2003 SESSION

03-1068

09/01

SENATE BILL 102-FN

COMMITTEE: Ways and Means

ANALYSIS

This bill changes the definitions of "gross charge", "service address," and "place of primary use" and adds definitions of "post-paid calling service" and "private communications service" for purposes of the communications services tax. The bill establishes certain rules for computation of the tax for private communications services and post-paid calling services.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-1068

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Communications Services Tax; Definitions; Gross Charge. Amend the introductory paragraph of RSA 82-A:2, V to read as follows:

V. "Gross charge" means the amount paid for communications services and for all services and equipment provided in connection therewith by a retailer, valued in money whether paid in money or otherwise, including cash, credits, services and property of every kind or nature, and shall be determined without any deduction on account of the cost of such communications services, the cost of materials used, labor or service costs or any other expense whatsoever. "Gross charges" for private [line] communications service shall include charges [imposed at each channel point within this state, charges for the channel mileage between each channel point within this state, and charges for that portion of the interstate inter-office channel provided within New Hampshire] apportioned to New Hampshire in accordance with RSA 82-A:4-c. In case credit is extended, the amount thereof shall be included only as and when paid. However, "gross charge" shall not include:

2 Communications Services Tax; Definitions; Gross Charge. RSA 82-A:2, V(e) is repealed and reenacted to read as follows:

(e) Charges for services, not subject to tax under this chapter which are aggregated with and not separately stated from taxable charges for communications services, only to the extent that the provider can reasonably identify such charges from its books and records kept in the regular course of business;

3 Communications Services Tax; Definitions; Service Address. RSA 82-A:2, XIII is repealed and reenacted to read as follows:

XIII. "Service address" means:

(a) The location of communications services equipment to which a taxpayer's call is charged and from which the communications services originate or terminate, regardless of where the call is billed or paid.

(b) In the event the location in subparagraph (a) is unknown, service address means the origination point of the signal of the telecommunications services first identified by either the seller's telecommunications system or in information received by the seller from its service provider, where the system used to transport such signals is not that of the seller.

(c) If the location in subparagraph (a) and (b) are unknown or in the event this may not be a defined location, as in the case of mobile telephones, paging systems, maritime systems, and the like (except for air-to-ground radiotelephone service as defined in section 22.99 of title 47 of the Code of Federal Regulations in effect on June 1, 1999), service address shall mean the location of a taxpayer's place of primary use.

4 Communications Services Tax; Definition; Place of Primary Use. Amend RSA 82-A:2, XXI(b) to read as follows:

(b) [Within] In the case of mobile telecommunications services, the licensed service area of the home service provider.

5 New Paragraphs; Communications Services Tax; Definitions. Amend RSA 82-A:2 by inserting after paragraph XXII the following new paragraphs:

XXIII. "Post-paid calling service" means the communications service obtained by making a payment on a call-by-call basis either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, calling card or debit card, or by charge made to a telephone number which is not associated with the origination or termination of the communications service.

XXIV. "Private communications service" means a communications service that entitles the taxpayer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels.

6 Imposition of Tax. RSA 82-A:4 is repealed and reenacted to read as follows:

82-A:4 Imposition of Tax; Interstate Communications Services. Except as provided in RSA 82-A:4-b, a tax is imposed upon interstate communications services and private communications services furnished to a person in this state and purchased at retail from a retailer by such person, at the rate of 4.5 percent of the gross charge when such service purchased on a call-by call basis originates in this state and terminates outside this state or originates outside this state and terminates in this state and the service address is in this state, or when such service purchased on a basis other than a call-by-call basis is provided to a person with a place of primary use in this state or when such private communications services are apportioned to this state in accordance with RSA 82-A:4-c. Provided however, a tax is imposed upon interstate post-paid calling service furnished to a person in this state and purchased at retail from a retailer by such person, at the rate of 4.5 percent of the gross charge when the origination point of the communications signal (as first identified by either (a) the seller's telecommunications system, or (b) information received by the seller from its service provider, where the system used to transport such signals is not that of the seller) is in this state. To prevent actual multi-state taxation of communications services that are subject to taxation under this section, any taxpayer, upon proof that that taxpayer has paid a tax in another state on such services, shall be allowed a credit against the tax imposed in this section to the extent of the amount of such tax properly due and paid in such other state. However, such tax is not imposed on communications services to the extent such services may not, under the Constitution and statutes of the United States, be made the subject of taxation by the state.

7 New Section; Special Rules for Private Communications Services. Amend RSA 82-A by inserting after section 4-b the following new section:

82-A:4-c Special Rules for Private Communications Services. The gross charge for private communications services is apportioned to this state as follows:

I. Service for a separate charge related to a taxpayer channel termination point is apportioned to this state if such customer channel termination point is located in this state.

II. Service where all taxpayer termination points are located entirely within this state is apportioned to this state.

III. Service for segments of a channel between 2 taxpayer channel termination points, one located inside this state and one located outside this state, and which segment of channel is separately charged is apportioned 50 percent to this state.

IV. Service for segments of a channel located in this state and one or more other states and which segments are not separately billed is apportioned to this state based on the percentage determined by dividing the number of taxpayer channel termination points in this state by the total number of taxpayer channel termination points.

8 Applicability. This act shall apply to bills issued on or after January 1, 2004; provided, however, in the case of private communications services, if information on mileage is not available, the department of revenue administration may allow the application of the apportionment rules in RSA 82-A:2, XIII to prior periods.

9 Effective Date. This act shall take effect July 1, 2003.

LBAO

03-1068

Revised 3/5/03

SB 102 FISCAL NOTE

FISCAL IMPACT:

METHODOLOGY: