
contained in, or derived from, prepaid mobile telephony services
surcharge and local charge records of the board pursuant to
subdivision (b), to retain that information after that person's
contract with the county, city and county, city, or district has
expired.
(b) (1) When requested by resolution of the legislative body of
any county, city and county, city, or district, the board shall
permit any duly authorized officer or employee of the county, city
and county, city, or district, or other person designated by that
resolution, to examine all of the prepaid mobile telephony services
surcharge and local charge records of the board pertaining to the
ascertainment of those prepaid mobile telephony services surcharge
and local charges to be collected for the county, city and county,
city, or district by the board pursuant to contract entered into
between the board and the county, city and county, city, or district
pursuant to this part. Except as otherwise provided in this section,
this subdivision does not allow any officer, employee, or other
person authorized or designated by a county, city and county, city,
or district to examine any sales or transactions and use tax records
of any taxpayer. The costs that are incurred by the board in
complying with a request made pursuant to this subdivision shall be
deducted by the board from those revenues collected by the board on
behalf of the county, city and county, city, or district making the
request.
(2) The resolution of the legislative body of the county, city and
county, city, or district shall certify that any person designated
by the resolution, other than an officer or employee, meets all of
the following conditions:
(A) Has an existing contract with the county, city and county,
city, or district to examine those prepaid mobile telephony services
surcharge and local charge records.
(B) Is required by that contract to disclose information contained
in, or derived from, those prepaid mobile telephony services
surcharge and local charge records only to an officer or employee of
the county, city and county, city, or district who is authorized by
the resolution to examine the information.
(C) Is prohibited by that contract from performing consulting
services for a seller during the term of that contract.
(D) Is prohibited by that contract from retaining the information
contained in, or derived from, those prepaid mobile telephony
services surcharge and local charge records, after that contract has
expired.
(3) Information obtained by examination of board records pursuant
to this subdivision shall be used only for purposes related to the
collection of the prepaid mobile telephony services surcharge and
local charges by the board pursuant to the contract, or for purposes
related to other governmental functions of the county, city and
county, city, or district set forth in the resolution.
(c) If the board believes that any information obtained pursuant
to subdivision (b) has been disclosed to any person not authorized or
designated by the resolution of the legislative body of the county,
city and county, city, or district, or has been used for purposes not
permitted by subdivision (b), the board may impose conditions on
access to its local charge records that the board considers
reasonable, in order to protect the confidentiality of those records.
(d) Predecessors, successors, receivers, trustees, executors,
administrators, assignees, and guarantors, if directly interested,
may be given information as to the items included in the measure and
amounts of any unpaid local charges or amounts of local charges
required to be collected, interest, and penalties.
SEC. 8. SEC. 9. No inference shall
be drawn from the enactment of this act with respect to any
remittance requirements of a prepaid MTS provider pursuant to the law
as it existed prior to the enactment of this act. Additionally,
nothing in this act shall affect any remittance requirements of a
prepaid mobile telephony services provider for any service other than
prepaid mobile telephony services. Nothing in this act shall affect
the federal remittance requirements of a prepaid mobile telephony
services provider.
SEC. 9. SEC. 10. It is the intent of
the Legislature that the remittance obligations of a prepaid mobile
telephony services provider, relating to emergency telephone users
surcharge and any charges imposed by the Public Utilities Commission
pursuant to Chapter 2.5 (commencing with Section 401) of Part 1 of
Division 1 of the Public Utilities Code or for purposes of the
universal services programs, shall remain applicable for each of the
following:
(a) The collection of surcharges, the liability for which accrued
prior to January 1, 2016.
(b) The making of any refunds and the effecting of any credits for
payments made on claims of liability that accrued prior to January
1, 2016.
(c) The disposition of money collected on any liability that
accrued prior to January 1, 2016.
(d) The commencement of any action or proceeding pursuant to the
Public Utilities Act (Part 1 (commencing with Section 201) of
Division 1 of the Public Utilities Code).
SEC. 10. SEC. 11. No reimbursement
is required by this act pursuant to Section 6 of Article XIII B of
the California Constitution because the only costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.
SEC. 11. SEC. 12. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to provide a standardized collection mechanism
as soon as possible by which state and local charges are collected
from end-users of prepaid mobile telephony services, thereby
permitting needed financial support for programs necessary to serve
the public or telecommunications users, it is necessary that this act
take effect immediately.