BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1481|
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CONSENT
Bill No: SB 1481
Author: Committee on Governance and Finance
Introduced:3/17/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Prepaid Mobile Telephony Services Surcharge
Collection Act
SOURCE: Board of Equalization
DIGEST: This bill makes three changes to the Prepaid Mobile
Telephony Services Surcharge (MTS) Collection Act recommended by
the Board of Equalization (BOE) to assist implementation.
ANALYSIS:
Existing law:
1)Enacts the MTS Act, which requires purchasers of prepaid
wireless services to pay a surcharge for each retail sale (MTS
Fee) on and after January 1, 2016 (AB 1717, Perea, Chapter
885, Statutes of 2014).
2)Provides that the rate of the MTS Fee is a percentage of the
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sales price of the prepaid wireless service, and that it is
in-lieu of all other state and local fees and charges.
3)Directs BOE to collect the MTS Fee pursuant to the Fee
Collection Procedures Law.
4)Requires BOE to calculate the rate of the MTS Fee by adding
the state 911 surcharge rate as well as other fees imposed by
the California Public Utilities Commission to local charges
for communications access and 911, as well as utility user
taxes.
5)Requires all retailers to collect the MTS Fee from purchasers,
and remit proceeds to BOE, except for those who sell a de
minimis amount of prepaid wireless services, currently $15,000
per year; however, all retailers must register with BOE and
submit quarterly returns regardless of the amount of sales.
6)Requires retailers to collect and remit the MTS Fee whenever a
retail transaction takes place in the state, including retail
transactions made in person in the state, or if the
transaction is a "known-address" transaction defined as:
a) A retail sale involving an item that is shipped to, or
picked up by, the prepaid customer in California,
b) If the prepaid customer's address is known by the seller
to be in the state,
c) The prepaid customer provides a California address
during the sale, or
d) The mobile telephone is associated with a location in
the state, such as an area code.
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1)Requires retailers to collect the prepaid MTS surcharge and
local charge at the time of the retail transaction and include
necessary provisions, that allow for the BOE to efficiently
and effectively administer the MTS Fee, 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.
This bill:
1)Relieves retailers who sell a de minimis amount of prepaid
wireless service from the requirement to register with BOE and
file quarterly returns; however, this bill provides that it
does not prevent a retailer from registering with BOE on a
voluntary basis to collect and remit the charge.
2)Provides that a "known-address transaction" will be deemed a
retail transaction that takes place in the state when the
mobile telephone is associated with a location in the state,
such as an area code, only when an address is not available to
the seller.
3)Makes sections for state and local charges consistent with
regard to 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.
Background
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, Chapter 25, Statutes of
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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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified5/3/16)
Board of Equalization (source)
OPPOSITION: (Verified5/3/16)
None received
ARGUMENTS IN SUPPORT: BOE states that this bill will also
help reduce its costs, and improve taxpayer communication. 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 MTS Fee. Additionally, clarifying known address
transactions will relieve some individuals who have moved out of
the state but want to maintain their phone numbers with
California area codes from paying the fee so long as the
individual supplies an out-of-state address.
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
5/4/16 14:58:15
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