Marketplace Fairness Act of 2017
This bill authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the agreement, but only if such agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing.
The bill defines "remote sale" as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this bill.
The bill also prohibits states from beginning to exercise the authority granted by this bill for a specified period after enactment.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 976 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 976
To restore States' sovereign rights to enforce State and local sales
and use tax laws, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 27, 2017
Mr. Enzi (for himself, Mr. Durbin, Mr. Alexander, Ms. Heitkamp, Ms.
Warren, Mr. Reed, Mr. Whitehouse, Mr. Warner, Mr. Cardin, Mr. Kaine,
Mr. Markey, Mr. Blunt, Mr. Rounds, Ms. Duckworth, and Ms. Collins)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To restore States' sovereign rights to enforce State and local sales
and use tax laws, and for other purposes.
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 ``Marketplace Fairness Act of 2017''.
SEC. 2. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.
(a) Streamlined Sales and Use Tax Agreement.--Each Member State
under the Streamlined Sales and Use Tax Agreement is authorized to
require all sellers not qualifying for the small seller exception
described in subsection (c) to collect and remit sales and use taxes
with respect to remote sales sourced to that Member State pursuant to
the provisions of the Streamlined Sales and Use Tax Agreement, but only
if any changes to the Streamlined Sales and Use Tax Agreement made
after the date of the enactment of this Act are not in conflict with
the minimum simplification requirements in subsection (b)(2). Subject
to section 3(h), a State may exercise authority under this Act
beginning 180 days after the State publishes notice of the State's
intent to exercise the authority under this Act, but no earlier than
the first day of the calendar quarter that is at least 180 days after
the date of the enactment of this Act.
(b) Alternative.--A State that is not a Member State under the
Streamlined Sales and Use Tax Agreement is authorized notwithstanding
any other provision of law to require all sellers not qualifying for
the small seller exception described in subsection (c) to collect and
remit sales and use taxes with respect to remote sales sourced to that
State, but only if the State adopts and implements the minimum
simplification requirements in paragraph (2). Subject to section 3(h),
such authority shall commence beginning no earlier than the first day
of the calendar quarter that is at least 6 months after the date that
the State--
(1) enacts legislation to exercise the authority granted by
this Act--
(A) specifying the tax or taxes to which such
authority and the minimum simplification requirements
in paragraph (2) shall apply; and
(B) specifying the products and services otherwise
subject to the tax or taxes identified by the State
under subparagraph (A) to which the authority of this
Act shall not apply; and
(2) implements each of the following minimum simplification
requirements:
(A) Provide--
(i) a single entity within the State
responsible for all State and local sales and
use tax administration, return processing, and
audits for remote sales sourced to the State;
(ii) a single audit of a remote seller for
all State and local taxing jurisdictions within
that State; and
(iii) a single sales and use tax return to
be used by remote sellers to be filed with the
single entity responsible for tax
administration.
A State may not require a remote seller to file sales
and use tax returns any more frequently than returns
are required for nonremote sellers or impose
requirements on remote sellers that the State does not
impose on nonremote sellers with respect to the
collection of sales and use taxes under this Act. No
local jurisdiction may require a remote seller to
submit a sales and use tax return or to collect sales
and use taxes other than as provided by this paragraph.
(B) Provide a uniform sales and use tax base among
the State and the local taxing jurisdictions within the
State pursuant to paragraph (1).
(C) Source all remote sales in compliance with the
sourcing definition set forth in section 4(7).
(D) Provide--
(i) information indicating the taxability
of products and services along with any product
and service exemptions from sales and use tax
in the State and a rates and boundary database;
(ii) software free of charge for remote
sellers that calculates sales and use taxes due
on each transaction at the time the transaction
is completed, that files sales and use tax
returns, and that is updated to reflect rate
changes as described in subparagraph (H); and
(iii) certification procedures for persons
to be approved as certified software providers.
For purposes of clause (iii), the software provided by
certified software providers shall be capable of
calculating and filing sales and use taxes in all
States qualified under this Act.
(E) Relieve remote sellers from liability to the
State or locality for the incorrect collection,
remittance, or noncollection of sales and use taxes,
including any penalties or interest, if the liability
is the result of an error or omission made by a
certified software provider.
(F) Relieve certified software providers from
liability to the State or locality for the incorrect
collection, remittance, or noncollection of sales and
use taxes, including any penalties or interest, if the
liability is the result of misleading or inaccurate
information provided by a remote seller.
(G) Relieve remote sellers and certified software
providers from liability to the State or locality for
incorrect collection, remittance, or noncollection of
sales and use taxes, including any penalties or
interest, if the liability is the result of incorrect
information or software provided by the State.
(H) Provide remote sellers and certified software
providers with 90 days notice of a rate change by the
State or any locality in the State and update the
information described in subparagraph (D)(i)
accordingly and relieve any remote seller or certified
software provider from liability for collecting sales
and use taxes at the immediately preceding effective
rate during the 90-day notice period if the required
notice is not provided.
(c) Small Seller Exception.--A State is authorized to require a
remote seller to collect sales and use taxes under this Act only if the
remote seller has gross annual receipts in total remote sales in the
United States in the preceding calendar year exceeding $1,000,000. For
purposes of determining whether the threshold in this section is met,
the gross annual receipts from remote sales of two or more persons
shall be aggregated if--
(1) such persons are related to the remote seller within
the meaning of subsections (b) and (c) of section 267 or
section 707(b)(1) of the Internal Revenue Code of 1986; or
(2) such persons have one or more ownership relationships
and such relationships were designed with a principal purpose
of avoiding the application of these rules.
SEC. 3. LIMITATIONS.
(a) In General.--Nothing in this Act shall be construed as--
(1) subjecting a seller or any other person to franchise,
income, occupation, or any other type of taxes, other than
sales and use taxes;
(2) affecting the application of such taxes; or
(3) enlarging or reducing State authority to impose such
taxes.
(b) No Effect on Nexus.--This Act shall not be construed to create
any nexus or alter the standards for determining nexus between a person
and a State or locality.
(c) No Effect on Seller Choice.--Nothing in this Act shall be
construed to deny the ability of a remote seller to deploy and utilize
a certified software provider of the seller's choice.
(d) Licensing and Regulatory Requirements.--Nothing in this Act
shall be construed as permitting or prohibiting a State from--
(1) licensing or regulating any person;
(2) requiring any person to qualify to transact intrastate
business;
(3) subjecting any person to State or local taxes not
related to the sale of products or services; or
(4) exercising authority over matters of interstate
commerce.
(e) No New Taxes.--Nothing in this Act shall be construed as
encouraging a State to impose sales and use taxes on any products or
services not subject to taxation prior to the date of the enactment of
this Act.
(f) No Effect on Intrastate Sales.--The provisions of this Act
shall apply only to remote sales and shall not apply to intrastate
sales or intrastate sourcing rules. States granted authority under
section 2(a) shall comply with all intrastate provisions of the
Streamlined Sales and Use Tax Agreement.
(g) No Effect on Mobile Telecommunications Sourcing Act.--Nothing
in this Act shall be construed as altering in any manner or preempting
the Mobile Telecommunications Sourcing Act (4 U.S.C. 116-126).
(h) Limitation on Initial Collection of Sales and Use Taxes From
Remote Sales.--A State may not begin to exercise the authority under
this Act--
(1) before the date that is 1 year after the date of the
enactment of this Act; and
(2) during the period beginning October 1 and ending on
December 31 of the first calendar year beginning after the date
of the enactment of this Act.
SEC. 4. DEFINITIONS AND SPECIAL RULES.
In this Act:
(1) Certified software provider.--The term ``certified
software provider'' means a person that--
(A) provides software to remote sellers to
facilitate State and local sales and use tax compliance
pursuant to section 2(b)(2)(D)(ii); and
(B) is certified by a State to so provide such
software.
(2) Locality; local.--The terms ``locality'' and ``local''
refer to any political subdivision of a State.
(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 in
effect on the date of the enactment of this Act; and
(B) does not include any associate member under the
Streamlined Sales and Use Tax Agreement.
(4) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, limited
liability company, or other legal entity, and a State or local
government.
(5) Remote sale.--The term ``remote sale'' means a sale
into a State, as determined under the sourcing rules under
paragraph (7), in which the seller would not legally be
required to pay, collect, or remit State or local sales and use
taxes unless provided by this Act.
(6) Remote seller.--The term ``remote seller'' means a
person that makes remote sales in the State.
(7) Sourced.--For purposes of a State granted authority
under section 2(b), the location to which a remote sale is
sourced refers to the location where the product or service
sold is received by the purchaser, based on the location
indicated by instructions for delivery that the purchaser
furnishes to the seller. When no delivery location is
specified, the remote sale is sourced to the customer's address
that is either known to the seller or, if not known, obtained
by the seller during the consummation of the transaction,
including the address of the customer's payment instrument if
no other address is available. If an address is unknown and a
billing address cannot be obtained, the remote sale is sourced
to the address of the seller from which the remote sale was
made. A State granted authority under section 2(a) shall comply
with the sourcing provisions of the Streamlined Sales and Use
Tax Agreement.
(8) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, Guam, American Samoa, the United States Virgin Islands,
the Commonwealth of the Northern Mariana Islands, and any other
territory or possession of the United States, and any tribal
organization (as defined in section 4 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b)).
(9) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax Agreement'' means the multi-
State agreement with that title adopted on November 12, 2002,
as in effect on the date of the enactment of this Act and as
further amended from time to time.
SEC. 5. SEVERABILITY.
If any provision of this Act or the application of such provision
to any person or circumstance is held to be unconstitutional, the
remainder of this Act and the application of the provisions of such to
any person or circumstance shall not be affected thereby.
SEC. 6. PREEMPTION.
Except as otherwise provided in this Act, this Act shall not be
construed to preempt or limit any power exercised or to be exercised by
a State or local jurisdiction under the law of such State or local
jurisdiction or under any other Federal law.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
Committee on Banking, Housing, and Urban Affairs. Hearings held. Hearings printed: S.Hrg. 115-57.
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