The Judiciary Committee of the U.S. House of Representatives approved the Wireless Tax Fairness Act of 2011 (H.R. 1002) by voice vote on July 14. The Act would prohibit states and localities, for five years, from imposing “a new discriminatory tax” on mobile services, mobile service providers, or mobile service property. A new discriminatory tax would be one imposed on mobile services, mobile service providers, or mobile service property that is not generally imposed, or is generally imposed at a lower rate, on services or transactions, businesses, or commercial or industrial property that does not involve mobile service. A grandfather clause would exempt from the prohibition a tax that was imposed and actually enforced on mobile services, mobile service providers, or mobile service property prior to the enactment of this legislation.
Prior to approval, the committee amended the legislation to exempt a local tax increase on wireless from the prohibition if the increase is approved by the voters in the local taxing jurisdiction. The committee also amended the legislation to require a study by the Government Accountability Office to determine the extent to which the taxes imposed by state and local governments affect the costs that consumers pay for mobile wireless services.
At the conclusion of the hearing, Rep. John Conyers, D-Mich., announced that he had intended to move to append to this Act, prior to the committee final vote, legislation that would confer collection authority over remote sellers to member states of the Streamlined Sales and Use Tax Agreement. However, Conyers said he had changed his mind and instead would introduce the so-called Main Street Fairness Act as a separate bill.
The Wireless Tax Fairness Act may now be taken up by the full House, where it has 236 cosponsors, a majority of House members. Similar legislation (S. 543) has been introduced in the U.S. Senate by Sen. Ron Wyden, D-Ore., and several cosponsors, but no action has been taken yet on the Senate bill.
The Judiciary Committee’s action is the second time in a week that it has approved legislation that would limit state taxing authority. On July 7, the committee approved the Business Activity Tax Simplification Act (H.R. 1439). (TAXDAY, 2011/07/11, S.1)
H.R. 1002, ordered reported, as amended, by the U.S. House Judiciary Committee on July 14, 2011