Streamlined Sales and Use Tax - Grants the consent of Congress to the November 12, 2002, Streamlined Sales and Use Tax Agreement.
Expresses the sense of Congress that such Agreement provides sufficient simplification and uniformity to warrant Federal authorization to States that are parties to the Agreement to require remote sellers to collect and remit the sales and use taxes of such States and of local taxing jurisdictions of such States. States that the purpose of this Act is to effectuate that limited authority, and not to grant additional authority unrelated to the accomplishment of that purpose.
States that once 10 States comprising at least 20 percent of the total population of all States imposing a sales tax have petitioned for membership under the Streamlined Sales and Use Tax Agreement, have been found to be in compliance with the Agreement pursuant to the terms of the Agreement, have become Member States under the Agreement, and the necessary operational aspects of the Agreement have been implemented, any Member State under the Agreement is authorized, notwithstanding any other provision of law, to require all sellers not qualifying for the small business exception provided by this Act to collect and remit sales and use taxes with respect to remote sales to purchasers located in such State.
Establishes minimum simplification requirements.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1736 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 1736
To promote simplification and fairness in the administration and
collection of sales and use taxes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 15, 2003
Mr. Enzi (for himself, Mr. Dorgan, Mr. Chafee, Mr. Hagel, Mrs.
Hutchison, Mr. Voinovich, Mr. Thomas, Mr. Breaux, Mr. Bingaman, Mr.
Graham of Florida, Mr. Johnson, Mr. Nelson of Nebraska, and Mr.
Rockefeller) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
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 ``Streamlined Sales and Use Tax Act''.
SEC. 2. CONSENT OF CONGRESS.
The Congress consents to the November 12, 2002, Streamlined Sales
and Use Tax Agreement.
SEC. 3. SENSE OF THE CONGRESS.
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 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 States and of local
taxing jurisdictions of such States. The purpose of this Act is to
effectuate that limited authority, and not to grant additional
authority unrelated to the accomplishment of that purpose.
SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.
(a) Grant of Authority.--Once 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
under the Streamlined Sales and Use Tax Agreement in the manner
required by the Agreement, have been found to be in compliance with the
Agreement pursuant to the terms of the Agreement, have become Member
States under the Agreement, and the necessary operational aspects of
the Agreement have been implemented, any Member State under the
Agreement is authorized, notwithstanding any other provision of law, to
require all sellers not qualifying for the small business exception
provided under subsection (b) to collect and remit sales and use taxes
with respect to remote sales to purchasers located in such State. Such
authorization shall terminate for all States if the requirements of the
preceding sentence cease to be met or if the Agreement, as amended, no
longer meets the minimum simplification requirements of section 6. Such
authorization shall also terminate for any Member State if such Member
State no longer complies with the requirements for Member State status
under the terms of the Agreement. Determinations regarding compliance
with the requirements of this subsection shall be made by the Governing
Board (or, prior to the establishment of the Governing Board, by the
States petitioning for membership under the Agreement) subject to
section 5.
(b) 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 where 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. 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 where 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.
(c) Reasonable Seller Compensation.--The authority provided in
subsection (a) is conditioned on acceptance and implementation by each
Member State of a requirement that the State provide reasonable
compensation for expenses incurred by sellers related to the
administration, collection and remittance of sales and use taxes.
Furthermore, the State shall provide compensation that covers all tax
processing costs of remote sellers. The additional compensation
provided to remote sellers shall remain in effect for a period of 4
years from the date that a State is granted the authority under this
Act to require remote sellers to collect and remit sales taxes with
respect to remote purchasers located in such State.
SEC. 5. DETERMINATION BY GOVERNING BOARD AND JUDICIAL REVIEW OF THAT
DETERMINATION.
(a) Petition.--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 State has met or continues to meet 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 meet the minimum
simplification requirements set forth in section 6; or
(D) any other requirement of section 4 has been
met; 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 six 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 Governing
Board's denial of the petition, or, if the Governing Board failed to
act on the petition, within 60 days after the end of the six-month
period beginning on the day after the date on which the petition was
submitted.
(d) Standard of Review.--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.
(e) Jurisdiction.--
(1) Generally.--Chapter 91 of title 28 of the United States
Code is amended by adding at the end thereof:
``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 Simplified Sales
and Use Tax 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.
The following criteria are the minimum simplification requirements
for the Agreement:
(1) A centralized, one-stop, multistate registration system
that sellers may elect to use to register with the Member
States; provided the 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.
(2) Uniform definitions of products and product-based
exemptions from which the Member States may choose their
individual tax bases; Member States 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.
(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 State sales and use tax rates and
taxability.
(5) Uniform rules for bad debts.
(6) Uniform requirements for tax returns and remittances.
(7) Consistent electronic filing and remittance methods.
(8) Single, State-level administration of all State and
local sales and use taxes, and a single filing for each State.
(9) A single sales and use tax rate per taxing jurisdiction
for items other than those listed in section 308 C of the
Agreement as adopted on November 12, 2002, except that a State
may impose a second sales and use tax rate for items satisfying
the Agreement's definition for food, food ingredients, or
drugs.
(10) A provision that relieves a seller or service provider
from liability for collection of the incorrect amount of sales
or use tax, provided such seller has relied on information
provided by the Member States regarding tax rates, boundaries,
or taxing jurisdiction assignments.
(11) Uniform audit procedures for sellers, including an
option under which a seller may elect, by notifying the
Governing Board, to be subject to a single audit on behalf of
all the Member States or a single audit on behalf of each
Member State.
(12) Reasonable compensation for all sellers that
administer, collect and remit sales and use tax, with
requirements for remote seller compensation as provided in
section 4(d) of this Act.
(13) Appropriate protections for consumer privacy.
(14) 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.
(15) The Member States apply the minimum simplification
requirements under this subsection to transaction taxes on
communications by January 1, 2006, except that the requirement
for one uniform return shall not apply and the requirements for
rate simplification are modified to require one rate for each
type of transaction tax per jurisdiction. ``Transaction tax''
as used in this provision shall have the same meaning as in
section 116 of title 4, United States Code, except that
``communications services'' shall replace ``mobile
telecommunications services'' whenever such term appears.
(16) Uniform rules for ``sales tax holidays'' that provide
alternative mechanisms for remote sellers to participate.
(17) 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 and sourcing rules
that contain provisions to prevent double taxation in
situations where a foreign country has imposed a transaction
tax on a digital good or service.
(18) Each amendment hereafter adopted to the Agreement is
within the scope of the subject matter currently covered by the
agreement.
SEC. 7. LIMITATION.
(a) 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 to impose such taxes or requirements.
(b) No Effect on Nexus, Etc.--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 State for any other tax purpose.
Except as provided in subsection (a), and in section 4, nothing in this
Act permits or prohibits a State's--
(1) licensing or regulating any person;
(2) requiring any person to qualify to transact intrastate
business;
(3) subjecting any person to State taxes not related to the
sale of goods or services; or
(4) 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,
on its face, 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.--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. Any such appeal shall be
filed not more than 20 days after 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'' means a member
state under the Streamlined Sales and Use Tax Agreement.
(4) Nationwide.--The term ``nationwide'' means throughout
the territory of the United States, including any of its
territories and possessions.
(5) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, or any
other legal entity, and includes a State or local government.
(6) Remote sale and remote seller.--The terms ``remote
sale'' and ``remote seller'' refer to a sale of goods or
services attributed to a particular taxing jurisdiction with
respect to which the seller did 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
jurisdiction to require the seller to collect and remit sales
or use taxes with respect to such sale.
(7) 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.
(8) 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, and as amended from time to time.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S12620)
Read twice and referred to the Committee on Finance.
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