1998 Regular Session
By: Senator(s) Bryan
Senate Bill 3186
AN ACT TO IMPOSE AN EXCISE TAX UPON THE AMOUNTS PAID FOR THE RETAIL PURCHASE OF COMMUNICATIONS SERVICES WHICH EITHER ORIGINATE OR TERMINATE IN MISSISSIPPI AND WHICH ARE CHARGED TO A SERVICE ADDRESS IN THIS STATE; TO PROVIDE FOR CERTAIN CREDITS AGAINST SUCH TAX; TO PROVIDE THAT THE PROCEEDS OF THE EXCISE TAX LEVIED PURSUANT TO THIS ACT SHALL BE DEPOSITED INTO THE COMMUNICATIONS EXCISE TAX LOCAL DISTRIBUTION FUND CREATED BY THIS ACT; TO PROVIDE THAT MONEY IN THE FUND SHALL BE DISTRIBUTED TO LOCAL TAXING DISTRICTS IN CERTAIN AMOUNTS; TO PROVIDE THAT THE FUND SHALL BE ADMINISTERED BY THE STATE TAX COMMISSION; TO PROVIDE MONIES RECEIVED BY LOCAL TAXING DISTRICTS SHALL BE CONSIDERED TO BE, AND SHALL BE USED IN THE SAME MANNER AS, THE PROCEEDS OF AD VALOREM TAXES; TO PROHIBIT POLITICAL SUBDIVISIONS FROM IMPOSING CERTAIN TAXES, FEES OR CHARGES UPON PROVIDERS OF COMMUNICATION SERVICES; TO AMEND SECTION 27-35-4, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT REAL PROPERTY OWNED OR USED BY PERSONS OR ENTITIES IN PROVIDING COMMUNICATION SERVICES SHALL BE CONSIDERED CLASS II PROPERTY FOR PURPOSES OF ASSESSMENT AND THAT PERSONAL PROPERTY OWNED OR USED BY SUCH PERSONS OR ENTITIES SHALL BE CLASS III PROPERTY FOR PURPOSES OF ASSESSMENT; TO AMEND SECTION 27-35-301, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE TRUE VALUE OF COMMUNICATIONS PROPERTY SHALL BE DETERMINED BY ESTIMATING THE REPLACEMENT COST OF THE PROPERTY; TO AMEND SECTION 27-35-319, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT PERSONS OR ENTITIES PROVIDING COMMUNICATIONS SERVICES AND HAVING PROPERTY LOCATED IN NOT MORE THAN SIX COUNTIES SHALL BE ASSESSED AS PERSONS; TO REPEAL SECTIONS 21-33-201 THROUGH 21-33-211, MISSISSIPPI CODE OF 1972, WHICH CONSTITUTE THE CITY UTILITY TAX LAW; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Sections 1 through 8 of this act may be cited as the Mississippi Communications Excise Tax Law.
SECTION 2. As used in Sections 1 through 8 of this act:
(a) "Communications service" means the provision, transmission, conveyance, or routing, for a consideration, of voice, data, video, or any other information or signals of the purchaser's choosing to a point, or between or among points, specified by the purchaser, by or through any electronic, radio or similar medium or method now in existence or hereafter devised. The term "communications service" shall include, but not be limited to, local telephone services, toll telephone services, telegraph services, teletypewriter services, teleconferencing services, private line services, channel services, mobile communication services, cable services, satellite broadcast and wireless cable services and internet access services. The term "communications service" shall not include information and data services, including the storage of data or information for subsequent retrieval, the retrieval of data or information, or the processing, or reception and processing, of data or information intended to change its form or content.
(b) "Local telephone service" shall include, but not be limited to, the access to a local telephone system and the privilege of communications within a local calling area.
(c) "Toll telephone service" shall include, but not be limited to, communications for which there is a toll charge that varies in amount according to the distance and/or elapsed transmission time of the communication; or a service that entitles the subscriber or user, upon the payment of a periodic charge, to the privilege of an unlimited number of communications to or from a location outside of a local calling area. The term "toll telephone service" includes wide-area telephone services.
(d) "Cable service" shall include, but not be limited to, the provision of video programming or other programming service to purchasers, and the purchaser interaction, if any, required for the selection or use of such video programming or other programming service, regardless of whether the programming is transmitted over facilities owned or operated by the cable service provider or over facilities owned or operated by one or more other communications service providers.
(e) "Mobile communications service" shall include, but not be limited to, any one-way or two-way radio communication service carried on between mobile stations or receivers and land stations, and by mobile stations communicating among themselves, and includes, but is not limited to, cellular communications services, personal communications services, paging services, specialized mobile radio services and any other form of mobile one-way or two-way communications service.
(f) "Service address" means the location of the communications equipment from which communications services are originated or at which communications services are received by the customer. In the event that this is not a defined location, as in the case of mobile phones, paging systems, maritime systems, air-to-ground systems and the like, "service address" shall mean the location of the customer's primary use of the communications equipment, as determined by the customer's billing address, if certified by the customer as the location of primary use, or other address certified by the customer as the location of primary use. If a customer does not certify the billing address or another address as the location of primary use, or if the address certified as the location of primary use is located outside the area in which the service provider provides communications services, the "service address" shall be deemed to be within the state associated with the area code of the customer's mobile telephone number.
SECTION 3. (1) There is hereby imposed a tax equal to three and one-half percent (32%) of amounts paid for the retail purchase of communications services which either originate or terminate in this state and which are charged to a service address in this state, regardless of where such amounts are billed or paid.
(2) The tax imposed by this section shall be paid by the person paying for such communications service and shall be collected from such person by the retailer and remitted to the State Tax Commission.
(3) Amounts paid for the retail purchase of communications service shall include amounts paid for, or attributable to, the connection, movement, change or termination of a communications service, but shall not include amounts paid for or attributable to:
(a) Communications services which are resold, used as a component part of, or integrated into a communications service provided to the ultimate retail purchaser who originates or terminates the taxable end-to-end communication, including, but not limited to, carrier access charges, right of access charges, interconnection charges paid by the providers of mobile communications services or other communications services, charges paid by cable service providers for the transmission of video or other programming by another communications service provider over facilities owned or operated by such other communications service provider, charges for the sale of unbundled network elements, and other intercompany charges for the use of facilities for providing communications services.
(b) Communications services paid for by inserting coins in coin-operated communications devises available to the public, but only to the extent the service is actually paid for in such manner.
(c) Communications services provided to the United States government, any agency or instrumentality thereof, or any entity exempt from state taxes under federal law.
(d) Communications services provided to the State of Mississippi or any political subdivision thereof.
(e) Any excise tax, sales tax, or similar tax, fee or assessment levied by the United States or any state or local government, including, but not limited to, emergency telephone surcharges, upon the purchase, sale, use or consumption of any
communications service, which is permitted or required to be added to the purchase price of such service.
(f) Bad debts which, for purposes of this paragraph, means any portion of a debt that is related to a sale of communications services and which has become worthless or uncollectible, as determined under applicable federal income tax standards. If the portion of the debt deemed to be bad is subsequently paid, the retailer shall report and pay the tax on that portion during the reporting period in which the payment is made.
(g) Services which are ancillary to the provision of communications service but are not directly related to the transmission of voice, data or information, including, but not limited to, voice mail and other voice messaging services, the installation or maintenance of wiring or equipment on a customer's premises, directory assistance, directory advertising and listings, detailed billing services, bad check charges and late payment charges.
(h) Communications services which have been obtained through fraudulent means or reimbursements between communications service providers intended to cover the cost of fraudulent communications activity.
SECTION 4. To prevent actual multi-state taxation of a communications service subject to taxation under Sections 1 through 8 of this act, any taxpayer, upon proof that such taxpayer has paid a tax in another state on such service, shall be allowed a credit against the tax imposed by this chapter to the extent of the amount of such tax paid in such other state.
SECTION 5. All administrative provisions of Chapter 65, Title 27, Mississippi Code of 1972, including those which fix damages, penalties and interest for nonpayment of sales tax and for noncompliance with the provisions of such chapter and all other requirements and duties imposed upon the taxpayer, shall apply to all taxpayers liable for the communications excise taxes imposed under the provisions of Sections 1 through 8 of this act and to all providers of communications services required to collect and remit such taxes. The chairman shall exercise all power and authority and perform all duties with respect to persons obligated under the Communications Excise Tax Law as are provided in Chapter 65, Title 27, Mississippi Code of 1972, except where there is conflict, in which case the provisions of Section 1 through 8 of this act shall control. The chairman may from time to time make such rules and regulations not inconsistent with the Communications Excise Tax Law as may be deemed necessary to carry out its provisions.
SECTION 6. The communications excise tax levied pursuant to Section 2 of this act, including any penalties or interest attributable to the nonpayment of such tax or for noncompliance with the provisions of Sections 1 through 8 of this act, shall be collected by the State Tax Commission and shall be accounted for separately from all other taxes. All monies collected under the provisions of this chapter shall be deposited by the State Tax Commission into the Communications Excise Tax Local Distribution Fund created pursuant to Section 7 of this act.
SECTION 7. (1) There is hereby created in the State Treasury a special fund to be known as the Communications Excise Tax Local Distribution Fund, into which shall be deposited the revenues collected from the tax levied pursuant to Section 2 of this act and such other monies as the Legislature may provide by appropriation. The monies in the fund shall be used:
(a) For the purpose of making payments to counties provided for in subsection (3) of this section,
(b) To pay the reasonable and necessary expenses incurred by the State Tax Commission in administering the provisions of this act as provided for in subsection (4) of this section.
(c) For the purpose of making equitable distributions to local taxing districts of amounts deposited in this fund in excess of the amount necessary to make the payments provided for in subsections (3) and (4) of this section, and
(2) The Communications Excise Tax Local Distribution Fund shall be administered by the State Tax Commission, and monies in the fund shall be expended upon appropriation by the Legislature. Unexpended amounts remaining in the fund at the end of the state fiscal year shall not lapse into the State General Fund, and any interest earned on amounts in the fund shall be deposited to the credit of the fund.
(3) Money from the fund shall annually be paid to each local taxing district in an amount not less than the amount necessary to fund any reduction below the amount of ad valorem tax revenue that such taxing district received from the property described in Section 27-35-4(4), Mississippi Code of 1972, for the 1998 calendar year, that is incurred in the year the payment is made as a result in the change in the assessment of such property.
(4) Money in excess of the amount necessary to make the payments provided for in subsection (3) of this section, may be utilized by the State Tax Commission to pay the reasonable and necessary expenses of the State Tax Commission incurred in administering this act; provided, however, that this amount shall not exceed one percent (1%) of the amount of the fund.
(5) Amounts in the fund in excess of the amounts necessary to make the payments provided for in subsection (3) of this section or to pay the reasonable and necessary expenses of the State Tax Commission as provided for in subsection (4) of this section, shall be distributed annually to each local taxing district in the proportion that the number of service addresses in such taxing district bears to the total number of service addresses in the state.
(6) Funds received by local taxing districts from the payments made pursuant to this section shall be considered to be, and shall be used in the same manner as, the proceeds of ad valorem taxes on property.
(7) The State Tax Commission shall calculate all distributions that are required to be made pursuant to this section.
(8) As used in this section, the term "local taxing district" means any county, municipality, school district or other local entity that levies an ad valorem tax or for which an ad valorem tax is levied, to fund all or a portion of its budget.
SECTION 8. (1) (a) If a political subdivision of this state levies any tax, charge or fee on communications services, or collects any such tax, charge or fee from providers of communications services; requires any provider of communications services, including, but not limited to, cable service providers, to enter into or extend the term of a franchise or other agreement which requires the payment of a tax, charge or fee; or enforces any provision of any ordinance or agreement to the extent that such provision obligates a provider of communications services to pay to the political subdivision a tax, charge or fee, such political subdivision shall receive no payment from the Communication Excise Tax Local Distribution Fund for as long as the imposition of such tax, charge or fee continues.
(b) For purposes of this subsection, a tax, charge or fee includes any tax, charge, fee, or in-kind payment of property or services, which is required by ordinance or agreement to be paid or furnished to a political subdivision by or through a provider of communications services regardless of whether such tax, charge, fee, or in-kind payment of property or services is:
(i) Designated as a utility tax, franchise fee, excise tax, user fee, occupancy fee, occupational or business license tax, subscriber charge or otherwise;
(ii) Measured by the amounts charged for services or otherwise;
(iii) Intended as compensation for the use of public rights-of-way; or
(iv) Permitted or required to be separately stated on the customer's bill.
(c) This subsection shall not apply to ad valorem taxes levied as provided by law and emergency telephone surcharges levied pursuant to Chapter 5, Title 19, Mississippi Code of 1972.
SECTION 9. Section 27-35-4, Mississippi Code of 1972, is amended as follows:
27-35-4. (1) All Class I property, as defined in Section 112, Mississippi Constitution of 1890, shall be assessed at the rate of ten percent (10%) of true value.
(2) All Class II property and Class III property, as defined in Section 112, Mississippi Constitution of 1890, shall be assessed at the rate of fifteen percent (15%) of true value.
(3) All Class IV property and Class V property, as defined in Section 112, Mississippi Constitution of 1890, shall be assessed at the rate of thirty percent (30%) of true value.
(4) For purposes of this section, real property owned or used by persons or entities in providing communications services, as defined in Section 2 of Senate Bill No. 3186, 1998 Regular Session, shall be considered Class II property, and personal property owned or used by persons or entities in providing such communications services shall be considered Class III property.
SECTION 10. Section 27-35-301, Mississippi Code of 1972, is amended as follows:
27-35-301. (1) The members of the State Tax Commission are constituted state assessors of railroads and other public service corporations, and they shall, upon the receipt or making of the schedules hereinafter provided for, assess the property of railroads, * * * sleeping car, express, electric power and light companies and other public service corporations liable to taxation in the state, affixing its true value so that such property shall bear its just proportion of taxation, taking into consideration the value of the franchise and the capital engaged in the business in this state. The state assessors of railroads and other public service corporations may adopt other and further rules necessary and proper to ascertain the value of property to be assessed by them, including the value of the franchise and amount of capital engaged in the business in this state. Provided, however, the members of the State Tax Commission shall be assessors of railroad and Class IV public service property, but shall not be the assessors of the types and kinds of properties owned by the public service corporations and appraised and assessed by county tax assessors pursuant to Sections 27-35-331 through 27-35-341.
(2) Except as otherwise provided in Section 27-35-319, the members of the State Tax Commission are constituted state assessors of persons and entities providing communications services, as defined in Section 2 of Senate Bill No. 3186, 1998 Regular Session, and they shall, upon the receipt or making of the schedules hereinafter provided for, assess the property of such persons and entities used in providing such communications services. The true value of communications property shall be determined solely by estimating the replacement cost of such communications properties based on data used by the owner or operator of such communications properties, or an affiliate of such owner or operator, for external financial reporting purposes. Further, the use of any method of valuation that values the business unit or enterprise, or which includes the communications properties in this state as a whole, or which results in the assessment, either directly or indirectly, of any intangible property or any property that is otherwise exempt from property taxation is expressly prohibited. The State Tax Commission shall conduct a study of the true economic lives, depreciation curves, trending, residual values and present worth tables associated with the property used to provide communications services and shall promulgate rules and regulations regarding the determination of true value consistent with the results of such study.
SECTION 11. Section 27-35-319, Mississippi Code of 1972, is amended as follows:
27-35-319. * * * Notwithstanding the provisions of Sections 27-35-31, 27-35-309, 27-35-317 and 27-35-323, when all the property of a person or entity providing communications services is located in not more than six (6) counties, it shall be assessed and taxed as that of a person; and the laws, providing for the assessment and collection of taxes on the property of persons, shall apply to the assessment and collection of taxes on the property of such persons or entities. All shares or certificates of stock issued by any such person or entity which is not publicly traded shall be exempt from taxation and shall not be returned for assessment. Its land and tangible personal property shall be assessed and taxed where situated on the first day of January of the year.
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SECTION 12. Sections 21-33-201, 21-33-203, 21-33-205, 21-33-207, 21-33-209 and 21-33-211, Mississippi Code of 1972, which constitute the City Utility Tax Law, are hereby repealed.
SECTION 13. To the extent that a person or entity providing communications services, as defined in Section 2 of this act, experiences a tax saving solely as a result of the provisions of this act, such tax saving shall inure to the benefit of the customers of such person or entity through a proportionate reduction in the prices of all classes of service provided by such person or entity, including residence, business and interconnection services. For purposes of this section, the term "tax saving" means a net reduction in the aggregate amount of taxes, charges and fees that are imposed on the service provider and not passed on to customers separately from the prices charged for services.
SECTION 14. The provisions of this act are deemed not to be severable. Therefore, if any of the provisions of this act are declared invalid or otherwise become inoperable, all other provisions of this act shall by operation of law and without any further action of the Legislature immediately become inapplicable, inoperable and of no effect.
SECTION 15. Sections 1 through 8 of this act and Section 11 of this act shall take effect and be in force from and after January 1, 1999; the remaining provisions of this act shall take effect and be in force from and after July 1, 1998.