Senate Bill No. 802

Introduced by Committee on Governance and Finance (Senators Hertzberg (Chair), Bates, Beall, Hernandez, Lara, Nguyen, and Pavley)

March 24, 2015

An act to amend Sections 41030, 41032, and 42010 of the Revenue and Taxation Code, relating to taxation, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 802, as introduced, Committee on Governance and Finance. Emergency telephone user surcharge.

The 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, and requires the Office of Emergency Services to annually determine the surcharge rate. Commencing with the calculation made October 1, 2015, existing law requires the office to compute the charges applicable to the intrastate portion of prepaid mobile telephony services, as provided.

The Prepaid Mobile Telephony Service Surcharge Collection Act establishes a prepaid MTS surcharge, as defined, based upon a percentage of the sales price of each retail transaction that occurs in this state for prepaid mobile telephony services, as defined, that is imposed in lieu of any charges imposed pursuant to the Emergency Telephone Users Surcharge Act and specified Public Utility Commission surcharges. That act requires the prepaid MTS surcharge to be annually calculated by the State Board of Equalization by November 1 of each year, commencing November 1, 2015, by using the emergency telephone user surcharge rate reported by the office and specified Public Utility Commission surcharges.

The Emergency Telephone Users Surcharge Act requires the office to notify the board of the emergency telephone user surcharge rate and the emergency telephone user surcharge rate applicable to prepaid mobile telephony services by October 15 of each year.

This bill would instead require the office to notify the board of the emergency telephone user surcharge rate by October 1.

The Emergency Telephone Users Surcharge Act requires, immediately upon notification by the office and fixing the surcharge rate, the board to notify by mail every registered service supplier of the new rate.

This bill would instead require the board to notify every registered service supplier of the new rate by means then available to it, including, but not limited to, mail, electronic mail, or Internet Web site postings.

This bill would make other technical, nonsubstantive changes.

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: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 41030 of the Revenue and Taxation Code,
as amended by Chapter 926 of the Statutes of 2014, 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 rate pursuant to subdivision (b)
that it estimates will produce sufficient revenue to fund the current
fiscal year’s 911 costs.

(b) (1) 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 costs approved
pursuant to Article 6 (commencing with Section 53100) of Chapter
1 of Part 1 of Division 2 of Title 5 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, 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 nor 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
costs approved pursuant to Article 6 (commencing with Section
53100) of Chapter 1 of Part 1 of Division 2 of Title 5 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 begin delete (a) and end delete (b) begin insert and (c) end insert of Section 319 of the Public
Utilities Code.

(c) When determining the surcharge rates pursuant to this
section, the office shall include the costs it expects to incur to plan,
test, implement, and operate Next Generation 911 technology and
services, including text to 911 service, consistent with the plan
and timeline required by Section 53121 of the Government Code.

(d) The office shall notify the board of the surcharge rate
begin insert imposed under this part and end insert determined pursuant to this section
begin insert on or before October 1 of each year end insert and the surcharge rate
applicable to prepaid mobile telephony services begin delete by end delete begin insert determined
pursuant to this section for purposes of the prepaid MTS surcharge
calculated under Part 21 (commencing with Section 42001) on or
before end insert October 15 of each year.

(e) 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, the Legislature, the 911 Advisory Board,
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).

(f) This section shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.

SEC. 2.  

Section 41032 of the Revenue and Taxation Code is
amended to read:

41032.  

Immediately upon notification by the Office of
Emergency Services and fixing the surcharge rate, the board shall
each year no later than November 15 publish in its minutes the
new rate, and it shall notify begin delete by mail end delete every service supplier
registered with it of the new rate begin insert by means then available to it,
including, but not limited to, mail, electronic mail, or Internet Web
site postings end insert .

SEC. 3.  

Section 42010 of the Revenue and Taxation Code is
amended to read:

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 (d) 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 begin delete (a) and end delete
(b) begin insert and (c) end insert of Section 319 of the Public Utilities Code.

(c) (1) The board shall post, for each local jurisdiction, the
combined total of the rates of prepaid MTS surcharge and the rate
or rates of local charges, as calculated pursuant to Sections 42102
and 42102.5, that each local jurisdiction has adopted, not later than
December 1 of each year, on its Internet Web site. The posted
combined rate shall be the rate that applies to all retail transactions
during the calendar year beginning April 1 following the posting.

(2) Notwithstanding paragraph (1), if a local agency notifies
the board pursuant to subdivision (d) of Section 42101.5 that the
posted rate is inaccurate or it no longer imposes a local charge or
local charges or that the rate of its local charge or local charges
has decreased, the board shall promptly post a recalculated rate
that is applicable to the jurisdiction of that local agency. The
change shall become operative on the first day of the calendar
quarter commencing more than 60 days from the date the local
agency notifies the board of the inaccuracy or that it no longer
imposes a local charge or that the rate of its local charge has
decreased. Nothing in this section modifies the notice obligations
of Section 799 of the Public Utilities Code. However, beginning
January 1, 2016, the notification and implementation requirements
of paragraphs (5) and (6) of subdivision (a) of Section 799 of the
Public Utilities Code shall not apply to prepaid mobile telephony
services.

(3) The board shall also separately post on its Internet Web site
the individual rates for each of the following:

(A) Each of the Public Utilities Commission surcharges that
make up the Public Utilities Commission surcharge portion of the
prepaid MTS surcharge, as reported pursuant to Section 319 of
the Public Utilities Code.

(B) The percentage for the emergency telephone users surcharge
reported pursuant to subdivision begin delete (c) end delete begin insert (d) end insert of Section 41030.

(C) Each of the individual local charges reported pursuant to
Section 42101.5.

(4) A seller collecting the prepaid MTS surcharge and local
charges pursuant to this part and Part 21.1 (commencing with
Section 42100) may rely upon the accuracy of the information
posted on the board’s Internet Web site in collecting and remitting
all amounts of the prepaid MTS surcharge and local charges.

(d) (1) Except for amounts retained pursuant to subdivision (e),
and except as provided in subdivision (f) for a seller that is a direct
seller, all amounts of the prepaid MTS surcharge and local charges
collected by sellers shall be remitted to the board pursuant to
Chapter 3 (commencing with Section 42020).

(2) A seller that is authorized to provide lifeline service under
the state lifeline program or federal lifeline program, that sells
prepaid mobile telephony services directly to the prepaid customer,
shall remit the prepaid MTS surcharge to the board, less any
applicable exemption from the surcharge that is applicable to the
retail transaction pursuant to Section 42012.

(e) A seller that is not a direct seller shall be permitted to deduct
and retain an amount equal to 2 percent of the amounts that are
collected by the seller from prepaid consumers for the prepaid
MTS surcharge and local charges, on a pro rata basis, according
to that portion of the revenues collected by the seller for each of
the following:

(1) The emergency telephone users surcharge.

(2) The Public Utilities Commission surcharges.

(3) Local charges.

(f) A direct seller shall remit the prepaid MTS surcharge and
local charges as follows:

(1) That portion of the prepaid MTS surcharge that consists of
the Public Utilities Commission surcharges shall be remitted to
the commission with those reports required by the commission.

(2) That portion of the prepaid MTS surcharge that consists of
the emergency telephone users surcharge shall be remitted to the
board pursuant to the Emergency Telephone Users Surcharge Act
(Part 20 (commencing with Section 41001)) for those retail
transactions with a prepaid consumer in the state.

(3) Local charges, if applicable, shall be remitted to the local
jurisdiction or local agency imposing the local charge. Remittance
of the local charges shall be separately identified from any other
local taxes or other charges that are remitted to the local jurisdiction
or local entity imposing the local tax or other charge.

(g) A direct seller shall utilize the amounts posted by the board
pursuant to subdivision (c) when determining what amounts to
remit to the Public Utilities Commission, board, and each local
jurisdiction or local agency.

(h) A prepaid MTS provider shall offer prepaid consumers the
option to make payment for additional prepaid usage directly to
the prepaid MTS provider at the provider’s retail location or
Internet Web site.

(i) The amount of the combined prepaid MTS surcharge and
local charges shall be separately stated on an invoice, receipt, or
other similar document that is provided to the prepaid consumer
of mobile telephony services by the seller, or otherwise disclosed
electronically to the prepaid consumer, at the time of the retail
transaction.

(j) The prepaid MTS surcharge that is required to be collected
by a seller and any amount unreturned to the prepaid consumer of
mobile telephony services that is not owed as part of the surcharge,
but was collected from the prepaid consumer under the
representation by the seller that it was owed as part of the
surcharge, constitute debts owed by the seller to this state. The
local charge begin delete shall end delete begin insert that is required to end insert be collected by a begin delete seller, end delete begin insert seller end insert
and any amount unreturned to the prepaid consumer of mobile
telephony services that is not owed as part of the local begin delete charge end delete
begin insert charge, end insert but that was collected from the prepaid consumer under
the representation by the seller that it was owed as part of the local
begin delete charge end delete begin insert charge, end insert constitutes begin delete a debt end delete begin insert debts end insert owed by the seller jointly
to the state, for purposes of collection on behalf of, and payment
to, the local jurisdiction and to the local jurisdiction imposing that
local charge.

(k) A seller that has collected any amount of prepaid MTS
surcharge and local charges in excess of the amount of the
surcharge imposed by this part and actually due from a prepaid
consumer may refund that amount to the prepaid consumer, even
though the surcharge amount has already been paid over to the
board and no corresponding credit or refund has yet been secured.
Any seller making a refund of any charge to a prepaid consumer
may repay therewith the amount of the surcharge paid.

(l) (1) Every prepaid consumer of mobile telephony services
in this state is liable for the prepaid MTS surcharge and any local
charges until they have been paid to this state, except that payment
to a seller registered under this part relieves the prepaid consumer
from further liability for the surcharge and local charges. Any
surcharge collected from a prepaid consumer that has not been
remitted to the board shall be a debt owed to the state by the person
required to collect and remit the surcharge. Any local charge
collected from a prepaid consumer that has not been remitted to
the board shall be a debt owed jointly to the state, for purposes of
collection on behalf of, and payment to, the local jurisdiction and
to the local jurisdiction imposing the local charge by the person
required to collect and remit the local charge. Nothing in this part
shall impose any obligation upon a seller to take any legal action
to enforce the collection of the surcharge or local charge imposed
by this section.

(2) A credit shall be allowed against, but shall not exceed, the
prepaid MTS surcharge and local charges imposed on any prepaid
consumer of mobile telephony services by this part to the extent
that the prepaid consumer has paid emergency telephone users
charges, state utility regulatory commission fees, state universal
service charges, or local charges on the purchase to any other state,
political subdivision thereof, or the District of Columbia. The credit
shall be apportioned to the charges against which it is allowed in
proportion to the amounts of those charges.

(m) (1) A seller is relieved from liability to collect the prepaid
MTS surcharge imposed by this part that became due and payable,
insofar as the base upon which the surcharge is imposed is
represented by accounts that have been found to be worthless and
charged off for income tax purposes by the seller or, if the seller
is not required to file income tax returns, charged off in accordance
with generally accepted accounting principles. A seller that has
previously paid the surcharge may, under rules and regulations
prescribed by the board, take as a deduction on its return the
amount found worthless and charged off by the seller. If any such
accounts are thereafter in whole or in part collected by the seller,
the amount so collected shall be included in the first return filed
after such collection and the surcharge shall be paid with the return.

(2) The board may by regulation promulgate such other rules
with respect to uncollected or worthless accounts as it shall deem
necessary to the fair and efficient administration of this part.

SEC. 4.  

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 allow sufficient time to promulgate and adopt
regulations necessary to implement the recently enacted Prepaid
Mobile Telephony Services Surcharge Act (Part 21 (commencing
with Section 42001) of Division 2 of the Revenue and Taxation
Code) and Local Prepaid Mobile Telephony Services Collection
Act (Part 21.1 (commencing with Section 42100) of Division 2 of
the Revenue and Taxation Code), it is necessary that this act take
effect immediately.