Senate Bill sb2070e1

CODING: Words stricken are deletions; words underlined are additions.




    CS for SB 2070                                 First Engrossed



  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; providing appropriations; amending

12         s. 202.11, F.S.; redefining the term

13         "communications services"; providing that the

14         definition of sales price for purposes of

15         communication services tax does not include

16         specified charges for Internet access services;

17         defining the term "service address" when the

18         location of the equipment is unknown or under

19         other circumstances; amending s. 202.26, F.S.;

20         prescribing methods of record keeping relating

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

22         providing that the definition of sales price

23         for purposes of sales tax does not include

24         specified charges for Internet access services;

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

26         of record keeping relating to bundled sales;

27         providing for emergency rulemaking by the

28         Department of Revenue; amending s. 202.17,

29         F.S.; providing intent that all sellers of

30         communications services must comply with ch.

31         202, F.S.; providing an effective date.


                                  1

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



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

 2  

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

 4  202.12(1), 202.19(7), 202.15, and 203.01, Florida Statutes,

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

 6  substitute communications system, as defined in section

 7  202.11, Florida Statutes, during the period from the effective

 8  date of this act through October 31, 2007.

 9         (2)  The Department of Revenue shall not make

10  assessments of tax on the costs of operating a substitute

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

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

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

14  the costs of operating a substitute communications system

15  prior to the effective date of this act.

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

17  Force is created and housed for administrative purposes within

18  the Department of Revenue. The task force shall operate

19  independently of the department.

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

21  three appointed by the Governor, three appointed by the

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

23  the House of Representatives. Members shall serve at the

24  pleasure of the appointing official. Any vacancy shall be

25  filled in the same manner as the original appointment.

26         (b)  All members shall possess expertise in state or

27  national telecommunications policy, taxation, law, or

28  technology. A member of the Legislature or a registered

29  lobbyist may not be appointed to the task force.

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

31  entitled to reimbursement of travel and per diem expenses


                                  2

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1  pursuant to section 112.061, Florida Statutes, relating to

 2  completing their duties and responsibilities under this

 3  section.

 4         (3)  The task force shall study:

 5         (a)  The national and state regulatory and tax policies

 6  relating to the communications industry, including the

 7  Internet Tax Freedom Act;

 8         (b)  The levels of tax revenue that have been generated

 9  by the communications services taxes imposed or administered

10  pursuant to chapter 202, Florida Statutes, in the past and

11  that are expected to be generated in the future, and their

12  adequacy in funding government services and bonded

13  indebtedness that rely on them;

14         (c)  The impact of the communications services taxes on

15  Florida's competitiveness;

16         (d)  The impact of the diversity of communications

17  technology and of changes in such technology on the state's

18  ability to design tax laws, the applicability of which is

19  reasonably clear to communications service providers and state

20  administrators, and which are susceptible to efficient and

21  fair administration by the state;

22         (e)  The administrative burdens imposed on

23  communications services providers; and

24         (f)  To the extent that future revenues from the

25  communications services tax are expected to be inadequate to

26  fund government services and bonded indebtedness that rely on

27  them, the options that are available for funding these

28  services and bonded indebtedness.

29         (4)  The task force shall hold its organizational

30  meeting by July 15, 2006. It shall select a chair and vice

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


                                  3

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



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

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

 3  for the purpose of conducting official business of the task

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

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

 6  meeting.

 7         (5)  The Public Service Commission shall provide staff

 8  for the technical and regulatory issues addressed by the task

 9  force. The Department of Revenue shall provide administrative

10  support and staff for the tax issues addressed by the task

11  force.

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

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

14  and the Speaker of the House of Representatives by February 1,

15  2007. The task force shall be dissolved by December 31, 2007.

16         Section 3.  (1)  The sum of $100,000 is appropriated

17  from the General Revenue Fund to the Department of Revenue for

18  the purpose of defraying the reimbursable travel and per diem

19  expenses of the Communications Service Tax Task Force.

20         (2)  The sum of $500,000 is appropriated from the

21  General Revenue Fund to the Department of Revenue for the

22  purpose of retaining expert witnesses and consultant services

23  in the areas of communications technology and computer

24  telephony. The purpose of such services is to provide the

25  Communications Service Tax Task Force with information,

26  technical consulting services, analysis, and testimony

27  regarding the current and future development of network and

28  telecommunications architecture, products, and services and

29  issues regarding the taxation of such products and services.

30  These funds shall be appropriated for the 2005-2006 fiscal

31  year in categories determined by the Department of Revenue


                                  4

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1  which will best support the needs of the task force. Any

 2  unspent funds shall be reappropriated in future fiscal years

 3  until the work of the task force is complete.

 4         Section 4.  Subsections (3), (14), and (15) of section

 5  202.11, Florida Statutes, are amended to read:

 6         202.11  Definitions.--As used in this chapter:

 7         (3)  "Communications services" means the transmission,

 8  conveyance, or routing of voice, data, audio, video, or any

 9  other information or signals, including cable services, to a

10  point, or between or among points, by or through any

11  electronic, radio, satellite, cable, optical, microwave, or

12  other medium or method now in existence or hereafter devised,

13  regardless of the protocol used for such transmission or

14  conveyance. The term includes such transmission, conveyance,

15  or routing in which computer processing applications are used

16  to act on the form, code, or protocol of the content for

17  purposes of transmission, conveyance, or routing without

18  regard to whether such service is referred to as

19  voice-over-Internet-protocol services or is classified by the

20  Federal Communications Commission as enhanced or value-added.

21  The term does not include:

22         (a)  Information services.

23         (b)  Installation or maintenance of wiring or equipment

24  on a customer's premises.

25         (c)  The sale or rental of tangible personal property.

26         (d)  The sale of advertising, including, but not

27  limited to, directory advertising.

28         (e)  Bad check charges.

29         (f)  Late payment charges.

30         (g)  Billing and collection services.

31  


                                  5

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1         (h)  Internet access service, electronic mail service,

 2  electronic bulletin board service, or similar on-line computer

 3  services.

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

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

 6  right or privilege of using communications services in this

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

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

 9  not be reduced by any separately identified components of the

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

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

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

13  universal-service fund fees.

14         (a)  The sales price of communications services shall

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

16  the following:

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

18  communications services.

19         2.  The detailed billing of communications services.

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

21  communications service.

22         4.  Central office and custom calling features.

23         5.  Voice mail and other messaging service.

24         6.  Directory assistance.

25         7.  The service of sending or receiving a document

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

27  performed during the course of providing professional or

28  advertising services.

29         (b)  The sales price of communications services does

30  not include charges for any of the following:

31  


                                  6

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



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

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

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

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

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

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

 7  stated separately.

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

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

10  to, regulatory fees and emergency telephone surcharges, which

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

12  fee or assessment is separately stated.

13         3.  Communications services paid for by inserting coins

14  into coin-operated communications devices available to the

15  public.

16         4.  The sale or recharge of a prepaid calling

17  arrangement.

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

19  services, defined as a radio service provided to purchasers

20  while on board an aircraft.

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

22  in connection with its business of providing communications

23  services.

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

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

26  are stated separately from the charges for communications

27  services.

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

29  Internet access services which are not separately itemized on

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

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


                                  7

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1  course of business. The dealer may support the allocation of

 2  charges with books and records kept in the regular course of

 3  business covering the dealer's entire service area, including

 4  territories outside this state.

 5         (15)  "Service address" means:

 6         (a)  Except as otherwise provided in this section:,

 7         1.  The location of the communications equipment from

 8  which communications services originate or at which

 9  communications services are received by the customer;.

10         2.  In the case of a communications service paid

11  through a credit or payment mechanism that does not relate to

12  a service address, such as a bank, travel, debit, or credit

13  card, and in the case of third-number and calling-card calls,

14  the term "service address" means service address is the

15  address of the central office, as determined by the area code

16  and the first three digits of the seven-digit originating

17  telephone number; or.

18         3.  If the location of the equipment described in

19  subparagraph 1. is not known and subparagraph 2. is

20  inapplicable, the term "service address" means the location of

21  the customer's primary use of the communications service. For

22  purposes of this subparagraph, the location of the customer's

23  primary use of a communications service is the residential

24  street address or the business street address of the customer.

25         (b)  In the case of cable services and direct-to-home

26  satellite services, the location where the customer receives

27  the services in this state.

28         (c)  In the case of mobile communications services, the

29  customer's place of primary use.

30         Section 5.  Subsection (3) of section 202.26, Florida

31  Statutes, is amended to read:


                                  8

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1         202.26  Department powers.--

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

 3  department may adopt rules relating to:

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

 5  including provisions concerning electronic funds transfer and

 6  electronic data interchange.

 7         (b)  The determination of customer service addresses.

 8         (c)  The interpretation or definition of any exemptions

 9  or exclusions from taxation granted by law.

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

11  determining the taxable status of discounts and rebates.

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

13  taxpayers.

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

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

16  202.22(4)(b).

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

18  202.22(2) and the certification and recertification of the

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

20         (h)  The registration of dealers.

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

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

23  by holders thereof.

24         (j)  The types of books and records kept in the regular

25  course of business which must be available during an audit of

26  a dealer's books and records when the dealer has made an

27  allocation or attribution pursuant to the definition of sales

28  prices in s. 202.11(14)(b)8. and examples of methods for

29  determining the reasonableness thereof. Books and records kept

30  in the regular course of business include, but are not limited

31  to, general ledgers, price lists, cost records, customer


                                  9

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1  billings, billing system reports, tariffs, and other

 2  regulatory filings and rules of regulatory authorities. Such

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

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

 5  may support the allocation of charges with books and records

 6  kept in the regular course of business covering the dealer's

 7  entire service area, including territories outside this state.

 8  During an audit, the department may reasonably require

 9  production of any additional books and records found necessary

10  to assist in its determination.

11         Section 6.  Subsection (16) of section 212.02, Florida

12  Statutes, is amended to read:

13         212.02  Definitions.--The following terms and phrases

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

15  in this section, except where the context clearly indicates a

16  different meaning:

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

18  tangible personal property, including any services that are a

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

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

21  to the purchaser by the seller, without any deduction

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

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

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

25  price" also includes the consideration for a transaction which

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

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

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

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

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

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


                                  10

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1  of tangible personal property; where the retailer will be

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

 3  manufacturer of the item of tangible personal property; or

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

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

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

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

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

 9  include federal manufacturers' excise taxes, even if the

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

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

12  does not include charges for Internet access services which

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

14  reasonably identified from the selling dealer's books and

15  records kept in the regular course of business. The dealer may

16  support the allocation of charges with books and records kept

17  in the regular course of business covering the dealer's entire

18  service area, including territories outside this state.

19         Section 7.  Subsection (3) of section 212.13, Florida

20  Statutes, is amended to read:

21         212.13  Records required to be kept; power to inspect;

22  audit procedure.--

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

24  every manufacturer and seller of tangible personal property or

25  services licensed within this state is required to permit the

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

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

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

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

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

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


                                  11

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



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

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

 3  has made an allocation or attribution pursuant to the

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

 5  prescribe by rule the books and records that must be made

 6  available during an audit of the dealer's books and records

 7  and examples of methods for determining the reasonableness

 8  thereof. Books and records kept in the regular course of

 9  business include, but are not limited to, general ledgers,

10  price lists, cost records, customer billings, billing system

11  reports, tariffs, and other regulatory filings and rules of

12  regulatory authorities. Such record may be required to be made

13  available to the department in an electronic format when so

14  kept by the dealer. The dealer may support the allocation of

15  charges with books and records kept in the regular course of

16  business covering the dealer's entire service area, including

17  territories outside this state. During an audit, the

18  department may reasonably require production of any additional

19  books and records found necessary to assist in its

20  determination.

21         Section 8.  The Executive Director of the Department of

22  Revenue is authorized, and all conditions are deemed met, to

23  adopt emergency rules under sections 120.563(1) and 120.54(4),

24  Florida Statutes, to administer this act. Notwithstanding any

25  other provision of law, the emergency rules shall remain

26  effective for 6 months after the date of their adoption and

27  may be renewed during the pendency of procedures to adopt

28  rules addressing the subject of the emergency rules.

29         Section 9.  Subsection (8) is added to section 202.17,

30  Florida Statutes, to read:

31         202.17  Registration.--


                                  12

CODING: Words stricken are deletions; words underlined are additions.






    CS for SB 2070                                 First Engrossed



 1         (8)  It is the intent of the Legislature to subject to

 2  the provisions of this chapter all sellers of communications

 3  services that have established a sufficient connection with

 4  this state to permit the state constitutionally to require

 5  compliance with this chapter. Activities of a seller of

 6  communications services that may subject such a seller to the

 7  provisions of this chapter include, but are not limited to:

 8         (a)  Maintaining an office or other place of business

 9  within this state.

10         (b)  Solicitation of business from one or more Florida

11  locations through employees, agents, independent contractors,

12  or other representatives of such seller.

13         Section 10.  This act shall take effect July 1, 2005.

14  

15  

16  

17  

18  

19  

20  

21  

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  


                                  13

CODING: Words stricken are deletions; words underlined are additions.