Expresses the sense of the Congress that: (1) States and localities should work together to develop a uniform streamlined sales and use tax system that addresses remote sales; and (2) a study should be commissioned to determine seller costs of collecting and remitting State and local sales and use taxes from 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 the above system.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1567 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1567
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
October 18, 2001
Mr. Enzi (for himself, Mr. Dorgan, Mrs. Hutchison, Mr. Kerry, Mr.
Thomas, Mr. Graham, Mr. Voinovich, and Mr. Hutchinson) introduced the
following bill; which was read twice and referred to the Committee on
Commerce, Science, and Transportation
_______________________________________________________________________
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.
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.
Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151
note) is amended to read as follows:
``(a) Moratorium.--No State or political subdivision thereof shall
impose--
``(1) any taxes on Internet access during the period
beginning after September 30, 1998, unless such a tax was
generally imposed and actually enforced prior to October 1,
1998; and
``(2) multiple or discriminatory taxes on electronic
commerce during the period beginning on October 1, 1998, and
ending on December 31, 2005.''.
SEC. 4. INTERNET TAX FREEDOM ACT DEFINITIONS.
(a) Internet Access Services.--Section 1104 of the Internet Tax
Freedom Act (47 U.S.C. 151 note) is amended by adding at the end the
following new paragraph:
``(11) Internet access services.--The term `Internet access
services' means services that combine computer processing,
information storage, protocol conversion, and routing with
transmission to enable users to access Internet content and
services. Such term does not include receipt of such content or
services.''.
(b) Internet Access.--Section 1104(5) of the Internet Tax Freedom
Act (47 U.S.C. 151 note) is amended by striking ``telecommunications
services.' and inserting ``telecommunications services generally, but
does include wireless web access services used to enable users to
access content, information, electronic mail, or other services offered
over the Internet, including any comparable package of services offered
to users.''.
(c) Telecommunications Services.--Section 1104(9) of the Internet
Tax Freedom Act (47 U.S.C. 151 note) is amended by striking ``and
includes communications services (as defined in section 4251 of the
Internal Revenue Code of 1986)''.
(d) Wireless Web Access Services.--Section 1104 of the Internet Tax
Freedom Act (47 U.S.C. 151 note), as amended by subsection (a), is
amended by adding at the end the following new paragraph:
``(12) Wireless web access services.--The term `wireless
web access services' means commercial mobile services (as
defined in section 332(d)(1) of Communications Act of 1934 (47
U.S.C. 332(d)(1)), multi-channel, multi-point
distribution services, or any wireless telecommunications services used
to access the Internet.''.
SEC. 5. STREAMLINED SALES AND USE TAX SYSTEM.
(a) Development of Streamlined System.--It is the sense of Congress
that States and localities should work together 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 reporting,
submission, and payment system for sellers.
(2) Uniform definitions for goods or services, the sale of
which 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 treatment of purchasers exempt from sales
and use taxes; and
(B) relief 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) A uniform format for tax returns and remittance forms.
(7) Consistent electronic filing and remittance methods.
(8) State administration of all State and local sales and
use taxes.
(9) 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; except that if the
seller does not comply with the procedures to elect a single
audit, any State can conduct an audit using those procedures.
(10) Reasonable compensation for tax collection by sellers.
(11) Exemption from use tax collection requirements for
remote sellers falling below a de minimis threshold of
$5,000,000 in gross annual sales.
(12) Appropriate protections for consumer privacy.
(13) Such other features that the States deem warranted to
promote simplicity, uniformity, neutrality, efficiency, and
fairness.
(b) Study.--It is the sense of Congress that a joint, comprehensive
study should be commissioned by State and local governments and the
business community to determine the cost to all sellers of collecting
and remitting State and local sales and use taxes on sales made by
sellers under the law as in effect on the date of enactment of this Act
and under the system described in subsection (a) to assist in
determining what constitutes reasonable compensation.
SEC. 6. INTERSTATE SALES AND USE TAX COMPACT.
(a) Authorization.--In general, the States are authorized to enter
into an Interstate Sales and Use Tax Compact. The Compact shall
describe a uniform, streamlined sales and use tax system consistent
with section 5(a), and shall provide that States joining the Compact
must adopt that system.
(b) Expiration.--The authorization in subsection (a) shall expire
if the Compact has not been formed before January 1, 2005.
(c) Congressional Approval of Compact.--
(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.--
(A) In general.--If a joint resolution described in
subparagraph (B) is enacted into law within 120
calendar days, excluding congressional recess period
days, of Congress receiving the Compact under paragraph
(1), then sections 7 and 8 shall apply to the adopting
States, and any other State that subsequently adopts
the Compact.
(B) Joint resolution.--A joint resolution described
in this subparagraph is a joint resolution of the two
Houses of Congress, the matter after the resolving
clause of which is as follows: ``That Congress--
``(1) agrees that the uniform, streamlined sales and use
tax system described in the Compact transmitted to Congress by
the States pursuant to section 6(c)(1) of the Internet Tax
Moratorium and Equity Act does not create an undue burden on
interstate commerce; and
``(2) authorizes any State that adopts such Compact to
require remote sellers to collect and remit sales and use taxes
in accordance with such system .''
(C) Expedited procedure for approval.--
(i) Rules of house and senate.--This
paragraph is enacted--
(I) as an exercise of the
rulemaking power of the House of
Representatives and the Senate,
respectively, and as such is deemed a
part of the rules of each House,
respectively, but applicable only with respect to the procedure to be
followed in that House in the case of the joint resolution described in
subparagraph (B), and they supersede other rules only to the extent
that they are inconsistent therewith, and
(II) with full recognition of the
constitutional right of either House to
change the rules (so far as they relate
to the procedure of that House) at any
time, in the same manner and to the
same extent as in the case of any other
rule of that House.
(ii) Applicable procedural provisions.--
Except as otherwise provided in this paragraph,
the procedures set forth in section 152 (other
than subsection (a) thereof) of the Trade Act
of 1974 (19 U.S.C. 2192) shall apply to the
joint resolution described in subparagraph (B)
by substituting the ``Committee on the
Judiciary'' for the ``Committee on Ways and
Means'' and the ``Committee on Commerce,
Science, and Transportation'' for the
``Committee on Finance'' in subsection (b)
thereof.
(iii) Introduction of joint resolution
after compact received.--Until Congress
receives the Compact described in paragraph
(1), it shall not be in order in either House
to introduce the joint resolution described in
subparagraph (B).
(iv) Consideration of joint resolution.--No
amendment to the joint resolution described in
subparagraph (B) shall be in order in either
the House of Representatives or the Senate, and
no motion to suspend the application of this
clause shall be in order in either House.
Within 120 calendar days, excluding
congressional recess period days, after the
date on which a joint resolution described in
subparagraph (B) is introduced in either House,
that House shall proceed to a final vote on the
joint resolution without intervening action. If
either House approves the resolution, it shall
be placed on the calendar in the other House,
which shall proceed immediately to a final vote
on the joint resolution without intervening
action.
SEC. 7. AUTHORIZATION TO SIMPLIFY STATE USE-TAX RATES THROUGH
AVERAGING.
(a) In General.--Subject to the exception in subsection (c), a
State that adopts the Compact authorized and approved under section 6
and 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 the State
and its local jurisdictions during the 12-month period ending on June
30 prior to such calendar year.
(c) Annual Option To Collect Actual Tax.--Notwithstanding
subsection (a), a remote seller may elect annually to collect the
actual applicable State and local use taxes on each sale made in the
State.
(d) Alternative System.--A State that adopts the uniform,
streamlined sales and use tax system described in the Compact
authorized and approved under section 6 so that remote sellers can use
information provided by the State to identify the single applicable
rate for each sale, may require a remote seller to collect the actual
applicable State and local sales or use tax due on each sale made in
the State if the State provides such seller relief from liability to
the State for relying on such information provided by the State.
SEC. 8. 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
authorized and approved under section 6 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.
(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. 9. NEXUS FOR STATE BUSINESS ACTIVITY TAXES.
It is the sense of Congress that before the conclusion of the 107th
Congress, legislation should be enacted to determine the appropriate
factors to be considered in establishing whether nexus exists for State
business activity tax purposes.
SEC. 10. 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. 11. 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 5(a)(3), 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
5(a)(3), to a particular taxing jurisdiction.
<all>
Introduced in Senate
Read twice and referred to the Committee on Commerce, Science, and Transportation. (text of measure as introduced: CR S10839-10840)
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