BILL ANALYSIS �
AB 1717
Page 1
ASSEMBLY THIRD READING
AB 1717 (Perea)
As Amended April 2, 2014
2/3 vote. Urgency
UTILITIES & COMMERCE 9-0 REVENUE &
TAXATION 9-0
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|Ayes:|Bradford, Bonilla, Dahle, |Ayes:|Bocanegra, Harkey, Beth |
| |Fong, | |Gaines, Gordon, Mullin, |
| |Beth Gaines, Mullin | |Nestande, Pan, Williams, |
| |Quirk, Rendon, Skinner | |Ting |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 15-0
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Holden, Jones, | | |
| |Linder, Pan, Quirk, | | |
| |Ridley-Thomas, Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Establishes a new point-of-sale system for collecting
and remitting specified fees, surcharges, and taxes applicable
to prepaid mobile telephony services (MTS). Specifically, this
bill :
1)Establishes a prepaid MTS surcharge based on or after January
1, 2016, on a percentage of the sales price of each retail
transaction that occurs in the state for prepaid wireless
service. The prepaid MTS surcharge would include the emergency
telephone users surcharge (9-1-1) and California Public
Utilities Commission (PUC) surcharges and any applicable local
user utility tax.
2)Requires a retail seller to collect the prepaid MTS surcharge
from a prepaid consumer and remit the amounts collected to the
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State Board of Equalization (BOE) and allows a retail seller
to receive 2% of the amounts collected with certain
exceptions.
3)Specifies the taxes to be separately stated on an invoice,
receipt, or other similar document provided to the prepaid
consumer, or otherwise disclosed electronically to the prepaid
consumer.
4)Requires BOE, after deducting its administrative expenses, to
deposit the amounts collected for 9-1-1 user surcharge into
the Prepaid MTS 9-1-1 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.
5)Requires PUC to annually compute for prepaid mobile telephony
services the PUC's reimbursement fee and six universal service
program surcharges, to post notice of those fees and
surcharges on its Internet Web site, and to notify BOE and the
Office of Emergency Services (OES) 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.
6)Requires the PUC, 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, and publicize on its Internet Web site.
7)Exempts prepaid consumers from prepaid MTS surcharge if the
prepaid consumer is certified as eligible for the state or
federal lifeline program.
8)Requires OES to annually compute the intrastate portion of the
9-1-1 surcharge to be collected on prepaid mobile telephony
services to post notice of those charges and to notify BOE of
the amount.
9)Requires OES to prepare a prescribed summary of the
calculation of the proposed 9-1-1 surcharge and make it
available to the public on its Internet Web site.
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10)Creates statewide uniformity for user utility taxes (UUTs)
assessed on prepaid mobile telephony service and preempts
existing 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 new provisions, as specified.
11)Requires a seller to refund prepaid consumers for any prepaid
MTS surcharges and local charges in excess of the surcharge
amount.
12)Allows a consumer to rebut the presumed location of a retail
transaction for the purposes of the collection of the local
charges by filing a claim and declaration under penalty of
perjury.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)The state should realize a net state revenue gain of $8
million from 2011-12 revenues. In addition, there will likely
be a net local revenue gain in the $60 to $70 million range
for UTT not currently collected.
2)BOE projects annual administrative costs of over $11 million
for collection and implementation.
3)PUC projects administrative costs of $630,000 for the first
two years of implementation and $350,000 annual on-going
administrative costs.
COMMENTS :
1)Purpose. According to the author, everyone who uses phone
service pays a small monthly fee as part of their bill to help
fund 911 and support other important state and local programs.
However, for the fastest growing segment of wireless users,
prepaid wireless services, there is no collection mechanism
for customers to pay these fees. Nearly 25% of all wireless
customers are now prepaid customers.
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a) According to the author, the current system leaves state
and local governments without a reliable, predictable means
for ensuring collection of these revenues. This bill will
ensure state and local governments receive the necessary
resources for 911 programs by developing a statewide
mechanism to include prepaid services in the
already-established collection of fees applied to wireless
communication services.
2)Background. The state's current system for collecting taxes
and fees is based on monthly bills. Customers pay 911 fees
and state and local fees to fund telephone service for
low-income households, broadband for underserved areas, and
local government services.
a) According to the Wireless Association, the prepaid
wireless market is anticipated to grow at a rate of 10% per
year.
3)Collection of fees and surcharges for prepaid wireless
services. Current law imposes a state 911 user surcharge on
intrastate communications service, administered by the
California Technology Agency; a PUC Reimbursement Fee to pay
for PUC operations, and several surcharges to pay for state
universal service programs administered by the PUC as follows:
a) California High Cost Fund A and B.
b) Deaf and Disabled Telecommunications program.
c) California Teleconnect Fund.
d) California Advanced Services Fund.
e) Lifeline Telephone Service.
The BOE estimates state fees total 3.46% of intrastate service.
There are about 150 different Local 911 fees and UUTs assessed
on service provided within the jurisdiction of the city or
county imposing the tax. UUTs vary by jurisdiction but not all
cities and counties impose them.
Post-paid fees and surcharges are assessed as they are reflected
on customer bills after service is used. With prepaid service,
there is no specific billing process.
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Similar Legislation. AB 300 (Perea) of 2013, contained
provisions substantially similar to the current bill and would
have established a point-of-sale system for collecting and
remitting specified fees, surcharges, and taxes applicable to
prepaid MTS. AB 300 was vetoed, with the Governor noting the
collection system was duplicative, complex and would result in
increased collection costs.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0003676