S.B. 214

1

TAXATION OF MOBILE
2 TELECOMMUNICATIONS SERVICE AND TASK
3 FORCE ON TELECOMMUNICATIONS
4 TAXATION
5 2001 GENERAL SESSION
6 STATE OF UTAH
7 Sponsor: Curtis S. Bramble
8 This act amends the Revenue and Taxation Code and the Utah Municipal Code to prohibit
9 cities or towns from imposing a charge on mobile telecommunications service for a one-year
10 period beginning on July 1, 2001. The act creates the Task Force on Telecommunications
11 Taxation. The act provides for the membership of the task force, task force chairs,
12 compensation of task force members, task force duties and responsibilities, the task force
13 meeting schedule, task force reporting requirements, and staff support. The act requires the
14 task force to follow interim rules. The act appropriates $45,000 from the General Fund for
15 fiscal year 2000-01 to the Senate, the House of Representatives, and the Office of Legislative
16 Research and General Counsel to fund the task force. Certain provisions of this legislation
17 are repealed on June 30, 2002.
18 This act affects sections of Utah Code Annotated 1953 as follows:
19 AMENDS:
20 10-1-203, as last amended by Chapter 172, Laws of Utah 2000
21 ENACTS:
22 59-1-1201, Utah Code Annotated 1953
23 59-1-1202, Utah Code Annotated 1953
24 59-1-1203, Utah Code Annotated 1953
25 59-1-1204, Utah Code Annotated 1953
26 59-1-1205, Utah Code Annotated 1953
27 59-1-1206, Utah Code Annotated 1953

28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 10-1-203 is amended to read:
30 10-1-203. License fees and taxes -- Application information to be transmitted to the
31 county auditor.
32 (1) For the purpose of this section, "business" means any enterprise carried on for the
33 purpose of gain or economic profit, except that the acts of employees rendering services to
34 employers are not included in this definition.
35 (2) Except as provided in Subsections (3) through (5), the governing body of a
36 municipality may license for the purpose of regulation and revenue any business within the limits
37 of the municipality and may regulate that business by ordinance.
38 (3) (a) The governing body of a municipality may raise revenue by levying and collecting
39 a municipal energy sales or use tax as provided in Part 3, Municipal Energy Sales and Use Tax
40 Act, except a municipality may not levy or collect a franchise tax [or fee] as defined in Subsection
41 10-1-303 (7) or fee on an energy supplier other than the municipal energy sales and use tax
42 provided in Part 3, Municipal Energy Sales and Use Tax Act.
43 (b) (i) Subsection (3)(a) does not affect the validity of a franchise agreement as defined
44 in Subsection 10-1-303 (6), that is in effect on July 1, 1997, or a future franchise.
45 (ii) A franchise agreement as defined in Subsection 10-1-303 (6) in effect on January 1,
46 1997, or a future franchise shall remain in full force and effect.
47 (c) A municipality that collects a contractual franchise fee pursuant to a franchise
48 agreement as defined in Subsection 10-1-303 (6) with an energy supplier that is in effect on July
49 1, 1997, may continue to collect that fee as provided in Subsection 10-1-310 (2).
50 (d) (i) Subject to the requirements of Subsection (3)(d)(ii), a franchise agreement as
51 defined in Subsection 10-1-303 (6) between a municipality and an energy supplier may contain a
52 provision that:
53 (A) requires the energy supplier by agreement to pay a contractual franchise fee that is
54 otherwise prohibited under Part 3, Municipal Energy Sales and Use Tax Act; and
55 (B) imposes the contractual franchise fee on or after the day on which Part 3, Municipal
56 Energy Sales and Use Tax is:
57 (I) repealed, invalidated, or the maximum allowable rate provided in Section 10-1-305 is
58 reduced; and

59 (II) is not superseded by a law imposing a substantially equivalent tax.
60 (ii) A municipality may not charge a contractual franchise fee under the provisions
61 permitted by Subsection (3)(b)(i) unless the municipality charges an equal contractual franchise
62 fee or a tax on all energy suppliers.
63 (4) [Subject to the provisions of] Except as provided in Section 59-1-1203 , and subject to
64 Title 11, Chapter 26, Local Taxation of Utilities Limitation, a municipality may impose upon,
65 charge, or collect from a public utility engaged in the business of supplying telephone service or
66 other person or entity engaged in the business of supplying telephone service any tax, license, fee,
67 license fee, license tax, or similar charge, or any combination of any of these, based upon the gross
68 revenues of the utility, person, or entity derived from sales or use or both sales and use of the
69 telephone service within the municipality.
70 (5) (a) The governing body of a municipality may by ordinance raise revenue by levying
71 and collecting a license fee or tax on:
72 (i) a parking service business in an amount that is less than or equal to:
73 (A) $1 per vehicle that parks at the parking service business; or
74 (B) 2% of the gross receipts of the parking service business;
75 (ii) a public assembly facility in an amount that is less than or equal to $1 per ticket
76 purchased from the public assembly facility; and
77 (iii) subject to the limitations of Subsections (5)(c) and (d), a business that causes
78 disproportionate costs of municipal services or for which the municipality provides an enhanced
79 level of municipal services in an amount that is reasonably related to the costs of the municipal
80 services provided by the municipality.
81 (b) For purposes of this Subsection (5):
82 (i) "Municipal services" include:
83 (A) public utilities; or
84 (B) services for:
85 (I) police;
86 (II) fire;
87 (III) storm water runoff;
88 (IV) traffic control;
89 (V) parking;

90 (VI) transportation;
91 (VII) beautification; or
92 (VIII) snow removal.
93 (ii) "Parking service business" means a business:
94 (A) that primarily provides off-street parking services for a public facility that is wholly
95 or partially funded by public moneys;
96 (B) that provides parking for one or more vehicles; and
97 (C) that charges a fee for parking.
98 (iii) "Public assembly facility" means a business operating an assembly facility that:
99 (A) is wholly or partially funded by public moneys; and
100 (B) requires a person attending an event at the assembly facility to purchase a ticket.
101 (c) Before the governing body of a municipality imposes a license fee or tax on a business
102 that causes disproportionate costs of municipal services under Subsection (5)(a)(iii), the governing
103 body of the municipality shall adopt an ordinance defining for purposes of the tax under
104 Subsection (5)(a)(iii) what constitutes disproportionate costs and what amounts are reasonably
105 related to the costs of the municipal services provided by the municipality.
106 (d) Before the governing body of a municipality imposes a license fee or tax on a business
107 for which it provides an enhanced level of municipal services under Subsection (5)(a)(iii), the
108 governing body of the municipality shall adopt an ordinance defining for purposes of the tax under
109 Subsection (5)(a)(iii) what constitutes the basic level of municipal services in the municipality and
110 what amounts are reasonably related to the costs of providing an enhanced level of municipal
111 services in the municipality.
112 (6) All license fees and taxes shall be uniform in respect to the class upon which they are
113 imposed.
114 (7) The governing body shall transmit the information from each approved business license
115 application to the county assessor within 60 days following the approval of the application.
116 (8) If challenged in court, an ordinance enacted by a municipality before January 1, 1994,
117 imposing a business license fee or tax on rental dwellings under this section shall be upheld unless
118 the business license fee or tax is found to impose an unreasonable burden on the fee or tax payer.
119 Section 2. Section 59-1-1201 is enacted to read:
120 Part 12. Taxation of Telecommunications Act

121 59-1-1201. Title.
122 This part is known as the "Taxation of Telecommunications Act."
123 Section 3. Section 59-1-1202 is enacted to read:
124 59-1-1202. Definitions.
125 As used in this part:
126 (1) "Charge" means one or more of the following amounts:
127 (a) a tax, including a tax imposed on the basis of gross revenues;
128 (b) a license;
129 (c) a fee;
130 (d) a license fee;
131 (e) a license tax;
132 (f) an amount similar to Subsections (1)(a) through (e).
133 (2) (a) "Customer" means:
134 (i) except as provided in Subsection (2)(a)(ii), a person that contracts with a home service
135 provider for mobile telecommunications service; or
136 (ii) notwithstanding Subsection (2)(a)(i), the end user of the mobile telecommunications
137 service if the person described in Subsection (2)(a)(i) is not the end user of the mobile
138 telecommunications service.
139 (b) "Customer" does not include:
140 (i) a reseller of mobile telecommunications service; or
141 (ii) a serving carrier under an arrangement to serve a customer outside the home service
142 provider's licensed service area.
143 (3) "Home service provider" means a facilities-based carrier or reseller with which a
144 customer or an end user contracts for the provision of mobile telecommunications service.
145 (4) (a) "Mobile telecommunications service" means commercial mobile radio service as
146 defined in 47 C.F.R. Sec. 20.3.
147 (b) "Mobile telecommunications service" does not include:
148 (i) a pager service using mobile devices that does not allow for two-way voice
149 communication;
150 (ii) narrowband personal communications services; and
151 (iii) short message services.

152 (5) "Task force" means the Task Force on Telecommunications Taxation.
153 Section 4. Section 59-1-1203 is enacted to read:
154 59-1-1203. Prohibition on county, city, or town imposing a tax on mobile
155 telecommunications service.
156 (1) Except as provided in Subsection (2), beginning on July 1, 2001, through June 30,
157 2002, a city or town may not impose a charge on:
158 (a) a customer for a mobile telecommunications service; or
159 (b) a home service provider for a mobile telecommunications service.
160 (2) This section may not be interpreted to limit the authority of a city or town to impose
161 a tax under Chapter 12, Sales and Use Tax Act.
162 Section 5. Section 59-1-1204 is enacted to read:
163 59-1-1204. Task Force on Telecommunications Taxation -- Creation -- Membership
164 -- Chairs -- Interim rules followed -- Compensation.
165 (1) There is created the Task Force on Telecommunications Taxation consisting of the
166 following nine members:
167 (a) three members of the Senate appointed by the president of the Senate, no more that two
168 of whom may be from the same political party; and
169 (b) six members of the House of Representatives appointed by the speaker of the House
170 of Representatives, no more than four of whom may be from the same political party.
171 (2) (a) The president of the Senate shall designate a member of the Senate appointed under
172 Subsection (1)(a) as a cochair of the task force.
173 (b) The speaker of the House of Representatives shall designate a member of the House
174 of Representatives appointed under Subsection (1)(a) as a cochair of the task force.
175 (3) If the Legislative Management Committee authorizes the task force to establish a
176 subcommittee, the cochairs of the task force may appoint legislators or persons who are not
177 legislators to the subcommittee.
178 (4) In conducting its business, the task force shall comply with the rules of legislative
179 interim committees.
180 (5) (a) Legislators on the task force shall receive compensation and expenses in accordance
181 with Section 36-2-2 and Legislative Joint Rule 15.03.
182 (b) (i) A member of a subcommittee of the task force who is not a legislator or a

183 government employee may not receive compensation or benefits for the member's services, but
184 may receive per diem and expenses incurred in the performance of the member's official duties at
185 the rates established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
186 (ii) A member of a subcommittee of the task force may decline to receive per diem and
187 expenses for their services.
188 Section 6. Section 59-1-1205 is enacted to read:
189 59-1-1205. Duties and responsibilities -- Meeting schedule -- Task force reporting
190 requirements -- Staff support.
191 (1) The task force shall:
192 (a) study the overall structure of the taxes or fees that the state or political subdivisions of
193 the state impose on telecommunications equipment, facilities, or services;
194 (b) study individual taxes or fees that the state or political subdivisions of the state impose
195 on telecommunications equipment, facilities, or services, including:
196 (i) a sales and use tax;
197 (ii) a franchise tax;
198 (iii) a fee imposed on telecommunications companies for the use of:
199 (A) rights-of-way; or
200 (B) other publicly owned property;
201 (iv) a charge imposed on telecommunications companies for other purposes; or
202 (v) other taxes or fees as determined by the task force;
203 (c) study the telecommunications tax policy of:
204 (i) the state; and
205 (ii) political subdivisions of the state;
206 (d) make recommendations regarding whether the telecommunications tax policy or tax
207 structure should be changed with respect to:
208 (i) the state; or
209 (ii) a political subdivision of the state;
210 (e) study short-term and long-term impacts of any proposed changes to the
211 telecommunications tax structure of:
212 (i) the state; or
213 (ii) a political subdivision of the state.

214 (2) The task force may study any other issue as determined by the task force relating to:
215 (a) the telecommunications tax structure of:
216 (i) the state; or
217 (ii) a political subdivision of the state; or
218 (b) state or local revenue sources that depend on the telecommunications industry.
219 (3) The task force shall meet no more than eight times during the 2001 interim.
220 (4) The task force shall report its findings and recommendations on the issues the task
221 force studies in accordance with this section:
222 (a) to the Revenue and Taxation Interim Committee; and
223 (b) on or before the October interim meeting.
224 (5) The Office of Legislative Research and General Counsel shall provide staff support to
225 the task force.
226 (6) The task force may request information from the governor's Office of Planning and
227 Budget, the Utah League of Cities and Towns, and the Utah Association of Counties in conducting
228 the study required by this section.
229 Section 7. Section 59-1-1206 is enacted to read:
230 59-1-1206. Appropriation.
231 There is appropriated from the General Fund for fiscal year 2000-01 to pay for the task
232 force:
233 (1) $5,000 to the Senate to pay for the compensation and expenses of senators on the task
234 force;
235 (2) $10,000 to the House of Representatives to pay for the compensation and expenses of
236 representatives on the task force; and
237 (3) $30,000 to the Office of Legislative Research and General Counsel to pay for staffing
238 the task force.
239 Section 8. Repeal date.
240 Sections 59-1-1201 through 59-1-1206 are repealed on June 30, 2002.

Legislative Review Note
as of 2-12-01 10:28 AM


This legislation prohibits for a one-year period a city or town from imposing certain charges on
a customer or home service provider for mobile telecommunications service. This prohibition
could potentially be subject to challenge because it is unclear whether a city is given direct power
to tax under Utah Constitution Article XI, Section 5, or whether under Utah Constitution Article
XIII, Section 5, a city may only tax if the Legislature by statute delegates this power to the city.
If a court finds that a city does not have direct power to tax and may only tax if the Legislature
grants this power to the city by statute, the prohibition would likely be upheld.

Office of Legislative Research and General Counsel