BILL ANALYSIS �
AB 1717
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1717 (Perea)
As Amended August 22, 2014
2/3 vote. Urgency
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|ASSEMBLY: |71-2 |(May 29, 2014) |SENATE: |29-2 |(August 26, |
| | | | | |2014) |
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Original Committee Reference: U. & C.
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 (911) 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
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 911 user 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.
5)Requires PUC to annually compute for prepaid mobile telephony
services the PUC's reimbursement fee and six universal service
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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
911 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 911 surcharge and make it
available to the public on its Internet Web site.
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.
13)Ensures the State 911 fund is no less than $9.9 million
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dollars and if it falls below that amount, each seller that is
a telephone corporation to shall divide and pay the difference
on a pro rata basis according to each such telephone
corporation's intrastate prepaid wireless revenues.
The Senate amendments :
1)Require the BOE post individual, as well as cumulative, rates
for PUC surcharges and local charges to facilitate direct
seller remittance.
2)Include a reporting requirement by carriers of MTS 911
remittances to ensure they are included in the tabulation of
overall MTS 911 remittances.
3)Add a sunset date of January 1, 2020, for guarantee of the
State 911 fund.
4)Clarify the definition of direct sellers.
5)Require a reporting of MTS costs by the BOE.
6)Clarify the BOE's administrative role.
7)Make a finding a declaration that the law in effect prior to
the imposition of the prepaid MTS surcharge as a result of the
enactment of this act is the subject of ongoing and potential
litigation.
8)Specify that the remittance of local charges shall be
separately identified from any other local taxes that are
remitted to the local jurisdiction or local agency imposing
the local charge.
9)Authorize the BOE share any seller, including direct seller
records, relating to local charges with local governments.
10) Clarify that the local government is responsible for the
enforcement, including auditing, of collection and remittance
of local charges by direct sellers.
11)Clarify that the local government is responsible for paying
to the BOE its pro rata share of the BOE's cost of collection
and administration.
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12)Require the BOE to report to the Legislature no later than
July 1, 2017 the costs, number of sellers, and other pertinent
information to assist Legislature in determining whether to
re-enact this statute.
13)Add language to permit deposit of funds to state 911 fund and
PUC accounts from the MTS accounts.
14)Add double-jointing language to AB 1717 (Perea) of the
current legislative session, to prevent chaptering out issues.
15)Make other non-substantive changes.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)$8.3 million for Fiscal Year (FY) 2015-16, $13.6 million for
FY 2016-17, $12.3 million for FY 2017-18, and $12.1 million
thereafter from fee revenues (special) for BOE to administer
and collect the new collection mechanism beginning in 2016,
not including additional costs associated with the potential
sunset of the new collection mechanism.
2)$630,000 for the first two years of implementation and
$350,000 thereafter from the Public Utilities Commission
Utilities Reimbursement Account (special) to set the MTS and
track MTS revenues
3)Unknown changes in state revenues, but potentially an increase
in $4.99 million, to various special funds by collecting
surcharges on more services and on retail prices. Staff
estimates that after the subtraction of the state's portion of
the BOE and PUC's increased administrative costs, net revenues
may be in the hundreds of thousands of dollars.
4)Cost pressures on the General Fund for a loan for start-up
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
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for customers to pay these fees. Nearly 25% of all wireless
customers are now prepaid customers.
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.
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.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0005391