HB3359 101ST GENERAL ASSEMBLY

LRB101 11152 HLH 56384 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3359

Introduced , by Rep. Arthur Turner

SYNOPSIS AS INTRODUCED:

New Act

Creates the Video Service Tax Modernization Act. Imposes a tax upon the act or privilege of providing direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works to a subscriber in the State. Provides that the tax is imposed at the rate of 5% of the provider's gross revenues derived from or attributable to that subscriber. Creates the Entertainment Tax Fairness Act. Imposes a tax upon the subscribers of entertainment in the State at the rate of 1% of the charges paid for the privilege to witness, view, or otherwise enjoy the entertainment. Defines "entertainment" as any paid video programming, direct-to-home satellite service, direct broadcast satellite service, digital audio-visual works service, or video service to a subscriber in the State.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

ARTICLE 10. VIDEO SERVICE TAX MODERNIZATION

Section 10-1. Short title. This Act may be cited as the Video Service Tax Modernization Act.

Section 10-5. Application. This Act applies to the provision of direct-to-home satellite service, direct broadcast satellite service, and digital audio-visual works on or after the effective date of this Act.

This Act does not apply to: (1) satellite radio service or subscription radio service whereby a digital radio signal is broadcast without any corresponding or related video programming or services; or (2) a satellite television transmission of simulcast horse races broadcast from or received at locations operated by an organization licensee, an inter-track wagering licensee, or an inter-track wagering location licensee licensed under the Illinois Horse Racing Act of 1975.

Section 10-10. Definitions. As used in this Act:

"Department" means the Department of Revenue.

"Digital audio-visual works" means a series of related images that, when shown in succession, impart an impression of motion, together with accompanying sounds, if any, sold to an end user with rights of less than permanent use. "Digital audio-visual works" does not include cable service provided by a cable operator, as those terms are defined in 47 U.S.C. 522, and does not include video service provided by a holder, as those terms are defined in Article 21 of the Public Utilities Act.

"Direct broadcast satellite service" means video services transmitted or broadcast by satellite directly to the subscriber's premises with the use of or accompanied by ground receiving or distribution equipment, including, but not limited to, infrastructure to provide Internet access used in the transmission or broadcast of such video services, at the subscriber's premises, but not in the uplink process to the satellite, and includes, but is not limited to, the retransmission of local broadcast television, the provision of premium channels, other recurring monthly services, service and pay-per-view, video-on-demand, and other event-based services.

"Direct-to-home satellite service" has the meaning given to that term in Public Law No. 104-104, Title VI, Section 602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C. 152).

"End user" means any person other than a person who receives by contract a product transferred electronically for further commercial broadcast, rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution, or exhibition of the product, in whole or in part, to another person or persons.

"Gross revenue" means all consideration of any kind or nature received by a provider, or an affiliate of the provider, in connection with the provision of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works to subscribers. "Gross revenue" does not include:

(1) charges for the rental of equipment related to the provision of direct-to-home satellite service, direct broadcast satellite service, or digital audiovisual works;

(2) activation, installation, repair, or maintenance charges or similar service charges related to the provision of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works;

(3) service order charges, service termination charges, or any other administrative charges related to the provision of direct-to-home satellite service, direct broadcast satellite service, or digital audiovisual works;

(4) revenue not actually received, regardless of whether it is billed, including, but not limited to, bad debts;

(5) revenue received by an affiliate or other person in exchange for supplying goods and services used by a provider;

(6) the amount of any refunds, rebates, or discounts made to subscribers, advertisers, or other persons;

(7) revenue from any service that is subject to tax under the Service Occupation Tax Act, Retailers' Occupation Tax Act, Service Use Tax Act, or Use Tax Act;

(8) the tax imposed by this Act or any other tax of general applicability imposed on a provider or a purchaser of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works by a federal, State, or local governmental entity and required to be collected by a person and remitted to the taxing entity;

(9) charges, other than those charges specifically described in this Act, that are aggregated or bundled with such specifically-described charges on a subscriber's bill, if the provider can reasonably identify the charges in its books and records kept in the regular course of business;

(10) revenue from advertising services; or

(11) charges that may not be taxed pursuant to the federal Internet Tax Freedom Act.

"Permanent" means perpetual or for an indefinite or unspecified length of time.

"Person" means a natural individual, firm, trust, estate, partnership, association, joint stock company, joint venture, corporation, or limited liability company, or a receiver, trustee, guardian, or other representative appointed by order of any court, and includes the federal and State governments, including State universities created by statute, and municipalities, counties, and other political subdivisions of this State.

"Premises" means a residence or place of business of a subscriber in this State.

"Provider" means a person who transmits, broadcasts, sells, or distributes direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works to subscribers in the State.

"Subscriber" means a member of the general public who receives direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works from a provider and does not further distribute the service in the ordinary course of business.

Section 10-15. Imposition of tax.

(a) A tax is imposed upon the act or privilege of providing direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works to a subscriber in this State by any provider at the rate of 5% of the provider's gross revenues derived from or attributable to that subscriber.

(b) For purposes of the tax imposed by subsection (a), a subscriber is in this State if the subscriber's street address representative of where the subscriber's use or access of the direct-to-home satellite service, direct broadcast satellite service, or digital audio visual work primarily occurs, which must be the street address of the subscriber based on such other information kept by the provider in the regular course of its business.

(c) The tax imposed by subsection (a) may be passed through to, and collected from, the provider's subscribers in Illinois. To the extent allowed under federal or State law, a provider may identify as a separate line item on each regular bill issued to a subscriber the amount of the total bill assessed as a tax under this Act.

(d) To prevent actual multi-state taxation upon the act or privilege that is subject to taxation under this Act, any taxpayer, upon proof that that taxpayer has paid a tax in another state on such event, shall be allowed a credit against the tax imposed in this Act to the extent of the amount of such tax properly due and paid in such other state. However, such tax is not imposed on the act or privilege to the extent such act or privilege may not, under the Constitution and statutes of the United States, be made the subject of taxation by the State.

Section 10-20. Remittances.

(a) On or before the twentieth day of each calendar month, every provider of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works that provides such service or services to a subscriber in this State during the preceding calendar month shall file a return with the Department, in a form prescribed by the Department, stating:

(1) the name of the provider;

(2) the address of the provider's principal place of business;

(3) the total amount of gross revenues received by the provider during the preceding calendar month, quarter, or year, as the case may be, from the provision of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works during that preceding calendar month, quarter, or year and upon the basis of which the tax is imposed;

(4) the amount of tax due;

(5) the signature of the taxpayer; and

(6) such other reasonable information as the Department may require.

(b) If a taxpayer fails to sign a return within 30 days after the proper notice and demand for signature by the Department is received by the taxpayer, then the return shall be considered valid and any amount shown to be due on the return shall be deemed assessed.

(c) If the provider is otherwise required to file a monthly return, and if the provider's average monthly tax liability to the Department under this Act does not exceed $200, the Department may authorize the provider's returns to be filed on a quarter annual basis, with the return for January, February, and March of a given year being due by April 20 of that year; with the return for April, May, and June of a given year being due by July 20 of that year; with the return for July, August, and September of a given year being due by October 20 of that year, and with the return for October, November, and December of a given year being due by January 20 of the following year.

(d) If the provider is otherwise required to file a monthly or quarterly return, and if the provider's average monthly tax liability with the Department under this Act does not exceed $50, the Department may authorize the provider's returns to be filed on an annual basis, with the return for a given year being due by January 20 of the following year.

(e) Those quarterly and annual returns shall be subject to the same requirements as to form and substance as monthly returns.

(f) A taxpayer who has an annual tax liability in the amount set forth in subsection (b) of Section 2505-210 of the Department of Revenue Law shall make all payments required by rules of the Department by electronic funds transfer.

Any taxpayer not required to make payments by electronic funds transfer may make payments by electronic funds transfer with the permission of the Department.

All taxpayers required to make payment by electronic funds transfer and any taxpayers authorized to voluntarily make payments by electronic funds transfer shall make those payments in the manner authorized by the Department.

Section 10-25. Records.

(a) A provider on whom the tax is imposed by this Act shall maintain the necessary records, and any other information required by the Department, to determine the amount of the tax that the provider is required to remit and any credit that the provider is entitled to claim under this Act.

(b) The records shall be open at all times to inspection by the Department.

Section 10-30. Rules. The Department is authorized to adopt and enforce any reasonable rules and to prescribe such forms relating to the administration and enforcement of this Act as it may deem appropriate.

Section 10-35. Incorporation of Retailers' Occupation Tax Act and Uniform Penalty and Interest Act. All of the provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the Retailers' Occupation Tax Act, which are not inconsistent with this Act, and the Uniform Penalty and Interest Act, shall apply, as far as practicable, to the subject matter of this Act to the same extent as if such provisions were included herein. References in those incorporated Sections to taxpayers and to persons engaged in the business of selling tangible personal property at retail mean providers of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works when used in this Act.

ARTICLE 15. ENTERTAINMENT TAX FAIRNESS ACT

Section 15-1. Short title. This Act may be cited as the Entertainment Tax Fairness Act.

Section 15-5. Application. This Act applies to all subscribers of entertainment in this State for the privilege to witness, view, or otherwise enjoy the entertainment.

This Act does not apply to: (1) satellite radio service or subscription radio service whereby a digital radio signal is broadcast without any corresponding or related video programming or services; or (2) a satellite television transmission of simulcast horse races broadcast from or received at locations operated by an organization licensee, an inter-track wagering licensee, or an inter-track wagering location licensee licensed under the Illinois Horse Racing Act of 1975.

Section 15-10. Definitions. As used in this Act:

"Cable service" has the meaning given to that term in item (6) of 47 U.S.C. 522.

"Department" means the Department of Revenue.

"Digital audio-visual works service" means the transmission of a series of related images that, when shown in succession, impart an impression of motion, together with accompanying sounds, if any, sold to an end user with rights of less than permanent use. "Digital audio-visual works service" does not include cable service or video service.

"Direct broadcast satellite service" means video services transmitted or broadcast by satellite directly to the subscriber's premises with the use of or accompanied by ground receiving or distribution equipment, including, but not limited to, infrastructure to provide Internet access used in the transmission or broadcast of such video services, at the subscriber's premises, but not in the uplink process to the satellite, and includes, but is not limited to, the retransmission of local broadcast television, the provision of premium channels, other recurring monthly services, service and pay-per-view, video-on-demand, and other event-based services.

"Direct-to-home satellite service" has the meaning given to that term in Public Law No. 104-104, Title VI, Section 602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C. 152).

"End user" means any person other than a person who receives by contract a product transferred electronically for further commercial broadcast, rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution, or exhibition of the product, in whole or in part, to another person or persons.

"Entertainment" means any paid video programming whether transmitted by cable service, direct-to-home satellite service, direct broadcast satellite service, digital audio-visual works service, or video service to a subscriber in this State.

"Permanent" means perpetual or for an indefinite or unspecified length of time.

"Provider" means a person who transmits, broadcasts, sells, or distributes cable service, direct-to-home satellite service, direct broadcast satellite service, digital audio-visual works service, or video service to subscribers in the State.

"Subscriber" means a member of the general public who receives cable service, direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works service, or video service from a provider and does not further distribute the service in the ordinary course of business.

"Video service" has the meaning given to that term in the Cable and Video Competition Law of 2007 of the Public Utilities Act.

Section 15-15. Imposition of tax.

(a) A tax is imposed upon the subscribers of entertainment in this State at the rate of 1% of the charges paid for the privilege to witness, view, or otherwise enjoy the entertainment.

(b) For purposes of the tax imposed by subsection (a), a subscriber is in this State if the subscriber's street address is representative of where the subscriber's use or access of the entertainment primarily occurs, which must be the street address of the subscriber based on such other information kept by the provider in the regular course of its business.

(c) The provider of the entertainment shall collect and secure from each subscriber the tax imposed by this Act and remit the tax to the Department as set forth in Section 15-20 of this Act.

Section 15-20. Remittances.

(a) On or before the twentieth day of each calendar month, every provider shall file a return with the Department, in a form prescribed by the Department, stating:

(1) the name of the provider;

(2) the address of the provider's principal place of business;

(3) the total amount of tax revenues collected by the provider under this Act during the preceding calendar month, quarter, or year, as the case may be, during that preceding calendar month, quarter, or year and upon the basis of which the tax is imposed;

(4) the amount of tax due;

(5) the signature of the provider; and

(6) such other reasonable information as the Department may require.

(b) If a provider fails to sign a return within 30 days after the proper notice and demand for signature by the Department is received by the provider, then the return shall be considered valid and any amount shown to be due on the return shall be deemed assessed.

(c) If the provider is otherwise required to file a monthly return, and if the amount collected by the provider under this Act does not exceed $200, the Department may authorize the provider's returns to be filed on a quarter annual basis, with the return for January, February, and March of a given year being due by April 20 of that year; with the return for April, May, and June of a given year being due by July 20 of that year; with the return for July, August, and September of a given year being due by October 20 of that year, and with the return for October, November, and December of a given year being due by January 20 of the following year.

(d) If the provider is otherwise required to file a monthly or quarterly return, and if the amount collected by the provider under this Act does not exceed $50, the Department may authorize the provider's returns to be filed on an annual basis, with the return for a given year being due by January 20 of the following year.

(e) Those quarterly and annual returns shall be subject to the same requirements as to form and substance as monthly returns.

(f) A provider responsible for collecting and remitting the amount set forth in subsection (b) of Section 2505-210 of the Department of Revenue Law shall make all payments required by rules of the Department by electronic funds transfer.

Any provider not required to make payments by electronic funds transfer may make payments by electronic funds transfer with the permission of the Department.

All providers required to make payment by electronic funds transfer and any taxpayers authorized to voluntarily make payments by electronic funds transfer shall make those payments in the manner authorized by the Department.

Section 15-25. Records.

(a) A provider subject to this Act shall maintain the necessary records, and any other information required by the Department, to determine the amount of the tax that the provider is required to collect and remit and any credit that the provider is entitled to claim under this Act.

(b) The records shall be open at all times to inspection by the Department.

Section 15-30. Rules. The Department is authorized to adopt and enforce any reasonable rules and to prescribe such forms relating to the administration and enforcement of this Act as it may deem appropriate.

Section 15-35. Incorporation of Retailers' Occupation Tax Act and Uniform Penalty and Interest Act. All of the provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the Retailers' Occupation Tax Act, which are not inconsistent with this Act, and the Uniform Penalty and Interest Act, shall apply, as far as practicable, to the subject matter of this Act to the same extent as if such provisions were included herein. References in those incorporated Sections to taxpayers and to persons engaged in the business of selling tangible personal property at retail mean providers of direct-to-home satellite service, direct broadcast satellite service, or digital audio-visual works service when used in this Act.