Expresses the sense of the Congress that States and localities should work together, with the advice of the National Conference of Commissioners on Uniform State Laws, to develop a uniform streamlined sales and use tax system that addresses remote sales.
Authorizes States to enter into an Interstate Sales and Use Tax Compact which shall describe a uniform, streamlined sales and use tax system consistent with such system.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2775 Introduced in Senate (IS)]
106th CONGRESS
2d Session
S. 2775
To foster innovation and technological advancement in the development
of the Internet and electronic commerce, and to assist the States in
simplifying their sales and use taxes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 22, 2000
Mr. Dorgan (for himself, Mr. Enzi, Mr. Voinovich, Mr. Breaux, Mr.
Graham, Mr. Hutchinson, Mrs. Lincoln, Mr. Bennett, Mr. Bryan, Mr.
Cleland, and Mr. Thomas) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To foster innovation and technological advancement in the development
of the Internet and electronic commerce, and to assist the States in
simplifying their sales and use taxes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Internet Tax Moratorium and Equity
Act''.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) The moratorium of the Internet Tax Freedom Act on new
taxes on Internet access and on multiple and discriminatory
taxes on electronic commerce should be extended.
(2) States should be encouraged to simplify their sales and
use tax systems.
(3) As a matter of economic policy and basic fairness,
similar sales transactions should be treated equally, without
regard to the manner in which sales are transacted, whether in
person, through the mails, over the telephone, on the Internet,
or by other means.
(4) Congress may facilitate such equal taxation consistent
with the United States Supreme Court's decision in Quill Corp.
v. North Dakota.
(5) States that adequately simplify their tax systems
should be authorized to correct the present inequities in
taxation through requiring sellers to collect taxes on sales of
goods or services delivered in-state, without regard to the
location of the seller.
(6) The States have experience, expertise, and a vital
interest in the collection of sales and use taxes, and thus
should take the lead in developing and implementing sales and
use tax collection systems that are fair, efficient, and non-
discriminatory in their application and that will simplify the
process for both sellers and buyers.
(7) Online consumer privacy is of paramount importance to
the growth of electronic commerce and must be protected.
SEC. 3. EXTENSION OF INTERNET TAX FREEDOM ACT MORATORIUM THROUGH 2005.
Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151
note) is amended by striking ``3 years after the date of the enactment
of this Act--'' and inserting ``on December 31, 2005:''.
SEC. 4. STREAMLINED SALES AND USE TAX SYSTEM.
(a) Development of Streamlined System.--It is the sense of the
Congress that States and localities should work together, with the
advice of the National Conference of Commissioners on Uniform State
Laws, to develop a streamlined sales and use tax system that addresses
the following in the context of remote sales:
(1) A centralized, one-stop, multi-state registration
system for sellers.
(2) Uniform definitions for goods or services, whose sale
may, by State action, be included in the tax base.
(3) Uniform rules for attributing transactions to
particular taxing jurisdictions.
(4) Uniform procedures for--
(A) the designation and identification of
purchasers exempt from sales and use taxes; and
(B) immunization from liability for sellers that
rely on such State procedures.
(5) Uniform procedures for the certification of software
that sellers rely on to determine sales and use tax rates and
taxability.
(6) Uniform bad debt rules.
(7) A uniform format for tax returns and remittance forms.
(8) Consistent electronic filing and remittance methods.
(9) State administration of all State and local sales and
use taxes.
(10) Uniform audit procedures, including a provision giving
a seller the option to be subject to no more than a single
audit per year using those procedures; provided that if the
seller does not comply with the procedures to elect a single
audit, any States can conduct an audit using those procedures.
(11) Reasonable compensation for tax collection by sellers.
(12) Exemption from use tax collection requirements for
remote sellers falling below a de minimis threshold of
$5,000,000 in gross annual sales.
(13) Appropriate protections for consumer privacy.
(14) Such other features that the States deem warranted to
promote simplicity, uniformity, neutrality, efficiency, and
fairness.
(b) No Undue Burden.--The Congress finds that, if adopted, the
system described in subsection (a) will not place an undue burden on
interstate commerce or burden the growth of electronic commerce and
related technologies in any material way.
SEC. 5. INTERSTATE SALES AND USE TAX COMPACT.
(a) Authorization and Consent.--In general, the States are
authorized to enter into an Interstate Sales and Use Tax Compact.
Subject to subsection (c), the Congress consents to their entry into
that Compact. The Compact shall describe a uniform, streamlined sales
and use tax system consistent with section 4(a), and shall provide that
States joining the Compact must adopt that system.
(b) Expiration.--The authorization and consent in subsection (a)
shall expire if the Compact has not been formed before January 1, 2006.
(c) Congressional Consent Withdrawn if Compact Disapproved.--
(1) Adopting states to transmit.--Upon the 20th State
becoming a signatory to the Compact, the adopting States shall
transmit a copy of the Compact to Congress.
(2) Congressional action.--The consent of the Congress to
the Compact is withdrawn if the Congress, by law, disapproves
the Compact within 120 days (computed in accordance with
section 154 of the Trade Act of 1974 (19 U.S.C. 2194)) after
the adopting States transmit it to the Congress.
SEC. 6. AUTHORIZATION TO SIMPLIFY STATE USE-TAX RATES THROUGH
AVERAGING.
(a) In General.--A State that levies a use tax shall impose a
single, uniform State-wide use-tax rate on all remote sales on which it
assesses a use tax for any calendar year for which the State meets the
requirements of subsection (b).
(b) Averaging Requirement.--A State meets the requirements of this
subsection for any calendar year in which the single, uniform State-
wide use-tax rate is in effect if such rate is no greater than the
weighted average of the sales tax rates actually imposed by a State and
its local jurisdictions during the second calendar year prior to such
calendar year.
(c) Computation of Rate No Greater Than Weighted Average.--For
purposes of subsection (b), a State-wide use tax rate is no greater
than the weighted average of the sales tax rates imposed in a prior
calendar year only if, had such rate been assessed during such prior
calendar year on all sales on which a sales tax was actually assessed
by such State and its local jurisdictions, such rate would not have
yielded a greater total assessment of taxes than the total taxes
actually assessed on such sales during such year.
(d) Annual Option To Collect Actual Tax.--Notwithstanding
subsection (a), a remote seller has the annual option of collecting
applicable State and local use taxes throughout a State.
SEC. 7. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.
(a) Grant of Authority.--
(1) States that adopt the system may require collection.--
Any State that has adopted the system described in the Compact
is authorized, notwithstanding any other provision of law, to
require all sellers not qualifying for the de minimis exception
to collect and remit sales and use taxes on remote sales to
purchasers located in such State after the expiration of the
120 day period described by section 5(c)(2) unless the Compact
is disapproved under section 5(c).
(2) States that do not adopt the system may not require
collection.--Paragraph (1) does not extend to any State that
does not adopt the system described in the Compact.
(b) No Effect on Nexus, Etc.--No obligation imposed by virtue of
authority granted by subsection (a)(1) or denied by subsection (a)(2)
shall be considered in determining whether a seller has a nexus with
any State for any other tax purpose. Except as provided in subsection
(a), nothing in this Act permits or prohibits a State--
(1) to license or regulate any person;
(2) to require any person to qualify to transact intrastate
business; or
(3) to subject any person to State taxes not related to the
sale of goods or services.
SEC. 8. LIMITATION.
In general, nothing in this Act shall be construed as subjecting
sellers to franchise taxes, income taxes, or licensing requirements of
a State or political subdivision thereof, nor shall anything in this
Act be construed as affecting the application of such taxes or
requirements or enlarging or reducing the authority of any State or
political subdivision to impose such taxes or requirements.
SEC. 9. DEFINITIONS.
In this Act:
(1) State.--The term ``State'' means any State of the
United States of America and includes the District of Columbia.
(2) Goods or services.--The term ``goods or services''
includes tangible and intangible personal property and
services.
(3) Remote sale.--The term ``remote sale'' means a sale in
interstate commerce of goods or services attributed, under the
rules established pursuant to section 4(a)(3) of this Act, to a
particular taxing jurisdiction that could not, except for the
authority granted by this Act, require that the seller of such
goods or services collect and remit sales or use taxes on such
sale.
(4) Locus of remote sale.--The term ``particular taxing
jurisdiction'', when used with respect to the location of a
remote sale means a remote sale of goods or services
attributed, under the rules established pursuant to section
4(a)(3) of this Act, to a particular taxing jurisdiction.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S5676-5677)
Read twice and referred to the Committee on Finance.
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