SB 93-FN-A - AS AMENDED BY THE SENATE

03/14/2019   0861s

2019 SESSION

19-0863

10/01

SENATE BILL 93-FN-A

AN ACT relative to prepaid wireless telecommunications service and voice over Internet protocol communications under the communications service tax.

SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Feltes, Dist 15; Rep. Leishman, Hills. 24

COMMITTEE: Ways and Means

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AMENDED ANALYSIS

This bill clarifies the applicability of the communications services tax to voice over Internet protocol (VoiP) and prepaid wireless telecommunications service.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/14/2019   0861s 19-0863

10/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nineteen

AN ACT relative to prepaid wireless telecommunications service and voice over Internet protocol communications under the communications service tax.

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

1  Communications Services Tax; Purpose; Basic Communications Services Deleted.  Amend RSA 82-A:1 to read as follows:

82-A:1  Statement of Purpose.  It is the intent of the general court to impose a tax on those who use 2-way communications services and to source mobile telecommunications services to the place of primary use.  It is also the intent of the general court that Internet access service [and basic communications services essential to public health, safety, and welfare] shall not be subject to the tax imposed by this chapter.

2  Definitions; Communications Services.  Amend the introductory paragraph of RSA 82-A:2, III to read as follows:

III.  “Communications services” means services for transmitting, emitting, or receiving signs, signals, writing, images, sounds or intelligence of any nature by any electromagnetic system capable of 2-way communication and includes, without limitation, messages or information transmitted through use of local, toll and wide area telephone service; private line services and networks, whether leased, rented or owned; channel services; telegraph services; teletypewriter services; cable television; computer exchange services; mobile telecommunications services; prepaid wireless telecommunications services; VoIP; facsimile services; specialized mobile radio; stationary 2-way radio; paging services; or any other form, whether stationary, portable or mobile, of 2-way communications; or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite or similar facilities.  “Communications services” shall not include:

3  Definitions; Retailer.  Amend RSA 82-A:2, X to read as follows:

X.  "Retailer" means and includes every person engaged in the business of making sales at retail as defined in this chapter.  The department may, in its discretion, upon application, authorize the collection of the tax hereby imposed by any retailer not maintaining a place of business within this state, who, to the satisfaction of the department, furnishes adequate security to insure collection and payment of the tax.  Such retailer shall be issued, without charge, a permit to collect such tax.  When so authorized, it shall be the duty of such retailer to collect the tax upon all of the gross charges for communications services in this state in the same manner and subject to the same requirements as a retailer maintaining a place of business within this state.  The permit may be revoked by the department at its discretion.  For purposes of the tax imposed by this chapter on prepaid wireless telecommunications service, “retailer” has the same meaning as “seller.”  

4  New Paragraphs; Definitions; Prepaid Wireless Telecommunications Service; VoIP.  Amend RSA 82-A:2 by inserting after paragraph XXVI the following new paragraphs:

XXVII.  “Prepaid wireless telecommunications service” means "prepaid commercial mobile radio service," as that term is defined in RSA 106-H:2, VIII-b.

XXVIII.  “Retail transaction” means the purchase of prepaid wireless telecommunications service from a seller for any purpose other than resale.  

XXIX.  “Seller” means a person who sells prepaid wireless telecommunications service to another person.  

XXX.  “Voice over Internet Protocol” or “VoIP” means any service that:

(a)  Enables real-time, 2-way voice communications that originate from or terminate to the user’s location in Internet Protocol or any successor protocol;

(b)  Requires a broadband connection from the user’s location; and

(c)  Permits users generally to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network.

5  Imposition of Tax; Reference Added.  Amend RSA 82-A:4 to read as follows:

82-A:4  Imposition of Tax; Interstate Communications Services.  Except as provided in RSA 82-A:4-b, RSA 82-A:4-d and RSA 82-A:4-e, 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 7 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 paid calling service furnished to a person in this state and purchased at retail from a retailer by such person, at the rate of 7 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.

6  New Sections; Special Rules for VOIP Services and Prepaid Wireless Telecommunications Service.  Amend RSA 82-A by inserting after section 4-c the following new sections:

82-A:4-d  Special Rules for VoIP Services.  A tax is imposed on intrastate and interstate communications services that are VoIP services provided by a retailer to a person with a place of primary use in this state, regardless of where the VoIP services originate, terminate, or pass through.  The tax shall be imposed on the gross charge at the rate specified in RSA 82-A:3 and RSA 82-A:4.  No tax shall be imposed on a person whose place of primary use is outside this state.  

82-A:4-e  Special Rules for Prepaid Wireless Telecommunications Service.

I.  A tax is imposed on each retail transaction in this state of intrastate and interstate communications services that are prepaid wireless telecommunications services.  The tax shall be imposed on the gross charge at the rate specified in RSA 82-A:3 and 82-A:4.

II.  For purposes of paragraph I, a retail transaction is sourced to New Hampshire:

(a)  If the retail transaction occurs in person at a seller's location in New Hampshire; or

(b)  If subparagraph (a) does not apply, the prepaid wireless telecommunications service is evidenced by a physical item, such as a card, and the purchaser provides a New Hampshire delivery address for such item; or

(c)  If subparagraphs (a) and (b) do not apply, the consumer gives a New Hampshire address during the consummation of the sale, including the address associated with the consumer's payment instrument if no other address is available, and the address is not given in bad faith; or

(d)  If subparagraphs (a)-(c) do not apply, the consumer's mobile telephone number is associated with a postal zip code, telephone area code, or location within New Hampshire.

III.  The tax imposed by this section shall be collected by the seller from the consumer with respect to each retail transaction sourced to New Hampshire, in accordance with RSA 82-A:6; provided, however, the amount of the tax shall be either separately stated on an invoice, receipt, or other similar document that is provided by the seller to the consumer, or otherwise disclosed to the consumer.

IV.  If prepaid wireless telecommunications service is sold with one or more other products or services for a single, non-itemized charge, then the tax shall apply to the entire non-itemized charge except as provided in RSA 82-A:2, V(e).  

V.  If a minimal amount of prepaid wireless telecommunications service is sold with a prepaid wireless device for a single, non-itemized charge, then the seller may elect not to apply the tax to such transaction.  For purposes of this subparagraph, an amount of service denominated as 10 minutes or less, or $5 or less, is minimal.

VI.  The seller shall be liable to remit all taxes required by this section that are collected from consumers, including all such taxes that the seller is deemed to collect where the amount of the tax has not been separately stated on an invoice, receipt, or other similar document provided by the seller to the consumer, in accordance with RSA 82-A:7.

VII.  The prepaid commercial mobile radio service E911 surcharge imposed under RSA 106-H:9, I-a shall not be subject to the tax imposed by this section.

7  Applicability.  This act shall apply to taxable periods ending after December 31, 2019.

8  Effective Date.  This act shall take effect January 1, 2020.

LBAO

19-0863

Amended 3/28/19

SB 93-FN-A- FISCAL NOTE

AS AMENDED BY THE SENATE (AMENDMENT #2019-0681s)

AN ACT relative to prepaid wireless telecommunications service and voice over Internet protocol communications under the communications service tax.

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

METHODOLOGY:

This bill includes prepaid wireless communication services and voice over Internet protocol as taxable under the Communications Service Tax.  The bill also sources voice over Internet protocol (VoIP) to the place of primary use.  The Communications Service Tax on prepaid communication services sourced to New Hampshire is collected and remitted by the seller.  The Department of Revenue Administration assumes the transfer from landlines to VoIP and mobile devices and the use of prepaid communications services will continue to grow.  The Department states General Fund revenue will increase by an indeterminable amount, however the Department has no means to determine how much Communication Service Tax will be collected and remitted as a result of this bill.  The Department is able to administer this bill with no additional costs.

AGENCIES CONTACTED:

Department of Revenue Administration