Sales Tax Fairness and Simplification Act - Grants the consent of Congress to the Streamlined Sales and Use Tax Agreement (Agreement), the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002. Expresses the sense of Congress that the Agreement provides sufficient simplification and uniformity to warrant federal authorizations to states that are parties to it (member states) to require remote sellers (sellers without a physical presence in the taxing state) to collect and remit the sales and use taxes of such states and their local taxing jurisdictions.
Authorizes each member state, after 10 states (comprising at least 20% of all states imposing a sales tax) have petitioned for and become member states, to require all sellers, except those sellers with gross remote taxable sales nationwide of less than $5 million, to collect and remit sales and use taxes on remote sales owed to such member state under the terms of the Agreement.
Allows any person affected by the Agreement to petition the Governing Board established by the Agreement for a determination of any issue arising under the Agreement. Provides for judicial review of Governing Board determinations by the U.S. Court of Federal Claims.
Sets forth minimum simplification requirements for the Agreement.
Expresses the sense of Congress that member states should work with each other to prevent double taxation where a foreign country has imposed a transaction tax on a digital good or service
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3396 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 3396
To promote simplification and fairness in the administration and
collection of sales and use taxes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 3, 2007
Mr. Delahunt (for himself, Mr. LaHood, and Mr. Bachus) introduced the
following bill; which was referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To promote simplification and fairness in the administration and
collection of 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 ``Sales Tax Fairness and
Simplification Act''.
SEC. 2. CONSENT OF CONGRESS.
The Congress consents to the Streamlined Sales and Use Tax
Agreement.
SEC. 3. SENSE OF THE CONGRESS.
(a) Sales and Use Tax System.---It is the sense of the Congress
that the sales and use tax system established by the Streamlined Sales
and Use Tax Agreement, to the extent that it meets the minimum
simplification requirements of section 6, provides sufficient
simplification and uniformity to warrant Federal authorization to
Member States that are parties to the Agreement to require remote
sellers, subject to the conditions provided in this Act, to collect and
remit the sales and use taxes of such Member States and of local taxing
jurisdictions of such Member States.
(b) Purpose.--The purpose of this Act is to--
(1) effectuate the limited authority granted to Member
States under the Streamlined Sales and Use Tax Agreement; and
(2) not grant additional authority unrelated to the
accomplishment of the purpose described in paragraph (1).
SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.
(a) Grant of Authority.--
(1) In general.--Each Member State under the Streamlined
Sales and Use Tax Agreement is authorized, subject to the
requirements of this section, to require all sellers not
qualifying for the small business exception provided under
subsection (d) to collect and remit sales and use taxes with
respect to remote sales sourced to that Member State under the
Agreement.
(2) Requirements for authority.--The authorization provided
under paragraph (1) shall be granted once all of the following
have occurred:
(A) 10 States comprising at least 20 percent of the
total population of all States imposing a sales tax, as
determined by the 2000 Federal census, have petitioned
for membership and have become Member States under the
Agreement.
(B) The following necessary operational aspects of
the Agreement have been implemented by the Governing
Board:
(i) Provider and system certification.
(ii) Setting of monetary allowance by
contract with providers.
(iii) Implementation of an on-line
multistate registration system.
(iv) Adoption of a standard form for
claiming exemptions electronically.
(v) Establishment of advisory councils.
(vi) Promulgation of rules and procedures
for dispute resolution.
(vii) Promulgation of rules and procedures
for audits.
(viii) Provisions for funding and staffing
the Governing Board.
(C) Each Member State has met the requirements to
provide and maintain the databases and the taxability
matrix described in the Agreement, pursuant to
requirements of the Governing Board.
(3) Limitation of authority.--The authorization provided
under paragraph (1)--
(A) shall be granted notwithstanding any other
provision of law; and
(B) is dependent upon the Agreement, as amended,
meeting the minimum simplification requirements of
section 6.
(b) Termination of Authority.--
(1) In general.--The authorization provided under
subsection (a) shall terminate for all States if--
(A) the requirements contained in subsection (a)
cease to be satisfied; or
(B) any amendment adopted to the Agreement after
the date of enactment of this Act is not within the
scope of the administration of sales and use taxes or
taxes on telecommunications services by the Member
States.
(2) Loss of member state status.--The authorization
provided under subsection (a) shall terminate for a Member
State, if such Member State no longer meets the requirements
for Member State status under the terms of the Agreement.
(c) Determination of Status.--
(1) In general.--The Governing Board shall determine if
Member States are in compliance with the requirements of
subsections (a) and (b).
(2) Compliance determination.--Upon the determination of
the Governing Board that all the requirements of subsection (a)
have been satisfied, the authority of each Member State to
require a seller to collect and remit sales and use taxes shall
commence on the first day of a calendar quarter at least 6
months after the date the Governing Board makes its
determination.
(d) Small Business Exception.--No seller shall be subject to a
requirement of any State to collect and remit sales and use taxes with
respect to a remote sale if--
(1) the seller and its affiliates collectively had gross
remote taxable sales nationwide of less than $5,000,000 in the
calendar year preceding the date of such sale; or
(2) the seller and its affiliates collectively meet the
$5,000,000 threshold of this subsection but the seller has less
than $100,000 in gross remote taxable sales nationwide.
SEC. 5. DETERMINATIONS BY GOVERNING BOARD AND JUDICIAL REVIEW OF SUCH
DETERMINATIONS.
(a) Petition.--At any time after the Governing Board has made the
determination required under section 4(c)(2), any person who may be
affected by the Agreement may petition the Governing Board for a
determination on any issue relating to the implementation of the
Agreement.
(b) Review in Court of Federal Claims.--Any person who submits a
petition under subsection (a) may bring an action against the Governing
Board in the United States Court of Federal Claims for judicial review
of the action of the Governing Board on that petition if--
(1) the petition relates to an issue of whether--
(A) a Member State has satisfied or continues to
satisfy the requirements for Member State status under
the Agreement;
(B) the Governing Board has performed a
nondiscretionary duty of the Governing Board under the
Agreement;
(C) the Agreement continues to satisfy the minimum
simplification requirements set forth in section 6; or
(D) any other requirement of section 4 has been
satisfied; and
(2) the petition is denied by the Governing Board in whole
or in part with respect to that issue, or the Governing Board
fails to act on the petition with respect to that issue not
later than 6 months after the date on which the petition is
submitted.
(c) Timing of Action for Review.--An action for review under this
section shall be initiated not later than 60 days after the denial of
the petition by the Governing Board, or, if the Governing Board failed
to act on the petition, not later than 60 days after the end of the 6-
month period beginning on the day after the date on which the petition
was submitted.
(d) Standard of Review.--
(1) In general.--In any action for review under this
section, the court shall set aside the actions, findings, and
conclusions of the Governing Board found to be arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.
(2) Remand.--If the court sets aside any action, finding,
or conclusion of the Governing Board under paragraph (1), the
court shall remand the case to the Governing Board for further
action consistent with the decision of the court.
(e) Jurisdiction.--
(1) Generally.--Chapter 91 of title 28, United States Code,
is amended by adding at the end the following:
``SEC. 1510. JURISDICTION REGARDING THE STREAMLINED SALES AND USE TAX
AGREEMENT.
``The United States Court of Federal Claims shall have exclusive
jurisdiction over actions for judicial review of determinations of the
Governing Board of the Streamlined Sales and Use Tax Agreement under
the terms and conditions provided in section 5 of the Sales Tax
Fairness and Simplification Act.''.
(2) Conforming amendment to table of sections.--The table
of sections at the beginning of chapter 91 of title 28, United
States Code, is amended by adding at the end the following new
item:
``1510. Jurisdiction regarding the streamlined sales and use tax
agreement.''.
SEC. 6. MINIMUM SIMPLIFICATION REQUIREMENTS.
(a) In General.--The minimum simplification requirements for the
Agreement, which shall relate to the conduct of Member States under the
Agreement and to the administration and supervision of such conduct,
are as follows:
(1) A centralized, one-stop, multistate registration system
that a seller may elect to use to register with the Member
States, provided a seller may also elect to register directly
with a Member State, and further provided that privacy and
confidentiality controls shall be placed on the multistate
registration system so that it may not be used for any purpose
other than the administration of sales and use taxes.
Furthermore, no taxing authority within a Member State or a
Member State that has withdrawn or been expelled from the
Agreement may use registration with the centralized
registration system for the purpose of, or as a factor in
determining, whether a seller has a nexus with that Member
State for any tax at any time.
(2) Uniform definitions of products and product-based
exemptions from which a Member State may choose its individual
tax base, provided, however, that all local jurisdictions in
that Member State shall have a common tax base identical to the
State tax base of that Member State. A Member State may enact
other product-based exemptions without restriction if the
Agreement does not have a definition for the product or for a
term that includes the product. A Member State shall relax the
good faith requirement for acceptance of exemption certificates
in accordance with section 317 of the Agreement, as amended
through the date of enactment of this Act.
(3) Uniform rules for sourcing and attributing transactions
to particular taxing jurisdictions.
(4) Uniform procedures for the certification of service
providers and software on which a seller may elect to rely in
order to determine Member State sales and use tax rates and
taxability.
(5) Uniform rules for bad debts and rounding.
(6) Uniform requirements for tax returns and remittances.
(7) Consistent electronic filing and remittance methods.
(8) Single, State-level administration of all Member State
and local sales and use taxes, including a requirement for a
State-level filing of tax returns in each Member State.
(9) A single sales and use tax rate per taxing
jurisdiction, except that a State may impose a single
additional rate, which may be zero, on food, food ingredients,
and drugs, provided that this limitation does not apply to the
items identified in section 308 C of the Agreement, as amended
through the date of enactment of this Act.
(10) A Member State shall eliminate caps and thresholds on
the application of sales and use tax rates and exemptions based
on value, provided that this limitation does not apply to the
items identified in section 308 C of the Agreement, as amended
through the date of enactment of this Act.
(11) A provision requiring each Member State to complete a
taxability matrix, as adopted by the Governing Board. The
matrix shall include information regarding terms defined by the
Agreement in the Library of Definitions. The matrix shall also
include, pursuant to the requirements of the Governing Board,
information on use, entity, and product based exemptions.
(12) A provision requiring that each Member State relieves
a seller or service provider from liability to that Member
State and local jurisdiction for collection of the incorrect
amount of sales or use tax, and relieves the purchaser from
penalties stemming from such liability, provided that
collection of the improper amount is the result of relying on
information provided by that Member State regarding tax rates,
boundaries, or taxing jurisdiction assignments, or in the
taxability matrix regarding terms defined by the Agreement in
the Library of Definitions.
(13) Audit procedures for sellers, including an option
under which a seller not qualifying for the small business
exception in section 4(d) may request, by notifying the
Governing Board, to be subject to a single audit on behalf of
all Member States for sales and use taxes (other than use taxes
on goods and services purchased for the consumption of the
seller). The Governing Board, in its discretion, shall
authorize such a single audit.
(14) As of the day that authority to require collection
commences under section 4, each Member State shall provide
reasonable compensation for expenses incurred by a seller
directly in administering, collecting, and remitting sales and
use taxes (other than use taxes on goods and services purchased
for the consumption of the seller) to that Member State. Such
compensation may vary in each Member State depending on the
complexity of the sales and use tax laws in that Member State
and may vary by the characteristics of sellers in order to
reflect differences in collection costs. Such compensation may
be provided to a seller or a third party service provider whom
a seller has contracted with to perform all the sales and use
tax responsibilities of a seller.
(15) Appropriate protections for consumer privacy.
(16) Governance procedures and mechanisms to ensure timely,
consistent, and uniform implementation and adherence to the
principles of the streamlined system and the terms of the
Agreement.
(17) Each Member State shall apply the simplification
requirements of the Agreement to taxes on telecommunications
services, except as provided herein. This requirement is
applicable to Member States as of July 1, 2010, except that
sales and use taxes on telecommunications services shall be
subject to the Agreement and the authority granted to the
Member States when the requirements of section 4(a) are met. On
or after July 1, 2010, for those Member States which meet the
requirements of this paragraph, the authority granted such
Member States under section 4 may be exercised by such Member
States, pursuant to the terms of section 4 and section 5, with
respect to taxes on telecommunications services other than
sales and use taxes on such services. The following are
exceptions to the requirement established under this paragraph:
(A) The requirement for one uniform return shall
not apply, provided, however, there shall be one
uniform return for each type of tax on
telecommunications services within a State.
(B) The requirements for rate simplification are
modified to require that each taxing jurisdiction shall
have only one rate for each type of tax on
telecommunications services.
(C) The requirements for tax base uniformity in
section 302 of the Agreement shall apply to each type
of tax on telecommunications services within a State,
but shall not be construed to require that the tax base
for different types of taxes on telecommunications
services must be identical to the tax base for sales
and use taxes imposed on telecommunications services.
(18) Uniform rules and procedures for ``sales tax
holidays''.
(19) Uniform rules and procedures to address refunds and
credits for sales taxes relating to customer returns,
restocking fees, discounts and coupons, and rules to address
allocations of shipping and handling and discounts applied to
multiple item and multiple seller orders.
(b) Requirement To Provide Simplified Tax Systems.--
(1) In general.--The requirements of this section are
intended to ensure that each Member State provides and
maintains the necessary simplifications to its sales and use
tax system to warrant the collection authority granted to it in
section 4.
(2) Reduction of administrative burdens.--The requirements
of this section should be construed--
(A) to require each Member State to substantially
reduce the administrative burdens associated with sales
and use taxes; and
(B) as allowing each Member State to exercise
flexibility in how these requirements are satisfied.
(3) Exception.--In instances where exceptions to the
requirements of this section can be exercised in a manner that
does not materially increase the administrative burden on a
seller obligated to collect or pay the taxes, such exceptions
are permissible.
SEC. 7. LIMITATION.
(a) In General.---Nothing in this Act shall be construed as--
(1) subjecting a seller to franchise taxes, income taxes,
or licensing requirements of a Member State or political
subdivision thereof; or
(2) affecting the application of such taxes or requirements
or enlarging or reducing the authority of any Member State to
impose such taxes or requirements.
(b) No Effect on Nexus, Etc.--
(1) In general.--No obligation imposed by virtue of the
authority granted by section 4 shall be considered in
determining whether a seller has a nexus with any Member State
for any other tax purpose.
(2) Permissible member state authority.--Except as provided
in subsection (a), and in section 4, nothing in this Act
permits or prohibits a Member State from--
(A) licensing or regulating any person;
(B) requiring any person to qualify to transact
intrastate business;
(C) subjecting any person to State taxes not
related to the sale of goods or services; or
(D) exercising authority over matters of interstate
commerce.
SEC. 8. EXPEDITED JUDICIAL REVIEW.
(a) Three-Judge District Court Hearing.--Notwithstanding any other
provision of law, any civil action challenging the constitutionality of
this Act, or any provision thereof, shall be heard by a district court
of three judges convened pursuant to the provisions of section 2284 of
title 28, United States Code.
(b) Appellate Review.--
(1) In general.--Notwithstanding any other provision of
law, an interlocutory or final judgment, decree, or order of
the court of three judges in an action under subsection (a)
holding this Act, or any provision thereof, unconstitutional
shall be reviewable as a matter of right by direct appeal to
the Supreme Court.
(2) 30-day time limit.--Any appeal under paragraph (1)
shall be filed not more than 30 days after the date of entry of
such judgment, decree, or order.
SEC. 9. DEFINITIONS.
For the purposes of this Act the following definitions apply:
(1) Affiliate.--The term ``affiliate'' means any entity
that controls, is controlled by, or is under common control
with a seller.
(2) Governing board.--The term ``Governing Board'' means
the governing board established by the Streamlined Sales and
Use Tax Agreement.
(3) Member state.--The term ``Member State''--
(A) means a Member State as that term is used under
the Streamlined Sales and Use Tax Agreement as of the
date of enactment of this Act; and
(B) does not include associate members under the
Agreement.
(4) Nationwide.--The term ``nationwide'' means throughout
each of the several States and the District of Columbia, the
Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin
Islands, the Northern Mariana Islands, and any other territory
or possession of the United States.
(5) Nondiscretionary duty of the governing board.--The
phrase ``nondiscretionary duty of the Governing Board'' means
any duty of the Governing Board specified in the Agreement as a
requirement for action by use of the term ``shall'', ``will'',
or ``is required to''.
(6) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, or any
other legal entity, and includes a State or local government.
(7) Remote sale.--The term ``remote sale'' refers to a sale
of goods or services attributed to a particular Member State
with respect to which a seller does not have adequate physical
presence to establish nexus under the law existing on the day
before the date of enactment of this Act so as to allow such
Member State to require, without regard to the authority
granted by this Act, the seller to collect and remit sales or
use taxes with respect to such sale.
(8) Remote seller.--The term ``remote seller'' means any
seller who makes a remote sale.
(9) State.--The term ``State'' means any State of the
United States of America and includes the District of Columbia,
Puerto Rico, and any other territory or possession of the
United States.
(10) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax Agreement'' (or ``the
Agreement'') means the multistate agreement with that title
adopted on November 12, 2002, as amended through the date of
enactment of this Act and unless the context otherwise
indicates as further amended from time to time.
(11) Tax on telecommunications services.--The term ``tax on
telecommunications services'' or ``taxes on telecommunication
services'' shall encompass the same taxes, charges, or fees as
are included in section 116 of title 4, United States Code,
except that ``telecommunication services'' shall replace
``mobile telecommunications services'' whenever such term
appears.
(12) Telecommunications service.--
(A) In general.--The term ``telecommunications
service'' means the electronic transmission,
conveyance, or routing of voice, data, audio, video, or
any other information or signals to a point, or between
or among points.
(B) Inclusion.--The term ``telecommunication
service''--
(i) includes transmission services in which
computer processing applications are used to
act on the form, code, or protocol of the
content for purposes of transmission,
conveyance, or routing without regard to
whether such services are referred to as voice
over Internet protocol services or are
classified by the Federal Communications
Commission as enhanced or value added services;
and
(ii) does not include the data processing
and information services that allow data to be
generated, acquired, stored, processed, or
retrieved and delivered by an electronic
transmission to a purchaser where the primary
purpose of such purchaser for the underlying
transaction is the processed data or
information.
SEC. 10. SENSE OF THE CONGRESS ON DIGITAL GOODS AND SERVICES.
It is the sense of the Congress that each State that is a party to
the Agreement should work with other States that are also party to the
Agreement to prevent double taxation in situations where a foreign
country has imposed a transaction tax on a digital good or service.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on the Judiciary.
Referred to the Subcommittee on Commercial and Administrative Law.
Referred to the Subcommittee on Courts, the Internet, and Intellectual Property.
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