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| Montana Administrative Register Notice 42-2-817 | No. 20 10/29/2009 | |
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BEFORE THE DEPARTMENT OF REVENUE OF THE STATE OF
TO: All Concerned Persons 1. On November 23, 2009, at 1:30 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Individuals planning to attend the hearing shall enter the building through the east doors of the 2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., November 9, 2009, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, 3. The department entered into negotiated rulemaking with a nine-member committee representing industry, local governments, and state programs. The members participated in discussions concerning the proposed rules in this notice as a means of clarification for collecting the tax associated with prepaid wireless cellular phones. The 9-1-1 fee is a tax to be paid by the provider not the purchaser and the providers object to paying this tax. Some providers have suggested that the tax be collected at the time the sale occurs but the department does not have the authority under the current law to collect this tax from the retailer. In the final vote of the negotiated rulemaking committee, seven members of the committee recommended the rules in this notice be developed and two voted against the rules. Two of the industry members favored the provider payment and two opposed that approach. Those supporting the provider payment approach are paying the full amount of the fees and taxes on the wireless services. These industry members believe they face unfair competition from the prepaid service providers who may not be paying the full amount of tax. They argue that competitive equity should motivate the department to move forward with rules implementing the provider payment approach. The two industry members voting "no" on the provider payment approach advocate a sales tax approach under which general retailers would collect the 9-1-1 fee. The Department of Revenue has no legal authority to implement such an approach. Beyond this legal barrier to the sales tax approach, the idea of requiring general retailers and convenience stores to invest in expensive sales tax systems to collect a tax or fee on a single product line within a store selling hundreds or thousands of products is not reasonable, administratively feasible, or cost effective. The advent of wireless technology leads to a need to update 9-1-1 services for Montanans. This is a program that is especially vital to the public health and safety of those who live in or are visiting and traveling through rural The department is accepting the committee's majority vote and proposing to adopt and amend the rules that were reviewed and recommended by the committee. 4. The proposed new rules do not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rules provide as follows: NEW RULE I DEFINITIONS The following definitions apply to terms used in this subchapter: (1) "Average revenue" is defined as $50 per subscriber. (2) "Intrastate monthly revenue" is defined as the prepaid service provider's revenue derived from services provided by a wireless provider to subscribers with a (3) "Prepaid service provider" means a service provider that requires prepayment of its wireless telecommunications service. (4) "Prepaid subscriber" means a subscriber that is required to prepay for wireless telecommunications services provided by prepaid service providers. (5) "Service provider" means an entity that offers services to subscribers in Montana to allow two or more persons in different locations to communicate orally, without regard to the technology or medium the entity uses to provide the telecommunications service, and access to telecommunications relay service. The term includes providers of telecommunications service, including but not limited to providers of internet protocol-enabled voice communications service and wireless services.
AUTH: 10-4-203, 10-4-212, 15-1-201, MCA IMP: 10-4-101, MCA REASONABLE NECESSITY: The department is proposing to adopt New Rule I to define terms used within these proposed rules which ensure that all providers of telecommunication services collect and remit the 9-1-1 fee. The average revenue definition adopts the industry average of $50 and is the denominator factor used in New Rule III to arrive at the number of access lines for calculating the 9-1-1 service fee. The intrastate revenue definition adopts the subscribers Prepaid service provider, prepaid subscriber, and service provider are defined to assist the reader on who is responsible for collecting the 9-1-1 fees, and how to correctly determine the number of access line equivalents. NEW RULE II CALENDAR YEAR ELECTION (1) The method to calculate the amount of payment of the fees imposed for 9-1-1 services provided by prepaid service providers must be selected as of the first filing of the calendar year and may not be changed until the first filing of the following calendar year.
AUTH: 10-4-203, 10-4-212, 15-1-201, MCA IMP: 10-4-101, 10-4-201, 10-4-204, MCA
REASONABLE NECESSITY: The department is proposing to adopt New Rule II to require a prepaid service provider to select one of the two methods allowed in New Rule III(2)(a) by April 30 of each calendar year that will be used for the four quarters of that calendar year. The rule also provides notice to the prepaid service provider that they cannot change their method mid-year.
NEW RULE III COLLECTION AND DETERMINATION OF FEE FOR PREPAID SUBSCRIBERS (1) The subscriber who receives wireless services from a prepaid service provider is subject to the 9-1-1 emergency telephone service fee collected and remitted to the Department of Revenue by the service provider. (2) All prepaid service providers are required to collect the 9-1-1 emergency telephone service fee from subscribers in the following manner. (a) A prepaid service provider will impose the 9-1-1 emergency telephone service fees established in 10-4-201, MCA on the subscriber using one of the following options: (i) on a monthly basis, the prepaid service provider will collect the amount of the fees established in 10-4-201, MCA from each active prepaid subscriber whose account balance is equal to or greater than the fees established in 10-4-201, MCA; or (ii) the prepaid service provider will divide the total intrastate monthly revenue by the average revenue for each prepaid subscriber of the wireless industry to determine the number of active access lines. The number of access lines is then applied to the fees established in 10-4-201, MCA to arrive at the amount of fees paid by the subscriber. AUTH: 10-4-203, 10-4-212, 15-1-201, MCA IMP: 10-4-101, 10-4-201, 10-4-211, 10-4-212, MCA REASONABLE NECESSITY: The department is proposing to adopt New Rule III to clarify current law and the department's practice that requires all service providers, which includes both prepaid and post-paid service providers, to collect and remit the 9-1-1 fees to the state of NEW RULE IV WHEN THE SERVICE FEE IS COLLECTED FROM THE SERVICE SUBSCRIBER (1) The service fee is collected from the subscriber for all months services are provided to the subscriber including the final month in which the subscriber disconnects the access line with the original service provider. (2) The prepaid service provider that calculates the 9-1-1 fee based upon the average revenue for each prepaid subscriber shall quarterly remit the fee upon the activation of an active prepaid account and upon each replenishment of additional minutes purchased by the prepaid customer during that quarter. AUTH: 10-4-203, 10-4-212, 15-1-201, MCA IMP: 10-4-101, 10-4-201, 10-4-203, 10-4-204, 10-4-211, 10-4-212, MCA REASONABLE NECESSITY: New Rule IV provides how the 9-1-1 service fee is collected by a service provider from a subscriber when the subscriber is in his or her last month of service. New Rule IV also describes how a prepaid service provider will collect the 9-1-1 service fee when a prepaid subscriber adds additional minutes to his or her account balance. 5. The rule proposed to be amended provides as follows, stricken matter interlined, new matter underlined: 42.31.401 REPORTING REQUIREMENTS (1) A provider is required to complete form 9-1-1, Emergency Telephone (9-1-1) Service Fee Return, which is provided by the department, (2) The (a) the ending date of the calendar quarter (b) the name and address of the provider of telephone exchange access services or service provider of wireless telephone services; (c) the type of service provider, whether it is a prepaid wireless provider, wireline service provider, internet/VOIP service provider, wireless service provider, or other service provider; (d) the total number of access lines for each month of the calendar quarter;
(f) the number of taxable lines for each month of the calendar quarter; (g) the amount of fee computed by multiplying the total number of
(3) If the total amount of the fee is less than $50 in each of the quarters during the preceding calendar year, the AUTH: 10-4-203, 10-4-212, 15-1-201, MCA IMP: 10-4-201, 10-4-203, 10-4-204, 10-4-211, 10-4-212, MCA REASONABLE NECESSITY: The department is proposing to amend ARM 42.31.401 to include the name of the form that is required to be filed by the service provider. This rule clarifies who is responsible for filing the form 9-1-1. The amendments to this rule also address the need for the service provider to define the type of service they provide. This information will assist the department in identifying how to calculate the tax. Additionally, this rule requires the service providers to disclose the total number of access lines used to calculate the fee. Section (2)(g) strikes the reference to the fee of $.50 and replaces the language the applicable statute with the current fee, thereby eliminating the need to amend the rule every time the Legislature changes the fee. Section (2)(e) has been removed because the language on how to handle mid-month disconnecting and connecting situations is addressed more thoroughly in New Rule IV. Sections (2)(h) and (i), as well as section (3) amends the existing rule into a writing style consistent with other department rules. 6. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail canderson@mt.gov and must be received no later than December 4, 2009. 7. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing. 8. An electronic copy of this Notice of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems. 9. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the person in 6 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue. 10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply. /s/ Cleo Anderson /s/ Dan R. Bucks CLEO ANDERSON DAN R. BUCKS Rule Reviewer Director of Revenue Certified to Secretary of State October 19, 2009
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