UNAPPROVED DRAFT BILL -- Subject to Change Without Notice!
BILL NO.
INTRODUCED BY
(Primary Sponsor)
A BILL FOR AN ACT ENTITLED: "AN ACT ENACTING A 4 PERCENT TAX ON THE GROSS REVENUE OF RETAIL INTRASTATE, INTERSTATE, AND INTERNATIONAL TELECOMMUNICATIONS SERVICES; PROVIDING FOR THE ADMINISTRATION OF THE TAX; PROVIDING THAT THE TAX REVENUE BE DEPOSITED IN THE STATE GENERAL FUND; REPEALING THE TELEPHONE COMPANY LICENSE TAX; AMENDING SECTION 69-3-860, MCA; REPEALING SECTIONS 15-53-101, 15-53-102, 15-53-103, 15-53-104, 15-53-105, 15-53-106, 15-53-111, 15-53-112, 15-53-113, 15-53-114, AND 15-53-115, MCA; AND PROVIDING AN APPLICABILITY DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Definitions. As used in [sections 1 through 11] unless the context clearly requires otherwise:
(1) "Bad debts" means any portion of a debt related to a sale of intrastate, interstate, or international telecommunication, the gross revenue for which is not otherwise deductible or excludable, that has become worthless or uncollectible, as determined under applicable federal income tax standards. If the portion of the debt considered to be bad is subsequently paid, the taxpayer shall report and pay the tax on that portion during the reporting period in which the payment is made.
(2) "Department" means the department of revenue as provided in 2-15-101.
(3) (a) "Gross revenue" means, except as provided in subsection (3)(b), all revenue, whether in money or other consideration, and includes cash, credits, services, and property and is determined without a deduction of the cost of telecommunications, materials used, labor or service, or any other expense, including:
(i) gross revenue for private line services, including charges imposed at each channel termination point within this state, charges for the total channel mileage between each channel termination point within the state, and 50% of charges for the interstate interoffice channel provided between the last channel termination point in the state and the first channel termination point outside of the state;
(ii) charges for services, except as provided in subsection (3)(b)(iii), that are entirely ancillary to the provision of telecommunications, such as services for telephone directory information, connection or disconnection, call forwarding, caller identification, and call waiting.
(b) "Gross revenue" does not include:
(i) the tax imposed by section 4251 of the Internal Revenue Code, 26 U.S.C. 4251;
(ii) surcharges imposed by statute, ordinance, or regulatory authority for the purpose of financing programs, such as assistance to the economically disadvantaged, 911 service, telephone devices for the deaf (TDD), or similar programs developed and financed through surcharges on telecommunications;
(iii) charges for customer equipment, including equipment that is leased or rented by the customer from any source, when the charges are disaggregated and separately identified from other amounts charged for the provision of intrastate, interstate, and international telecommunications; and
(iv) bad debts.
(4) "International" means all telecommunications in which the service address of the person is in this state and that either:
(a) originate in this state and terminate outside of the United States; or
(b) originate outside of the United States and terminate in this state.
(5) "Interstate" means all telecommunications in which the service address of the person is in this state and that either:
(a) originate in this state and terminate in another state; or
(b) originate in another state and terminate in this state.
(6) "Intrastate" means all telecommunications, regardless of routing, that both originate and terminate within the state.
(7) "Person" means, without limitation, a natural individual, a firm, a trust, an estate, a partnership, an association, a joint stock company, a joint venture, a limited liability company, a corporation, a cooperative, or an Indian tribe or a receiver, a trustee, a guardian or another representative appointed by order of a court, the federal or state government, or governmental instrumentalities, including, without limitation, federal or state universities created by statute, political subdivisions of a state, and foreign governments, including their political subdivisions, instrumentalities, and agencies.
(8) "Private line" means a dedicated service that is not traffic-sensitive for a single customer that entitles the customer to the exclusive or priority use of a communications channel or group of channels from one or more specified locations to one or more specified locations.
(9) "Sale at retail" means the sale, acquisition, consumption, or use of telecommunications, provided that sale at retail does not include:
(a) the provision of telecommunications:
(i) among members of an affiliated group that includes a parent entity and all of the parent entity's wholly owned entities, including wholly owned, subtier entities; or
(ii) by a member of the group for the group's own exclusive use and consumption; and
(b) carrier access charges, right of access charges, charges for use of intercompany facilities, and charges for all telecommunications resold in the subsequent provision of telecommunications and all of these charges that are nontaxable sales for resale, such as the acquisition of telecommunications by the member of the group providing the telecommunications to an affiliated group of entities within the meaning of subsection (10)(a).
(10) "Sale of intrastate, interstate, or international telecommunication" means the transmitting, supplying or furnishing of intrastate, interstate, or international telecommunication and all services and equipment provided in connection with it for a consideration to other persons.
(11) "Service address" means the location of the telecommunication equipment from which the telecommunication is originated or at which the telecommunication is received by the taxpayer's purchaser except that:
(a) if the gross revenue is paid through a credit or payment mechanism that does not relate to a service address of the interstate or international telecommunication, such as when payment of the telecommunication is accomplished by a bank, travel, credit, or debit card or when the telecommunication is charged to telecommunication equipment the location of which does not constitute a service address of the telecommunication, the service address is considered to be the location of the origination of the interstate or international telecommunication;
(b) if the service address is not a defined location, as in the case of mobile telephones, paging systems, maritime systems, air-to-ground systems and the like, service address means the location of the subscriber's primary use of the telecommunication equipment as defined by telephone number, authorization code, or the location in this state to which bills are sent, but the location of the mobile telephone switching office or similar facility in this state that receives and transmits the signals of the telecommunication is considered the service address when the mobile telephone switching office or similar facility is outside the subscriber's assigned service area;
(c) the service address of private line telecommunication services is considered to be in this state to the extent that gross revenue of the services are attributed to this state.
(12) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States.
(13) "Taxpayer" means a person who individually or through agents, employees, independent contractors, officers, representatives, or permittees engages in the business of providing the service of originating or receiving intrastate, interstate, or international telecommunications and who incurs a tax liability under [sections 1 through 11].
(14) "Telecommunication" means, without limitation:
(a) one-way transmission or two-way, interactive transmission of sounds, signals, or other intelligence converted to like form, which effect or are intended to effect meaningful communications by electronic or electromagnetic means via wire, cable, satellite, light waves, microwaves, radio waves, or otherwise;
(b) (i) the transmission of messages, programming, or information through the use of:
(A) local, toll, and wide area telephone service;
(B) private line services;
(C) channel services;
(D) telegraph services;
(E) teletypewriter;
(F) computer exchange services;
(G) cellular mobile telecommunication services;
(H) specialized mobile radio;
(I) stationary two-way radio;
(J) paging service; or
(K) any other form of mobile and portable one-way or two-way communications; or
(ii) any other transmission of messages, programming, or information by electronic or similar means between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite, or similar facilities, including enhanced services that employ computer processing applications to act on the format, content, code, or protocol or similar aspects of the information to be transmitted or provide additional, different, or restructured information or involve the taxpayer purchaser's interaction with stored information;
(c) the use of equipment based upon lease or timesharing agreements, storage of data or information for subsequent retrieval on equipment, or processing of data or information by equipment. Equipment includes but is not limited to calculators, computers, data processing equipment, tabulating equipment, and accounting equipment.
NEW SECTION. Section 2. Imposition of tax -- credit -- exemptions. (1) A tax is imposed at the rate of 4% of the gross revenue upon the sale at retail of intrastate, interstate, and international telecommunication where the telecommunication is charged to the taxpayer purchaser's service address in this state.
(2) To prevent actual double taxation of sales subject to tax under [sections 1 through 11], a taxpayer, upon proof that the taxpayer or the taxpayer's purchaser has paid a tax in another state on the purchase, is allowed a credit against the tax imposed under subsection (1) to the extent of the amount of the tax legally imposed in the other state, but the amount of credit may not exceed the tax owed to this state on the purchase.
(3) The tax imposed under subsection (1) may not be imposed to the extent that the sale of retail telecommunications may not, under the constitution, statutes, or treaties of the United States be made the subject of transactional taxation by this state. A customer claiming exemption from the tax or collection of the tax by reason of the constitution, statutes, or treaties of the United States shall file a claim with the department within 90 days of either payment of the tax or receipt of a notice of assessment of the tax.
NEW SECTION. Section 3. Reimbursement of tax. (1) The taxpayer may be reimbursed for the tax from the taxpayer purchaser by adding the tax, whenever possible, as a separate and distinct item to the gross revenue charged for the sale of intrastate, interstate, and international telecommunications.
(2) In the case of telecommunication devices requiring the direct deposit of money to operate, reimbursement of the tax may be combined with the direct deposit for the service.
(3) If the tax is separately stated on the books of the taxpayer and the total amount of tax that is separately stated with respect to transactions reportable within one reporting period is in excess of the amount of tax otherwise payable on the transactions on which the tax was separately stated, the excess amount of tax stated on the transactions within that reporting period must be included as a part of the gross revenue.
NEW SECTION. Section 4. Return required of telecommunications services providers. (1) A taxpayer who is liable for the tax provided for under [sections 1 through 11] shall, within 30 days after the end of each quarter:
(a) file with the department a statement, in a form that the department may prescribe, showing the gross revenue of the taxpayer subject to tax during the preceding quarter and containing other information that the department may require; and
(b) pay the tax owed for the preceding quarter.
(2) Each taxpayer liable to pay the tax under [section 2] shall keep a record, on a form approved by the department, showing the total gross revenue and other information that the department requires.
(3) The department may grant a reasonable extension of time for filing the return upon good cause shown.
NEW SECTION. Section 5. Deficiency assessment -- review -- interest -- penalty. (1) If the department determines that the amount of tax due is greater than the amount reported, it shall mail to the taxpayer a notice, pursuant to 15-1-211, of the additional tax proposed to be assessed. The taxpayer may seek a review of the determination pursuant to 15-1-211.
(2) (a) A deficiency must bear interest [as provided in [section 1 of House Bill No. 132]] until paid or at a rate of 1% a month or fraction of a month, computed from the original due date of the return.
(b) If payment is not made within 30 days, the tax is delinquent and a penalty [as provided in [section 1 of House Bill No. 132]] must be added to the amount of the deficiency.
NEW SECTION. Section 6. Penalty and interest -- waiver. The penalty may be waived by the department for reasonable cause as provided in 15-1-206.
NEW SECTION. Section 7. Credit for overpayment -- interest on overpayment. (1) If the department determines that the amount of tax, penalty, or interest due for any year is less than the amount paid, the amount of overpayment must be credited against the tax, penalty, or interest then due from the taxpayer, with the balance being refunded to the taxpayer or its successor through reorganization, merger, consolidation, or its shareholders upon dissolution.
(2) Except as provided in subsection (3), interest must be allowed on overpayments at the same rate that is charged on deficiency assessments under [section 11] due from the date of the return or from the date of overpayment, whichever date is later, to the date on which the department approves crediting or refunding the payment.
(3) (a) Interest may not accrue during any period of processing a claim for a refund that is delayed more than 30 days by reason of failure of the taxpayer to provide information requested by the department for the purposes of verifying the amount of the overpayment.
(b) Interest is not allowed:
(i) if the overpayment is credited or refunded within 6 months from the date on which the return is due or from the date on which the return is filed, whichever date is later; or
(ii) if the amount of interest is less than $1.
NEW SECTION. Section 8. Estimation of tax upon failure to file return -- notice. (1) If a taxpayer provider fails, neglects, or refuses to file the return required by [section 4] within the time required or fails to pay the tax required by [section 2] within the period provided for in [section 4], the department shall estimate the amount of gross revenue of the taxpayer subject to tax under [sections 1 through 11] during the preceding quarter.
(2) The department shall compute the amount of excise tax due from the taxpayer and mail to the taxpayer a letter and tax assessment statement setting forth the amount of delinquent excise tax, penalty, and interest due. The letter must advise that if payment is not made, a warrant for distraint may be filed.
NEW SECTION. Section 9. Warrant for distraint. If all or part of the tax imposed by [sections 1 through 11] is not paid when due, the department may issue a warrant for distraint as provided in Title 15, chapter 1, part 7. The resulting lien has precedence over any claim, lien, or demand filed after the department files the warrant for distraint.
NEW SECTION. Section 10. Statute of limitations. (1) Except as otherwise provided in this section, a deficiency may not be assessed or collected with respect to the year for which a return is filed unless a notice of additional tax proposed to be assessed is mailed within 5 years from the date on which the return was filed. For the purposes of this section, a return filed before the last day prescribed for filing is considered filed on the last day. If the taxpayer, before the expiration of the period prescribed for the assessment of the tax, consents in writing to an assessment after that time, the tax may be assessed at any time prior to the expiration of the period agreed upon.
(2) A refund or credit may not be allowed or paid with respect to the year for which a return is filed after 5 years from the last day prescribed for filing the return or after 1 year from the date of the overpayment, whichever period expires later, unless before the expiration of the period, the taxpayer files a claim for refund or the department has determined the existence of the overpayment and has approved the refund or credit of the overpayment. If the taxpayer has agreed in writing under the provisions of subsection (1) to extend the time within which the department may propose an additional assessment, the period within which a claim for refund or credit may be filed or a refund or credit allowed if a claim is not filed is automatically extended.
(3) If a return is required to be filed and the taxpayer fails to file the return, the tax may be assessed or an action to collect the tax may be brought at any time. If the return is required and the taxpayer files a fraudulent return, the 5-year period provided for in subsection (1) does not begin until discovery of the fraud by the department.
NEW SECTION. Section 11. Distribution of retail telecommunications excise tax revenue. Retail telecommunications excise tax revenue collected by the department must be deposited in the state general fund.
Section 12. Section 69-3-860, MCA, is amended to read:
"69-3-860. Interim universal access program -- funding -- surcharge rate. (1) (a) The interim universal access program is funded by a surcharge based on the retail revenue for all intrastate telecommunications services in the state. The surcharge must be determined by the administrator by rule. The surcharge must be set and applied to all telecommunications carriers on a competitively neutral basis.
(b) The rate of the surcharge must be set to raise $250,000 during the fiscal year ending June 30, 1998, and $500,000 during the fiscal year ending June 30, 1999. The rate may be changed, by rule, as necessary.
(c) The payment of the surcharge is an explicit subsidy and may be shown as a separate line item on each carrier's retail telecommunications services bills.
(d) The surcharge may be applied only to telecommunications services. Customer premise equipment is not considered a telecommunications service.
(2) The surcharge is payable quarterly to the department of revenue and deposited by the department in the interim universal access account established in 69-3-861. The department may by rule:
(a) establish the form of a reporting statement to be filed by telecommunications carriers subject to the surcharge;
(b) set the date after the end of a fiscal quarter that the quarterly payment must be made;
(c) provide for recordkeeping by telecommunications providers subject to the surcharge; and
(d) provide methods to pay the surcharge, including offsets of surcharges owed against discounted services to be reimbursed, and to pay refunds of overpayment of the surcharge.
(3) (a) The collection of a surcharge under this section is subject to:
(i) the deficiency assessment, review, interest, and penalty provisions of 15-53-105 [section 5];
(ii) the penalty and interest for delinquency and waiver provisions of 15-53-111 [section 6];
(iii) the estimation of tax on failure to file a statement provisions of 15-53-112 [section 8];
(iv) the warrant for distraint provisions of 15-53-113 [section 9]; and
(v) the statute of limitations provisions of 15-53-115 [section 10 ].
(b) Any reference to the tax under sections listed in subsection (3)(a), either by cite to a section of law or literally to the tax, refer, for the purposes of this section, to the surcharge imposed by this section."
NEW SECTION. Section 13. Repealer. Sections 15-53-101, 15-53-102, 15-53-103, 15-53-104, 15-53-105, 15-53-106, 15-53-111, 15-53-112, 15-53-113, 15-53-114, and 15-53-115, MCA, are repealed.
NEW SECTION. Section 14. Coordination instruction. If House Bill No. 132 is not passed and approved then the bracketed language in:
(1) [section 5(2)(a) of this act] is void and the phrase "at 12% a year" must be inserted; and
(2) [section 5(2)(b) of this act] is void and the phrase "of $50" must be inserted.
NEW SECTION. Section 15. Codification instruction. [Sections 1 through 11] are intended to be codified as an integral part of Title 15, chapter 53, and the provisions of Title 15, chapter 53, apply to [sections 1 through 11].
NEW SECTION. Section 16. Applicability. [This act] applies to calendar quarters beginning after December 31, 1999.
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