SALEM, Ore. (AP) -- Oregon's tax-collecting agency plans to extend a tax for 911 service to prepaid cellular phones, a growing market that doesn't pay the tax levied on landline and traditional cellphone service.
Emergency responders tried to convince the Legislature to make the change last year, but lawmakers had little appetite to approve a tax increase and the effort went nowhere. The Department of Revenue now says it already has authority to levy the tax and doesn't need the Legislature's approval, The Associated Press has learned.
The agency last week proposed changing its administrative rules to require that cellphone companies pay the monthly 75 cent 911 tax for each of their prepaid customers.
The agency is collecting public comment on the proposal this month. It was not immediately clear when the change would take effect.
Large cellphone carriers are crying foul, saying the Department of Revenue has no authority to extend the tax. The carriers worry that they won't be able to collect the tax from their customers and will be stuck footing the bill themselves. The issue could end up in court.
The rule is just to make sure that we can equitably apply that tax to all providers, said Derrick Gasperini, a spokesman for the Department of Revenue.
Oregon's 911 tax was created in 1981 to help pay for call centers, dispatchers, communication equipment and other costs related to maintaining the emergency response system. The program collects about $80 million a year, said Mark Tennyson, the program's director at the Oregon Office of Emergency Management.
State officials don't know how many prepaid phones there are in Oregon, so it's unclear how much revenue the tax would generate. But state officials say the prepaid market is expanding because it's cheap and convenient, and they're concerned they'll lose money to pay for 911 services.
We're really hoping that we do start collecting this. We feel like it's revenue that they should be paying, Tennyson said.
Emergency response officials took the issue to the Legislature in 2011. A House committee held a public hearing on HB 2075 but never advanced it further. Because the measure would have raised revenue, it would've required approval by three- fifths of legislators.
Gasperini, the revenue department spokesman, said legislative lawyers have determined that the existing law allows the Department of Revenue to collect the tax for prepaid phone, so the Legislature's approval isn't required.
Officials from Verizon Wireless and T-Mobile, two of the four largest wireless phone companies, said they disagree. We don't believe that the Department of Revenue, absent a change in the statutory framework, maintains the authority to promulgate the rules as proposed, said Richard Kosesan, a Verizon lobbyist in Oregon. Some states assess 911 taxes when customers buy minutes for their prepaid phone, and the wireless companies say other states should find a similar approach.
The only logical place to collect the tax from prepaid customers is when they purchase minutes, which is the equivalent of paying their bill, and consistent with the fact that postpaid customers pay the 911 tax at the time they pay for their service on their monthly bills, T-Mobile said in a statement.
But others say that option would be difficult in states like Oregon that have no sales tax because retail stores and tax agencies don't have the infrastructure to collect levies at the cash register.
Rep. Vicki Berger, a Salem Republican who has tried to find a solution to the issue, didn't have a lot of sympathy for that argument.
If your business model makes it hard to collect, that's not the government's problem. That's your problem, Berger said.