Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2011
 

Emergency Telephone Users Surcharge Law

CHAPTER 2. THE SURCHARGE.


CHAPTER 2. THE SURCHARGE.

Article 1. Imposition of the Surcharge

41020. Imposition and rate of surcharge. (a) A surcharge is hereby imposed on amounts paid by every person in the state for both of the following:

(1) Intrastate telephone communication service in this state commencing on July 1, 1977.

(2) VoIP service that provides access to the "911" emergency system by utilizing the digits 9-1-1 by any service user in this state commencing on January 1, 2009. The surcharge shall not apply to charges for VoIP service where any point of origin or destination is outside of this state.

(b) (1) Notwithstanding Section 41025, charges not subject to the surcharge may be calculated by a service supplier based upon books and records kept in the regular course of business, and, for purposes of calculating the interstate revenue portion not subject to the surcharge, a service supplier may also choose a reasonable and verifiable method from the following:

(A) Books and records kept in the regular course of business.

(B) Traffic or call pattern studies representative of the service supplier's business within California.

(C) For VoIP service only, the VoIP safe harbor factor established by the FCC to be used to calculate the service supplier's contribution to the federal Universal Service Fund. The FCC safe harbor factor in effect for VoIP service on September 1 of each year shall apply for the period of January 1 through December 31, inclusive, of the next succeeding calendar year for purposes of this method. At such time as the FCC establishes a safe harbor factor for the federal Universal Service Fund for VoIP service that is greater than 75 percent for interstate revenue or abolishes the safe harbor factor applicable to VoIP service, this method shall become void and of no effect, in which case a VoIP service supplier may use an alternative method approved in advance by the board, which shall be available to all VoIP service suppliers. The FCC safe harbor factor applicable to VoIP service, as described in this subparagraph, is used solely as a mechanism to calculate the charges not subject to the surcharge for VoIP service and is not necessarily reflective of the intrastate portion of VoIP service. The use of the FCC safe harbor factor authorized by this subdivision shall not be interpreted to permit application of any intrastate requirement, other than the surcharge imposed under this part, upon VoIP service suppliers.

(2) Any method chosen by a service supplier shall remain in effect for at least one calendar year.

(3) If a service supplier reasonably relies upon books and records kept in the regular course of business or any documentation that satisfies the reasonable and verifiable method, then the service supplier's determination of the portion of the billed amount attributable to services not subject to the surcharge shall be rebuttably presumed to be correct. The service supplier's choice of books and records or other method and surcharge billing practice shall also be rebuttably presumed to be fair and legal business practices.

(4) It is the intent of the Legislature that the provisions of subparagraph (C) shall not be considered to be a precedent for the application of the surcharge or any other tax or fee where a person is required to collect a tax or fee imposed upon another.

(c) The surcharge imposed shall be at the rate of one-half of 1 percent of the charges made for such services to and including November 1, 1982, and thereafter at a rate fixed pursuant to Article 2 (commencing with Section 41030).

(d) The surcharge shall be paid by the service user as hereinafter provided.

(e) The surcharge imposed shall not apply to either of the following:

(l) In accordance with the Mobile Telecommunications Sourcing Act (Public Law 106–252), which is incorporated herein by reference, to any charges for mobile telecommunications services billed to a customer where those services are provided, or deemed provided, to a customer whose place of primary use is outside this state. Mobile telecommunications services shall be deemed provided by a customer's home service provider to the customer if those services are provided in a taxing jurisdiction to the customer, and the charges for those services are billed by or for the customer's home service provider.

(2) To any charges for VolP service billed to a customer where those services are provided to a customer whose place of primary use of VolP service is outside this state.

(f) For purposes of this section:

(1) "Charges for mobile telecommunications services" means any charge for, or associated with, the provision of commercial mobile radio service, as defined in Section 20.3 of Title 47 of the Code of Federal Regulations, as in effect on June 1, 1999, or any charge for, or associated with, a service provided as an adjunct to a commercial mobile radio service, that is billed to the customer by or for the customer's home service provider, regardless of whether individual transmissions originate or terminate within the licensed service area of the home service provider.

(2) "Customer" means (A) the person or entity that contracts with the home service provider for mobile telecommunications services, or with a VoIP service provider for VoIP service, or (B) if the end user of mobile telecommunications services or VoIP service is not the contracting party, the end user of the mobile telecommunications service or VoIP service. This paragraph applies only for the purpose of determining the place of primary use. The term "customer" does not include (A) a reseller of mobile telecommunications service or VoIP communication service, or (B) a serving carrier under an arrangement to serve the mobile customer outside the home service provider's licensed service area.

(3) "Home service provider" means the facilities-based carrier or reseller with which the customer contracts for the provision of mobile telecommunications services.

(4) "Licensed service area" means the geographic area in which the home service provider is authorized by law or contract to provide commercial mobile radio service to the customer.

(5) "Mobile telecommunications service" means commercial mobile radio service, as defined in Section 20.3 of Title 47 of the Code of Federal Regulations, as in effect on June 1, 1999.

(6) "Place of primary use" means the street address representative of where the customer's use of the mobile telecommunications service or VoIP service primarily occurs, that must be:

(A) The residential street address or the primary business street address of the customer.

(B) With respect to mobile telecommunications service, within the licensed service area of the home service provider.

(7) (A) "Reseller" means a provider who purchases telecommunications services or VoIP service from another telecommunications service provider or VoIP service and then resells the services, or uses the services as a component part of, or integrates the purchased services into, a mobile telecommunications service or VoIP service.

(B) "Reseller" does not include a serving carrier with which a home service provider arranges for the services to its customers outside the home service provider's licensed service area.

(8) "Serving carrier" means a facilities-based carrier providing mobile telecommunications service to a customer outside a home service provider's or reseller's licensed area.

(9) "Taxing jurisdiction" means any of the several states, the District of Columbia, or any territory or possession of the United States, any municipality, city, county, township, parish, transportation district, or assessment jurisdiction, or any other political subdivision within the territorial limits of the United States with the authority to impose a tax, charge, or fee.

(10) "VoIP service provider" means that provider of VoIP service with whom the end user customer contracts for the provision of VoIP services for the customer's own use and not for resale.

(g) The amendments made to this section by the act that added this subdivision shall become operative upon the enactment of that act, except that subdivisions (a) and (b) of this section, as amended, shall become operative on January 1, 2009.

History.—Stats. 1978, Ch. 352, effective July 4, 1978, substituted "1979" for "1978" in the second paragraph. Stats. 1979, Ch. 906, effective September 22, 1979, changed "1979" to "1982" and changed "this" following "Article 2 of" to "the". Stats. 2001, Ch. 638 (SB 896), reletterd first sentence as subdivision (a), second sentence as subdivision (b) and third sentence as subdivision (c), substituted "and thereafter at . . . with Section 41030)." for "at such a . . . the chapter thereafter." in new subdivision (b), added new subdivisions (d) and (e) and subparagraphs (e)(1) through (e)(9) inclusive, effective January 1, 2002, but operative August 1, 2002. Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008, added "both of the following" after "in the state for", numbered part of subdivision (a) as paragraph (1), and added paragraph (2) to subdivision (a); added new subdivision (b); relettered former subdivisions (b) and (c) as (c) and (d), respectively; relettered former subdivision (d) as (e), added "The surcharge imposed shall not apply to either of the following: (1)" after "(e)", substituted "Public Law" for "P.L.", deleted "the surcharge imposed under this section does not apply" after "herein by reference,", and added paragraph (2) to the new subdivision (e); relettered former subdivision (e) as (f), added "or with a VoIP service provider for VoIP service," after "mobile telecommunications services,", added "or VoIP service" twice after "mobile telecommunications service", added "or VoIP communication service" after "mobile telecommunications service" and added "mobile" after "to serve the" in the third sentence of paragraph (2) in subdivision (f); added "or VoIP service" in paragraph (6) of subdivision (f); added "With respect to mobile telecommunications service," after "(B)" in paragraph (6) of subdivision (f); substituted "Services" for "services" after "purchases telecommunications", added "or VoIP service" twice to subparagraph (A) in paragraph (7) of subdivision (f); added paragraph (10) to subdivision (f); and added subdivision (g).

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41021. Collection by service supplier. (a) A service supplier shall collect the surcharge from each service user at the time it collects its billings from the service user, provided that the duty to collect the surcharge from a service user shall commence with the beginning of the first regular billing period applicable to that person which starts on or after the operative date of the surcharge imposed by this part. If the stations or lines of more than one service supplier are utilized in furnishing the telephone communication services to the service user, the service supplier that bills the customer shall collect the surcharge from the customer.

(b) Only one payment under this part shall be required with respect to the surcharge on any service, notwithstanding that the lines or stations of one or more service suppliers are used in furnishing that service.

History.—Stats. 2008, Ch. 179 (SB 1498), in effect January 1, 2009, added subdivision letters (a) and (b); substituted "A" for "Every" before "service supplier shall", deleted "," and added "that"after "service user, provided", and substituted "communication" for communications" after "telephone" in new subdivision (a); and substituted "a" for "any" after "surcharge on" and substituted "that" for "such" after "furnishing" in new subdivision (b).

41022. Surcharge to be added; surcharge statement. The surcharge required to be collected by the service supplier shall be added to and stated separately in its billings to the service user.

41023. Surcharge collections are debts. The surcharge required to be collected by the service supplier, and any amount unreturned to the service user which is not a surcharge but was collected from the service user as representing a surcharge, constitute debts owed by the service supplier to this state.

A service supplier that has collected any amount of surcharge in excess of the amount of surcharge imposed by this part and actually due from a service user, may refund such amount to the service user, even though such surcharge amount has already been paid over to the board and no corresponding credit or refund has yet been secured. Any service supplier making a refund of any charge to a service user upon which surcharge is collected under this part from the service user may repay therewith the amount of the surcharge paid.

The service supplier may claim credit for such overpayment against the amount of surcharge imposed by this part which is due upon any other quarterly return, providing such credit is claimed in a return dated no later than three years from the date of overpayment.

41024. Liability for surcharge. Every service user in this state is liable for the surcharge until it has been paid to this state, except that payment to a service supplier registered under this part is sufficient to relieve the user from further liability for the tax.

Any surcharge collected from a service user which has not been remitted to the board shall be deemed a debt owed to the State of California by the person required to collect and remit such surcharge. Nothing in this part shall impose any obligation upon a service supplier to take any legal action to enforce the collection of the utility users surcharge imposed by this part. The service supplier shall provide the board with amounts uncollected which total three dollars ($3) or more on a cumulative basis with respect to a single service user along with the names, addresses and reasons of the service users refusing to pay the surcharge imposed by this part.

History.—Stats. 1981, Chapter 947, in effect January 1, 1982, added "which total . . . single service user" before "along" in the third sentence of the second paragraph.

41025. Billing of surcharge. If a bill is rendered to persons using intrastate telephone services or VoIP service, the amount on which the surcharge with respect to such services shall be based shall be the sum of all charges for such services included in the bill; except that if the person who renders the bill groups individual items for purposes of rendering the bill and computing the surcharge then the amount on which the surcharge with respect to each such group shall be based shall be the sum of all items within that group, and the surcharge on the remaining items not included in any such group shall be based on the charge for each item separately.

History.—Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008, added "or VoIP service," after "intrastate telephone services", added "," after "computing the surcharge", deleted commas after "shall be based" and "any such group", respectively.

41026. Rounding of payments. In the payment of the surcharge imposed by this part, a fractional part of a cent shall be disregarded unless it amounts to one-half or more, in which case it shall be increased to one cent.

41027. Constitutional exemptions. Nothing in this part shall be construed as imposing a surcharge upon amounts paid by any person when imposition of such surcharge would be in violation of the Constitution of the United States, the United States Code, or the laws of the State of California, nor upon toll charges used in the collection and dissemination of news for the public press or on charges for wide area telephone service used by common carriers in the conduct of their business.

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Article 2. Adjustment of Surcharge Rate

41030. Determination of rate. The deletionCalifornia Technology Agency shall determine annually, on or before October 1, a surcharge rate that it estimates will produce sufficient revenue to fund the current fiscal year's 911 costs. The surcharge rate shall be determined by dividing the costs (including incremental costs) the deletionCalifornia Technology Agency estimates for the current fiscal year of 911 plans approved pursuant to Section 53115 of the Government Code, less the available balance in the State Emergency Telephone Number Account in the General Fund, by its estimate of the charges for intrastate telephone communications services and VoIP service to which the surcharge will apply for the period of January 1 to December 31, inclusive, of the next succeeding calendar year, but in no event shall such surcharge rate in any year be greater than three-quarters of 1 percent nor less than one-half of 1 percent.

History.—Stats. 1978, Ch. 352, effective July 4, 1978, in the first sentence substituted "1979–80" for "1978–79". Stats. 1979, Ch. 906, effective September 22, 1979, changed "1979–80" to "1982–83". Stats. 1980, Ch. 1035, operative January 1, 1981, completely reworded the section. Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008, substituted "October" for "September" and substituted "January 1 to December 31" for "November 1 of the current calendar year to October 31". Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008, added "and VoIP service" after "intrastate telephone communications services" and added ", inclusive," after "December 31". Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services" throughout the section.

41031. Determination time. The deletionCalifornia Technology Agency shall make its determination of deletionthe surcharge rate each year no later than October 1 and shall notify the board of the new rate, which shall be fixed by the board to be effective with respect to charges made for intrastate telephone communication services and VoIP service on or after January 1 of the next succeeding calendar year.

History.—Stats. 1980, Ch. 1035, operative January 1, 1981, substituted "The Department of General Services" for "The board", substituted "notify the board of" for "fix", added a comma following "new rate" and substituted present wording following "shall be" for "effective as provided in Section 41033.". Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008, substituted "October" for "September", substituted "January" for November" and substituted "the next succeeding calendar year" for "each year." Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008, added "and VoIP service" after "intrastate telephone communication services". Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services" before "shall make its determination" and substituted "the" for "such" before "surcharge rate each year".

41032. Publication of rate. Immediately upon notification by the deletionCalifornia Technology Agency and fixing the surcharge rate, the board shall each year no later than November 15 publish in its minutes the new rate, and it shall notify by mail every service supplier registered with it of the new rate.

History.—Stats. 1980, Ch. 1035, operative January 1, 1981, substituted "notification by the Department of General Services" for "making its determination" and substituted "15" for "1". Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008, substituted "November" for "September". Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services".

41033. Application of rate. [Repealed by Stats. 1980, Ch. 1035, operative January 1, 1981.]

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Article 3. Registration

41040. Registration. Every service supplier in this state shall register with the board upon a form prescribed by the board and shall set forth the name under which it transacts or intends to transact business and such other information as the board may require.

41041. Security requirement. (a) When necessary to ensure compliance with this part, the board may require any person subject to this part to place with it the security that the board determines. Security in the form of cash, insured deposits in banks or savings and loan institutions, or a bond or bonds duly executed by an admitted surety insurer, payable to the state, conditioned upon faithful performance of all of the requirements of this part and expressly providing for the payment of all taxes, penalties, and other obligations of the person arising out of this part, shall be held in trust to be used solely in the manner provided by this section. The amount of security shall be fixed by the board, not to exceed twice the estimated average quarterly liability of persons filing for quarterly periods, or three times the estimated average monthly liability of persons filing for monthly periods, determined in the manner that the board deems proper. Security held by the board shall be released after a three-year period in which the person has filed all returns and paid all tax due to the state under this part or any amount of tax required to be collected and paid to the state within the time required.

(b) If, when a person discontinues business, the board holds security pursuant to this section in the form of cash or insured deposits in banks or savings and loan institutions, the security when applied to the account of the taxpayer shall be deemed a payment on any liability of the person to the board on the date the business is discontinued.

(c) This section shall not apply to a taxpayer who either has timely filed all returns and paid all tax due to the state under this part for the three consecutive years prior to the effective date of this section, or has, on or before July 31, 1998, timely filed all returns and paid all tax due to the state under this part since the taxpayer registered with the board pursuant to Section 41040. However, the board may require security from any such taxpayer who fails to remain in compliance with the reporting and payment requirements of this part subsequent to the effective date of this section.

History.—Added by Stats. 1998, Ch. 649 (AB 911), in effect January 1, 1999.

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