BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 1481 |Hearing |4/20/16 |
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|Author: |Committee on Governance and |Tax Levy: |No |
| |Finance | | |
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|Version: |3/17/16 |Fiscal: |Yes |
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|Consultant|Grinnell |
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Prepaid Mobile Telephony Services Surcharge Collection Act
Enacts three changes to the Mobile Telephony Surcharge.
Background and Proposed Law
In 2014, the Legislature enacted the Prepaid Mobile Telephony
Services Surcharge Collections Act, which requires purchasers of
prepaid wireless to pay a surcharge for each retail sale (MTS
Fee) on and after January 1, 2016 (AB 1717, Perea). The MTS Fee
is a percentage of the sales price, and is in-lieu of all other
state and local charges, fees, and taxes that currently apply.
The Board of Equalization (BOE) administers the MTS Fee
according to the Fee Procedures Collections Law, and must
calculate the rate according to the bill each year no later than
November 1, commencing on November 1, 2015 by adding:
The 911 Surcharge rate, and
The CPUC reimbursement and cumulative universal service
fees.
Additionally, AB 1717 also required the seller to also collect
at the point of sale, from consumers of prepaid wireless an
amount equal to adding the following according to rate
approximations in the bill:
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Local Utility User Taxes, and
Charges for access to communications services or local
911 emergency telephone systems.
Last year, the Legislature enacted several technical changes to
the MTS Fee in a bill implementing the Budget Act (SB 84,
Committee on Budget and Fiscal Review, 2015); however, BOE has
identified three remaining issues which require correction, and
recommended changes for each to assist in the effective
implementation of the MTS Fee.
I. De Minimis exemption. Currently, all retailers of prepaid
wireless services have to register with BOE, but those selling a
de minimis amount of MTS services don't have to collect and
remit the MTS, set in state law as $15,000 in sales per calendar
year. BOE states that requiring these smaller retailers to
complete and submit quarterly returns to BOE is burdensome, and
doesn't result in any revenue, as they are exempt from
collecting and remitting the fee. Senate Bill 1481 exempts
sellers of prepaid wireless services that meet the de minimis
standard from the registration requirement, but allows them to
voluntarily register and remit the MTS. Retailers whose sales
increase above the threshold would have to register with BOE,
and collect the MTS in the following calendar year.
II. Known address transactions. The MTS applies to sales of
prepaid wireless services that take place within the state,
which include in-person retail sales, as well as "known address"
transactions, where the seller is aware that the buyer has a
California address, or the phone is associated with a location
in this state, such as an area code. However, some individuals
who have moved out of the state want to maintain their phone
numbers with California area codes, but the retailer must
collect and remit the MTS in these cases because it's associated
with a location in the state, even if the individual supplies an
out-of-state address. SB 1481 instead provides that the
transaction will only be deemed a "known-address" transaction
for phones associated with a location in this state when an
address isn't available.
III. Consistency between MTS and local charges. State law
requires retailers to collect the prepaid MTS surcharge and
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local charge at the time of the retail transaction and include
necessary provisions, that allow for the BOE to efficiently and
effectively administer the bill, such as providing that any
amount collected by a retailer but unreturned to the consumer
that is not owed as part of the surcharge, constitutes a
seller's debt to the state. However, the language for the MTS
surcharge and the local charge are different. SB 1481 makes the
two consistent by amending the section on local charges to
conform with the state charge.
State Revenue Impact
BOE states that SB 1481 does not impact state revenues.
Comments
1. Purpose of the bill . SB 1481 makes three changes to the MTS
Act to ensure that BOE can correctly implement it beginning
later this year. BOE states that the measure will also help
reduce its costs, and improve taxpayer communication. Senate
Rule 23 requires all members of the Committee to sign Committee
Bills prior to introduction, so SB 1481 can only contain items
with universal agreement; should anyone object to a provision in
the measure, it will be removed.
Support and
Opposition (4/14/16)
Support : State Board of Equalization.
Opposition : None received.
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