Citations Affected: IC 6-2.5; IC 6-8.1; IC 36-7; IC 36-8.
Synopsis: Sourcing of mobile telecommunications taxes. Implements
the federal Mobile Telecommunications Sourcing Act, which provides
that taxes, charges, and fees levied on wireless telephone service shall
be paid to the jurisdiction where the customer's primary use of the
service occurs, irrespective of where the wireless telephone service
originates, terminates, or passes through. Makes conforming changes
in the statutes concerning the sales tax on intrastate
telecommunications service and the monthly emergency wireless
enhanced 911 fee on wireless service. Specifies that implementation of
the federal act does not authorize the imposition of new taxes, charges,
or fees that are not otherwise authorized by law. Authorizes a provider
of wireless telephone service, in the absence of an electronic data base
provided by the department of state revenue or another designated data
base provider, to rely on enhanced ZIP codes for purposes of assigning
customer addresses to taxing jurisdictions. Provides that "bundled"
offerings of taxable and nontaxable wireless service are considered
taxable unless the provider of the service provides information that
supports the nontaxability of a part of those services. Increases the
total amount of sales tax increment financing distributions that an
economic development district in the city of South Bend may receive
to $1,000,000 per year. Expands the purposes for which the money
received by the district may be used to include expenses related to the
acquisition of a commercial retail facility or demolition of commercial
property.
Effective: April 1, 2002 (retroactive); August 1, 2002.
November 20, 2001, read first time and referred to Committee on Finance.
January 22, 2002, amended, reported favorably _ Do Pass.
January 28, 2002, read second time, ordered engrossed.
January 29, 2002, engrossed. Read third time, passed. Yeas 50, nays 0.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
SECTION 1. IC 6-2.5-4-6 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE AUGUST 1, 2002]: Sec. 6. (a) As used in
this section, "telecommunication services" means the transmission of
messages or information by or using wire, cable, fiber optics, laser,
microwave, radio, satellite, or similar facilities. The term does not
include value added services in which computer processing
applications are used to act on the form, content, code, or protocol of
the information for purposes other than transmission.
(b) A person is a retail merchant making a retail transaction when
the person:
(1) furnishes or sells an intrastate telecommunication service; and
(2) receives gross retail income from billings or statements
rendered to customers.
(c) Notwithstanding subsection (b), a person is not a retail merchant
making a retail transaction when:
(1) the person provides, installs, constructs, services, or removes
tangible personal property which is used in connection with the
furnishing of the telecommunication services described in
subsection (a);
(2) the person furnishes or sells the telecommunication services
described in subsection (a) to another person described in this
section or in section 5 of this chapter; or
(3) the person furnishes telecommunications services described
in subsection (a) to another person who is using a prepaid
telephone calling card or prepaid telephone authorization number
described in IC 6-2.5-4-13. section 13 of this chapter; or
(4) the person furnishes intrastate mobile telecommunications
service (as defined in IC 6-8.1-15-7) to a customer with a place
of primary use that is not located in Indiana (as determined
under IC 6-8.1-15).
SECTION 2. IC 6-8.1-15 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
AUGUST 1, 2002]:
Chapter 15. Taxing Situs of Mobile Telecommunications Service
Sec. 1. As used in this chapter, "charges for mobile
telecommunications service" means any charge for or associated
with the provision of commercial mobile radio service, as defined
in Section 20.3 of Title 47 of the Code of Federal Regulations as in
effect on June 1, 1999, or any charge for or associated with a
service provided as an adjunct to a commercial mobile radio
service, that is billed to the customer by or for the customer's home
service provider regardless of whether individual transmissions
originate or terminate within the licensed service area of the home
service provider.
Sec. 2. (a) As used in this chapter, except as provided in
subsection (b), "customer" means:
(1) the person or entity that contracts with the home service
provider for mobile telecommunications service; or
(2) if the end user of mobile telecommunications service is not
the contracting party, the end user of the mobile
telecommunications service, but this subdivision applies only
for the purpose of determining the place of primary use.
(b) The term "customer" does not include:
(1) a reseller of mobile telecommunications service; or
(2) a serving carrier under an arrangement to serve the
customer outside the home service provider's licensed service
area.
Sec. 3. As used in this chapter, "designated data base provider"
means a corporation, an association, or other entity representing
the state and political subdivisions of the state that is responsible
for providing an electronic data base under section 15 of this
chapter and approved by the department.
Sec. 4. As used in this chapter, "enhanced ZIP code" means a
United States postal ZIP code of nine (9) or more digits.
Sec. 5. As used in this chapter, "home service provider" means
the facilities based carrier or reseller with which the customer
contracts for the provision of mobile telecommunications service.
Sec. 6. As used in this chapter, "licensed service area" means
the geographic area in which the home service provider is
authorized by law or contract to provide commercial mobile radio
service to the customer.
Sec. 7. As used in this chapter, "mobile telecommunications
service" means commercial mobile radio service, as defined in
Section 20.3 of Title 47 of the Code of Federal Regulations as in
effect on June 1, 1999.
Sec. 8. As used in this chapter, "place of primary use" means
the street address representative of where the customer's use of the
mobile telecommunications service primarily occurs, which must
be:
(1) the residential street address or the primary business
street address of the customer; and
(2) within the licensed service area of the home service
provider.
Sec. 9. As used in this chapter, "prepaid telephone calling
service" means the right to purchase exclusively
telecommunications service that must be paid for in advance that
enables the origination of calls using an access number or
authorization code, or both, whether manually or electronically
dialed, if the remaining amount of units of service that has been
prepaid is known by the provider of the prepaid service on a
continuous basis.
Sec. 10. As used in this chapter, "reseller" means a provider
who purchases telecommunications service from another
telecommunications service provider and then resells, uses as a
component part of, or integrates the purchased service into a
mobile telecommunications service. The term does not include a
serving carrier with which a home service provider arranges for
the service to its customers outside the home service provider's
licensed service area.
Sec. 11. As used in this chapter, "serving carrier" means a
facilities based carrier providing mobile telecommunications
service to a customer outside a home service provider's or
reseller's licensed service area.
Sec. 12. The general assembly finds that:
(1) the United States Congress has enacted the Mobile
Telecommunications Sourcing Act (4 U.S.C. 116 et seq.) for
the purpose of establishing uniform nationwide sourcing rules
for state and local taxation of mobile telecommunications
service;
(2) the federal Mobile Telecommunications Sourcing Act
provides that taxes on mobile telecommunications service
shall be paid to the jurisdiction where the customer's primary
use of the service occurs, irrespective of where the mobile
telecommunications service originates, terminates, or passes
through; and
(3) it is desirable to implement the federal Mobile
Telecommunications Sourcing Act in Indiana.
Sec. 13. (a) Except as provided by section 20 of this chapter, this
chapter applies to:
(1) the gross retail tax imposed on mobile telecommunications
service under IC 6-2.5-4-6;
(2) the monthly emergency wireless enhanced 911 fee imposed
on mobile telecommunications service under IC 36-8-16.5;
and
(3) any other tax, charge, or fee levied by the state or a taxing
jurisdiction within Indiana as a fixed charge for each
customer or measured by gross amounts charged to
customers for mobile telecommunications service, regardless
of whether the tax, charge, or fee is imposed on the vendor or
customer of the service and regardless of the terminology
used to describe the tax, charge, or fee;
on bills for mobile telecommunications service issued to customers
after July 31, 2002.
(b) This chapter does not apply to:
(1) any tax, charge, or fee levied upon or measured by the net
income, capital stock, net worth, or property value of the
provider of mobile telecommunications service;
(2) any tax, charge, or fee that is applied to an equitably
apportioned amount that is not determined on a transactional
basis;
(3) any tax, charge, or fee that:
(A) represents compensation for a mobile
telecommunications service provider's use of public
rights-of-way or other public property; and
(B) is not levied by the taxing jurisdiction as a fixed charge
for each customer or measured by gross amounts charged
to customers for mobile telecommunication service;
(4) any generally applicable business and occupation tax that
is imposed by the state, is applied to gross receipts or gross
proceeds, is the legal liability of the home service provider,
and that statutorily allows the home service provider to elect
to use the sourcing method required in this section; or
(5) the determination of the taxing situs of:
(A) prepaid telephone calling service; or
(B) air-ground radiotelephone service as defined in Section
22.99 of Title 47 of the Code of Federal Regulations as in
effect June 1, 1999.
Sec. 14. (a) Notwithstanding any other law, mobile
telecommunications service provided in a taxing jurisdiction to a
customer, the charges for which are billed by or for the customer's
home service provider, are considered to be provided by the
customer's home service provider.
(b) All charges for mobile telecommunications service that are
considered to be provided by the customer's home service provider
under this chapter are authorized to be subjected to tax, charge, or
fee by the taxing jurisdictions whose territorial limits encompass
the customer's place of primary use, regardless of where the
mobile telecommunication service originates, terminates, or passes
through.
(c) This chapter does not:
(1) authorize a taxing jurisdiction to impose a tax, charge, or
fee that the jurisdiction is not otherwise authorized to impose;
or
(2) modify, impair, supersede, or authorize the modification,
impairment, or supersession of the law of any taxing
jurisdiction pertaining to taxation except as expressly
provided by this chapter.
Sec. 15. (a) The department may provide an electronic data base
to a home service provider or, if the department does not provide
an electronic data base to home service providers, the designated
data base provider may provide an electronic data base to a home
service provider. The department or the designated data base
provider shall provide the data base in a format that complies with
the requirements of the federal Mobile Telecommunications
Sourcing Act (4 U.S.C. 116 et seq.).
this chapter does not reflect the correct taxing jurisdiction and give
binding notice to the home service provider to change the
assignment on a prospective basis from the date of notice of
determination. The home service provider must be given an
opportunity to demonstrate in accordance with department rules
and administrative procedures that the assignment reflects the
correct taxing jurisdiction.
Sec. 19. If charges for nontaxable mobile telecommunications
service are aggregated with and not separately stated from charges
that are subject to taxation, the charges for nontaxable mobile
telecommunications service are subject to taxation unless the home
service provider can reasonably identify charges not subject to the
tax, charge, or fee from its books and records that are kept in the
regular course of business.
Sec. 20. Notwithstanding any other provision of this chapter,
this chapter does not apply to any tax, charge, or fee levied by the
state or a taxing jurisdiction within Indiana beginning on the date
of entry of a final judgment on the merits by a court that:
(1) is based on federal law;
(2) is no longer subject to appeal; and
(3) substantially limits or impairs the essential elements of the
federal Mobile Telecommunications Sourcing Act (4 U.S.C.
116 et seq.).
Sec. 21. (a) If a customer believes that an amount of tax, charge,
or fee or an assignment of place of primary use or taxing
jurisdiction included on a bill under this chapter is erroneous, the
customer shall notify the home service provider in writing. The
customer shall include in the written notification the street address
for the customer's place of primary use, the account name and
number for which the customer seeks a correction, a description of
the error asserted by the customer, and any other information that
the home service provider reasonably requires to process the
request.
(b) Within sixty (60) days after receiving a notice under this
section, the home service provider shall review its records to
determine the customer's taxing jurisdiction. If the review shows
that the amount of tax, charge, or fee or assignment of place of
primary use or taxing jurisdiction is in error, the home service
provider shall correct the error and refund or credit the amount
of tax, charge, or fee erroneously collected from the customer for
a period of up to two (2) years. If the review shows that the amount
of tax, charge, or fee or assignment of place of primary use or
taxing jurisdiction is correct, the home service provider shall
provide a written explanation to the customer.
(c) The procedures set forth in this section are the first course
of remedy available to a customer seeking correction of assignment
of place of primary use or taxing jurisdiction, or a refund of or
other compensation for taxes, charges, or fees erroneously
collected by the home service provider. No cause of action based
upon a dispute arising from the collection of any such taxes,
charges, or fees shall accrue until a customer has exhausted the
remedies set forth in this section.
SECTION 3. IC 36-7-26-1, AS AMENDED BY P.L.291-2001,
SECTION 200, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE APRIL 1, 2002 (RETROACTIVE)]: Sec. 1. This chapter
applies to the following:
(1) A city having a population of more than seventy-five thousand
(75,000) but less than ninety thousand (90,000).
(2) A city having a population of more than ninety thousand
(90,000) but less than one hundred ten thousand (110,000). one
hundred five thousand (105,000) but less than one hundred
twenty thousand (120,000).
(3) A city having a population of more than one hundred fifty
thousand (150,000) but less than five hundred thousand
(500,000).
(4) A city having a population of more than one hundred twenty
thousand (120,000) but less than one hundred fifty thousand
(150,000).
SECTION 4. IC 36-7-26-23, AS AMENDED BY P.L.291-2001,
SECTION 202, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE APRIL 1, 2002 (RETROACTIVE)]: Sec. 23. (a) Before
the first business day in October of each year, the board shall require
the department to calculate the net increment for the preceding state
fiscal year. The department shall transmit to the board a statement as
to the net increment in sufficient time to permit the board to review the
calculation and permit the transfers required by this section to be made
on a timely basis.
(b) There is established a sales tax increment financing fund to be
administered by the treasurer of state. The fund is comprised of two (2)
accounts called the net increment account and the credit account.
(c) On the first business day in October of each year, that portion of
the net increment calculated under subsection (a) that is needed:
(1) to pay debt service on the bonds issued under section 24 of
this chapter or to pay lease rentals under section 24 of this
chapter; and
(2) to establish and maintain a debt service reserve established by
the commission or by a lessor that provides local public
improvements to the commission;
shall be transferred to and deposited in the fund and credited to the net
increment account. Money credited to the net increment account is
pledged to the purposes described in subdivisions (1) and (2), subject
to the other provisions of this chapter.
(d) On the first business day of October in each year, the remainder
of:
(1) eighty percent (80%) of the gross increment; minus
(2) the amount credited to the net increment account on the same
date;
shall be transferred and credited to the credit account.
(e) The remainder of:
(1) the gross increment; minus
(2) the amounts credited to the net increment account and the
credit account;
shall be deposited by the auditor of state as other gross retail and use
taxes are deposited.
(f) A city described in section 1(2), 1(3), or 1(4) of this chapter may
receive not more than fifty percent (50%) of the net increment each
year. During the time a district exists in a city described in section 1(2),
1(3) or 1(4) of this chapter, not more than a total of one million dollars
($1,000,000) of net increment may be paid to the city described in
section 1(2), 1(3) or 1(4) of this chapter. During each year that a
district exists in a city described in section 1(2) of this chapter, not
more than one million dollars ($1,000,000) of net increment may be
paid to the city described in section 1(2) of this chapter.
(g) The auditor of state shall disburse all money in the fund that is
credited to the net increment account to the commission in equal
semiannual installments on November 30 and May 31 of each year.
SECTION 5. IC 36-7-26-24, AS AMENDED BY P.L.185-2001,
SECTION 9, AND AS AMENDED BY P.L.291-2001, SECTION 203,
IS AMENDED AND CORRECTED TO READ AS FOLLOWS
[EFFECTIVE APRIL 1, 2002 (RETROACTIVE)]: Sec. 24. (a) The
commission may issue bonds, payable in whole or in part, from money
distributed from the fund to the commission, to finance a local public
improvement under IC 36-7-14-25.1 or may make lease rental
payments for a local public improvement under IC 36-7-14-25.2 and
IC 36-7-14-25.3. The term of any bonds issued under this section may
not exceed twenty (20) years, nor may the term of any lease agreement
entered into under this section exceed twenty (20) years. The
commission shall transmit to the board a transcript of the proceedings
with respect to the issuance of the bonds or the execution and delivery
of a lease agreement as contemplated by this section. The transcript
must include a debt service or lease rental schedule setting forth all
payments required in connection with the bonds or the lease rentals.
(b) On January 15 of each year, the commission shall remit to the
treasurer of state the money disbursed from the fund that is credited to
the net increment account that exceeds the amount needed to pay debt
service or lease rentals and to establish and maintain a debt service
reserve under this chapter in the prior year and before May 31 of that
year. Amounts remitted under this subsection shall be deposited by the
auditor of state as other gross retail and use taxes are deposited.
(c) The commission in a city described in section 1(2) of this
chapter may only distribute money from the fund only for the
following:
(1) Road, interchange, and right-of-way improvements. and for
(2) Acquisition costs of a commercial retail facility and for
real property acquisition costs in furtherance of the road,
interchange, and right-of-way improvements.
(3) Demolition of commercial property and any related
expenses incurred before or after the demolition of the
commercial property.
(4) Physical improvements or alterations of property that
enhance the commercial viability of the district.
(d) The commission in a city described in section 1(3) of this
chapter may distribute money from the fund only for the following
purposes:
(1) For road, interchange, and right-of-way improvements and for
real property acquisition costs in furtherance of the road,
interchange, and right-of-way improvements.
(2) For the demolition of commercial property and any related
expenses incurred before or after the demolition of the
commercial property.
(e) The commission in a city described in section 1(4) of this
chapter may distribute money from the fund only for the following
purposes:
(1) For:
(A) the acquisition, demolition, and renovation of property;
and
(B) site preparation and financing;
related to the development of housing in the district.