Senate Bill sb2070c1

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    Florida Senate - 2005                           CS for SB 2070

    By the Committee on Communications and Public Utilities; and
    Senator Constantine




    579-2035-05

  1                      A bill to be entitled

  2         An act relating to communications services;

  3         providing a short title; specifying the period

  4         during which the actual cost of operating a

  5         substitute communications system is exempt from

  6         such taxes; creating the Communications Service

  7         Tax Task Force; providing for the membership of

  8         the task force; providing a purpose; providing

  9         for staffing and administrative support;

10         requiring a report to the Governor and the

11         Legislature; amending s. 202.11, F.S.;

12         providing that the definition of sales price

13         for purposes of communication services tax does

14         not include specified charges for Internet

15         access services; amending s. 202.26, F.S.;

16         prescribing methods of record keeping relating

17         to bundled sales; amending s. 212.02, F.S.;

18         providing that the definition of sales price

19         for purposes of sales tax does not include

20         specified charges for Internet access services;

21         amending s. 202.13, F.S.; prescribing methods

22         of record keeping relating to bundled sales;

23         providing an effective date.

24  

25  Be It Enacted by the Legislature of the State of Florida:

26  

27         Section 1.  (1)  The taxes levied under sections

28  202.12(1), 202.19(7), 202.15, and 203.01, Florida Statutes,

29  shall not be levied on the actual cost of operating a

30  substitute communications system, as defined in section

31  

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1  202.11, Florida Statutes, during the period from the effective

 2  date of this act through October 31, 2007.

 3         (2)  The Department of Revenue shall not make

 4  assessments of tax on the costs of operating a substitute

 5  communications system for the period October 1, 2001, through

 6  the effective date of this act. No refunds shall be made of

 7  any tax that has been remitted to the Department of Revenue on

 8  the costs of operating a substitute communications system

 9  prior to the effective date of this act.

10         Section 2.  (1)  The Communications Service Tax Task

11  Force is created and housed for administrative purposes within

12  the Department of Revenue. The task force shall operate

13  independently of the department.

14         (2)(a)  The task force shall consist of nine members,

15  three appointed by the Governor, three appointed by the

16  President of the Senate, and three appointed by the Speaker of

17  the House of Representatives. Members shall serve at the

18  pleasure of the appointing official. Any vacancy shall be

19  filled in the same manner as the original appointment.

20         (b)  Any nonlegislative member shall possess expertise

21  in state or national telecommunications policy, taxation, law,

22  or technology.

23         (c)  Members shall serve without compensation, but are

24  entitled to reimbursement of travel and per diem expenses

25  pursuant to section 112.061, Florida Statutes, relating to

26  completing their duties and responsibilities under this

27  section.

28         (3)  The task force shall review and evaluate existing

29  national and state regulatory and tax policies relating to the

30  communications industry and make recommendations to the

31  Legislature concerning the scope of communications services

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1  that should be subject to the communications services tax

 2  levied under chapters 202 and 203, Florida Statutes.

 3         (4)  The task force shall hold its organizational

 4  meeting by July 15, 2005.  It shall select a chair and vice

 5  chair and shall meet at the call of the chair at the time and

 6  place designated by the chair or as often as necessary to

 7  accomplish the purposes of this section. A quorum is necessary

 8  for the purpose of conducting official business of the task

 9  force. The task force shall use accepted rules of procedure to

10  conduct its meetings and shall keep a complete record of each

11  meeting.

12         (5)  The Public Service Commission shall provide

13  administrative support and staff for the technical and

14  regulatory issues addressed by the task force. The Department

15  of Revenue shall provide staff for the tax issues addressed by

16  the task force.

17         (6)  The task force shall report its findings and

18  recommendations to the Governor, the President of the Senate,

19  and the Speaker of the House of Representatives by January 15,

20  2006.  The task force shall be dissolved by June 30, 2007.

21         Section 3.  Subsection (14) of section 202.11, Florida

22  Statutes, is amended to read:

23         202.11  Definitions.--As used in this chapter:

24         (14)  "Sales price" means the total amount charged in

25  money or other consideration by a dealer for the sale of the

26  right or privilege of using communications services in this

27  state, including any property or other services that are part

28  of the sale. The sales price of communications services shall

29  not be reduced by any separately identified components of the

30  charge that constitute expenses of the dealer, including, but

31  not limited to, sales taxes on goods or services purchased by

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1  the dealer, property taxes, taxes measured by net income, and

 2  universal-service fund fees.

 3         (a)  The sales price of communications services shall

 4  include, whether or not separately stated, charges for any of

 5  the following:

 6         1.  The connection, movement, change, or termination of

 7  communications services.

 8         2.  The detailed billing of communications services.

 9         3.  The sale of directory listings in connection with a

10  communications service.

11         4.  Central office and custom calling features.

12         5.  Voice mail and other messaging service.

13         6.  Directory assistance.

14         7.  The service of sending or receiving a document

15  commonly referred to as a facsimile or "fax," except when

16  performed during the course of providing professional or

17  advertising services.

18         (b)  The sales price of communications services does

19  not include charges for any of the following:

20         1.  Any excise tax, sales tax, or similar tax levied by

21  the United States or any state or local government on the

22  purchase, sale, use, or consumption of any communications

23  service, including, but not limited to, any tax imposed under

24  this chapter or chapter 203 which is permitted or required to

25  be added to the sales price of such service, if the tax is

26  stated separately.

27         2.  Any fee or assessment levied by the United States

28  or any state or local government, including, but not limited

29  to, regulatory fees and emergency telephone surcharges, which

30  is required to be added to the price of such service if the

31  fee or assessment is separately stated.

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1         3.  Communications services paid for by inserting coins

 2  into coin-operated communications devices available to the

 3  public.

 4         4.  The sale or recharge of a prepaid calling

 5  arrangement.

 6         5.  The provision of air-to-ground communications

 7  services, defined as a radio service provided to purchasers

 8  while on board an aircraft.

 9         6.  A dealer's internal use of communications services

10  in connection with its business of providing communications

11  services.

12         7.  Charges for property or other services that are not

13  part of the sale of communications services, if such charges

14  are stated separately from the charges for communications

15  services.

16         8.  To the extent required by federal law, charges for

17  Internet access services which are not separately itemized on

18  a customer's bill, but which can be reasonably identified from

19  the selling dealer's books and records kept in the regular

20  course of business. The burden to show that the charges for

21  Internet access are reasonably identified is on the dealer.

22  The dealer may support the allocation of charges with

23  information derived from the dealer's entire service area,

24  including territories outside this state.

25         Section 4.  Subsection (3) of section 202.26, Florida

26  Statutes, is amended to read:

27         202.26  Department powers.--

28         (3)  To administer the tax imposed by this chapter, the

29  department may adopt rules relating to:

30  

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1         (a)  The filing of returns and remittance of tax,

 2  including provisions concerning electronic funds transfer and

 3  electronic data interchange.

 4         (b)  The determination of customer service addresses.

 5         (c)  The interpretation or definition of any exemptions

 6  or exclusions from taxation granted by law.

 7         (d)  Procedures for handling sales for resale and for

 8  determining the taxable status of discounts and rebates.

 9         (e)  Methods for granting self-accrual authority to

10  taxpayers.

11         (f)  The records and methods necessary for a dealer to

12  demonstrate the exercise of due diligence as defined by s.

13  202.22(4)(b).

14         (g)  The creation of the database described in s.

15  202.22(2) and the certification and recertification of the

16  databases as described in s. 202.22(3).

17         (h)  The registration of dealers.

18         (i)  The review of applications for, and the issuance

19  of, direct-pay permits, and the returns required to be filed

20  by holders thereof.

21         (j)  The information that must be made available during

22  an audit of a dealer's books and records when the dealer has

23  made an allocation or attribution pursuant to the definition

24  of sales price in s. 202.11(14)(b)8. and the standards for

25  determining the reasonableness thereof. Such records may be

26  required to be made available to the department in an

27  electronic format when so kept by the dealer.

28         1.  During an audit, the department may require the

29  production of any additional information found necessary to

30  assist its determination.

31  

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1         2.  When a dealer uses one of the following methods to

 2  support the allocation, the sales price shall be presumed

 3  reasonably identified:

 4         a.  If the selling dealer also offers for sale all of

 5  the tangible personal property or services that are being sold

 6  for a nonitemized sales price on an itemized or stand-alone

 7  basis and tax is computed on the itemized or stand-alone price

 8  of the taxable property or service, less any discount that can

 9  be demonstrated by the dealer to have been afforded to the

10  purchaser as a result of the combined sale of such items. The

11  discount shall be no greater than a proportionate price

12  decrease for each property or service, determined on the basis

13  of the individual sales price of all properties or services

14  compared to the nonitemized price of each property or service

15  when sold in combination.

16         b.  If the selling dealer does not offer one or more of

17  the items of tangible personal property or services being

18  offered for a nonitemized price on an itemized or stand-alone

19  basis, when the allocation is based upon the proportions that

20  the dealer's cost of each of the items of tangible personal

21  property and services offered for a nonitemized sales price

22  bears to the dealer's total cost for such property and

23  services. If the selling dealer maintains an account for the

24  cost of the items of tangible personal property or service

25  which must include any related intercompany charges, the

26  selling dealer's allocation of its costs shall reflect its

27  accounting allocation.

28         Section 5.  Subsection (16) of section 212.02, Florida

29  Statutes, is amended to read:

30         212.02  Definitions.--The following terms and phrases

31  when used in this chapter have the meanings ascribed to them

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    Florida Senate - 2005                           CS for SB 2070
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 1  in this section, except where the context clearly indicates a

 2  different meaning:

 3         (16)  "Sales price" means the total amount paid for

 4  tangible personal property, including any services that are a

 5  part of the sale, valued in money, whether paid in money or

 6  otherwise, and includes any amount for which credit is given

 7  to the purchaser by the seller, without any deduction

 8  therefrom on account of the cost of the property sold, the

 9  cost of materials used, labor or service cost, interest

10  charged, losses, or any other expense whatsoever.  "Sales

11  price" also includes the consideration for a transaction which

12  requires both labor and material to alter, remodel, maintain,

13  adjust, or repair tangible personal property. Trade-ins or

14  discounts allowed and taken at the time of sale shall not be

15  included within the purview of this subsection. "Sales price"

16  also includes the full face value of any coupon used by a

17  purchaser to reduce the price paid to a retailer for an item

18  of tangible personal property; where the retailer will be

19  reimbursed for such coupon, in whole or in part, by the

20  manufacturer of the item of tangible personal property; or

21  whenever it is not practicable for the retailer to determine,

22  at the time of sale, the extent to which reimbursement for the

23  coupon will be made. The term "sales price" does not include

24  federal excise taxes imposed upon the retailer on the sale of

25  tangible personal property. The term "sales price" does

26  include federal manufacturers' excise taxes, even if the

27  federal tax is listed as a separate item on the invoice. To

28  the extent required by federal law, the term "sales price"

29  does not include charges for Internet access services which

30  are not itemized on the customer's bill, but which can be

31  

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1  reasonably identified from the selling dealer's books and

 2  records kept in the regular course of business.

 3         Section 6.  Subsection (3) of section 212.13, Florida

 4  Statutes, is amended to read:

 5         212.13  Records required to be kept; power to inspect;

 6  audit procedure.--

 7         (3)  For the purpose of enforcement of this chapter,

 8  every manufacturer and seller of tangible personal property or

 9  services licensed within this state is required to permit the

10  department to examine his or her books and records at all

11  reasonable hours, and, upon his or her refusal, the department

12  may require him or her to permit such examination by resort to

13  the circuit courts of this state, subject however to the right

14  of removal of the cause to the judicial circuit wherein such

15  person's business is located or wherein such person's books

16  and records are kept, provided further that such person's

17  books and records are kept within the state. When the dealer

18  has made an allocation or attribution pursuant to the

19  definition of sales price in s. 212.02(16), the department may

20  prescribe by rule the information that must be made available

21  during an audit of a dealer's books and records and the

22  standards for determining the reasonableness thereof. Such

23  records may be required to be made available to the department

24  in an electronic format when so kept by the dealer. The burden

25  to show that the charges for Internet access are reasonably

26  identified is on the dealer. The dealer may support the

27  allocation of charges with information derived from the

28  dealer's entire service area, including territories outside

29  this state.

30  

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    Florida Senate - 2005                           CS for SB 2070
    579-2035-05




 1         (a)  During an audit, the department may require the

 2  production of any additional information found necessary to

 3  assist its determination.

 4         (b)  When a dealer uses one of the following methods to

 5  support the allocation, the sales price shall be presumed

 6  reasonably identified:

 7         1.  If the selling dealer also offers for sale all of

 8  the tangible personal property or services that are being sold

 9  for a nonitemized sales price on an itemized or stand-alone

10  basis and tax is computed on the itemized or stand-alone price

11  of the taxable property or service, less any discount that can

12  be demonstrated by the dealer to have been afforded to the

13  purchaser as a result of the combined sale of such items. The

14  discount shall be no greater than a proportionate price

15  decrease for each property or service, determined on the basis

16  of the individual sales price of all properties or services

17  compared to the nonitemized price of each property or service

18  when sold in combination.

19         2.  If the selling dealer does not offer one or more of

20  the items of tangible personal property or services being

21  offered for a nonitemized price on an itemized or stand-alone

22  basis, when the allocation is based upon the proportions that

23  the dealer's cost of each of the items of tangible personal

24  property and services offered for a nonitemized sales price

25  bears to the dealer's total cost for such property and

26  services. If the selling dealer maintains an account for the

27  cost of the items of tangible personal property or service,

28  which must include any related intercompany charges, the

29  selling dealer's allocation of its costs shall reflect its

30  accounting allocation.

31  

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    Florida Senate - 2005                           CS for SB 2070
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 1         Section 7.  This act shall take effect upon becoming a

 2  law.

 3  

 4          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 5                             SB 2070

 6                                 

 7  The committee substitute for Senate Bill 2070 deletes the
    provisions repealing the tax on a substitute communication
 8  system and replaces this with provisions that taxes on
    substitute communications systems are not to be levied or
 9  assessed during specified time periods; that create a task
    force to study the implications of emerging technologies on
10  Florida's communication service tax; and that provide for
    access by the Department of Revenue to communications services
11  companies' books and records to properly assess taxes.

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