[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 545 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 545

 To authorize collection of certain State and local taxes with respect 
     to the sale, delivery, and use of tangible personal property.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               March 13 (legislative day, March 6), 1995

Mr. Bumpers (for himself and Mr. Graham) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To authorize collection of certain State and local taxes with respect 
     to the sale, delivery, and use of tangible personal property.

    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 ``Consumer and Main Street Protection 
Act of 1995''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) merchandise purchased from out-of-State firms is 
        subject to State and local sales taxes in the same manner as 
        merchandise purchased from in-State firms,
            (2) State and local governments generally are unable to 
        compel out-of-State firms to collect and remit such taxes, and 
        consequently, many out-of-State firms choose not to collect 
        State and local taxes on merchandise delivered across State 
        lines,
            (3) moreover, many out-of-State firms fail to inform their 
        customers that such taxes exist, with some firms even falsely 
        claim that merchandise purchased out-of-State is tax-free, and 
        consequently, many consumers unknowingly incur tax liabilities, 
        including interest and penalty charges,
            (4) Congress has a duty to protect consumers from explicit 
        or implicit misrepresentations of State and local sales tax 
        obligations,
            (5) small businesses, which are compelled to collect State 
        and local sales taxes, are subject to unfair competition when 
        out-of-State firms cannot be compelled to collect and remit 
        such taxes on their sales to residents of the State,
            (6) State and local governments provide a number of 
        resources to out-of-State firms including government services 
        relating to disposal of tons of catalogs, mail delivery, 
        communications, and bank and court systems,
            (7) the inability of State and local governments to require 
        out-of-State firms to collect and remit sales taxes deprives 
        State and local governments of needed revenue and forces such 
        State and local governments to raise taxes on taxpayers, 
        including consumers and small businesses, in such State,
            (8) the Supreme Court ruled in Quill Corporation v. North 
        Dakota, 112 S. Ct. 1904 (1992) that the due process clause of 
        the Constitution does not prohibit a State government from 
        imposing personal jurisdiction and tax obligations on out-of-
        State firms that purposefully solicit sales from residents 
        therein, and that the Congress has the power to authorize State 
        governments to require out-of-State firms to collect State and 
        local sales taxes, and
            (9) as a matter of federalism, the Federal Government has a 
        duty to assist State and local governments in collecting sales 
        taxes on sales from out-of-State firms.

SEC. 3. AUTHORITY FOR COLLECTION OF SALES TAX.

    (a) In General.--A State is authorized to require a person who is 
subject to the personal jurisdiction of the State to collect and remit 
a State sales tax, a local sales tax, or both, with respect to tangible 
personal property if--
            (1) the destination of the tangible personal property is in 
        the State,
            (2) during the 1-year period ending on September 30 of the 
        calendar year preceding the calendar year in which the taxable 
        event occurs, the person has gross receipts from sales of such 
        tangible personal property--
                    (A) in the United States exceeding $3,000,000, or
                    (B) in the State exceeding $100,000, and
            (3) the State, on behalf of its local jurisdictions, 
        collects and administers all local sales taxes imposed pursuant 
        to this Act.
    (b) States Must Collect Local Sales Taxes.-- Except as provided in 
section 4(d), a State in which both State and local sales taxes are 
imposed may not require State sales taxes to be collected and remitted 
under subsection (a) unless the State also requires the local sales 
taxes to be collected and remitted under subsection (a).
    (c) Aggregation Rules.--All persons that would be treated as a 
single employer under section 52 (a) or (b) of the Internal Revenue 
Code of 1986 shall be treated as one person for purposes of subsection 
(a).
    (d) Destination.--For purposes of subsection (a), the destination 
of tangible personal property is the State or local jurisdiction which 
is the final location to which the seller ships or delivers the 
property, or to which the seller causes the property to be shipped or 
delivered, regardless of the means of shipment or delivery or the 
location of the buyer.

SEC. 4. TREATMENT OF LOCAL SALES TAXES.

    (a) Uniform Local Sales Taxes.--
            (1) In general.--Sales taxes imposed by local jurisdictions 
        of a State shall be deemed to be uniform for purposes of this 
        Act and shall be collected under this Act in the same manner as 
        State sales taxes if--
                    (A) such local sales taxes are imposed at the same 
                rate and on identical transactions in all geographic 
                areas in the State, and
                    (B) such local sales taxes imposed on sales by out-
                of-State persons are collected and administered by the 
                State.
            (2) Application to border jurisdiction tax rates.--A State 
        shall not be treated as failing to meet the requirements of 
        paragraph (1)(A) if, with respect to a local jurisdiction which 
        borders on another State, such State or local jurisdiction--
                    (A) either reduces or increases the local sales tax 
                in order to achieve a rate of tax equal to that imposed 
                by the bordering State on identical transactions, or
                    (B) exempts from the tax transactions which are 
                exempt from tax in the bordering State.
    (b) Nonuniform Local Sales Taxes.--
            (1) In general.--Except as provided in subsection (d), 
        nonuniform local sales taxes required to be collected pursuant 
        to this Act shall be collected under one of the options 
        provided under paragraph (2).
            (2) Election.--For purposes of paragraph (1), any person 
        required under authority of this Act to collect nonuniform 
        local sales taxes shall elect to collect either--
                    (A) all nonuniform local sales taxes applicable to 
                transactions in the State, or
                    (B) a fee (at the rate determined under paragraph 
                (3)) which shall be in lieu of the nonuniform local 
                sales taxes described in subparagraph (A).
        Such election shall require the person to use the method 
        elected for all transactions in the State while the election is 
        in effect.
            (3) Rate of in-lieu fee.--For purposes of paragraph (2)(B), 
        the rate of the in-lieu fee for any calendar year shall be an 
        amount equal to the product of--
                    (A) the amount determined by dividing total 
                nonuniform local sales tax revenues collected in the 
                State for the most recently completed State fiscal year 
                for which data is available by total State sales tax 
                revenues for the same year, and
                    (B) the State sales tax rate.
        Such amount shall be rounded to the nearest 0.25 percent.
            (4) Nonuniform local sales taxes.--For purposes of this 
        Act, nonuniform local sales taxes are local sales taxes which 
        do not meet the requirements of subsection (a).
    (c) Distribution of Local Sales Taxes.--
            (1) In general.--Except as provided in subsection (d), a 
        State shall distribute to local jurisdictions a portion of the 
        amounts collected pursuant to this Act determined on the basis 
        of--
                    (A) in the case of uniform local sales taxes, the 
                proportion which each local jurisdiction receives of 
                uniform local sales taxes not collected pursuant to 
                this Act,
                    (B) in the case of in-lieu fees described in 
                subsection (b)(2)(B), the proportion which each local 
                jurisdiction's nonuniform local sales tax receipts 
                bears to the total nonuniform local sales tax receipts 
                in the State, and
                    (C) in the case of any nonuniform local sales tax 
                collected pursuant to this Act, the geographical 
                location of the transaction on which the tax was 
                imposed.
        The amounts determined under subparagraphs (A) and (B) shall be 
        calculated on the basis of data for the most recently completed 
        State fiscal year for which the data is available.
            (2) Timing.--Amounts described in paragraph (1) (B) or (C) 
        shall be distributed by a State to its local jurisdictions in 
        accordance with State timetables for distributing local sales 
        taxes, but not less frequently than every calendar quarter. 
        Amounts described in paragraph (1)(A) shall be distributed by a 
        State as provided under State law.
            (3) Transition rule.--If, upon the effective date of this 
        Act, a State has a State law in effect providing a method for 
        distributing local sales taxes other than the method under this 
        subsection, then this subsection shall not apply to that State 
        until the 91st day following the adjournment sine die of that 
        State's next regular legislative session which convenes after 
        the effective date of this Act (or such earlier date as State 
        law may provide). Local sales taxes collected pursuant to this 
        Act prior to the application of this subsection shall be 
        distributed as provided by State law.
    (d) Exception Where State Board Collects Taxes.--Notwithstanding 
section 3(b) and subsections (b) and (c) of this section, if a State 
had in effect on January 1, 1995, a State law which provides that local 
sales taxes are collected and remitted by a board of elected States 
officers, then for any period during which such law continues in 
effect--
            (1) the State may require the collection and remittance 
        under this Act of only the State sales taxes and the uniform 
        portion of local sales taxes, and
            (2) the State may distribute any local sales taxes 
        collected pursuant to this Act in accordance with State law.

SEC. 5. RETURN AND REMITTANCE REQUIREMENTS.

    (a) In General.--A State may not require any person subject to this 
Act--
            (1) to file a return reporting the amount of any tax 
        collected or required to be collected under this Act, or to 
        remit the receipts of such tax, more frequently than once with 
        respect to sales in a calendar quarter, or
            (2) to file the initial such return, or to make the initial 
        such remittance, before the 90th day after the person's first 
        taxable transaction under this Act.
    (b) Local Taxes.--The provisions of subsection (a) shall also apply 
to any person required by a State acting under authority of this Act to 
collect a local sales tax or in-lieu fee.

SEC. 6. NONDISCRIMINATION AND EXEMPTIONS.

    Any State which exercises any authority granted under this Act 
shall allow to all persons subject to this Act all exemptions or other 
exceptions to State and local sales taxes which are allowed to persons 
located within the State or local jurisdiction.

SEC. 7. APPLICATION OF STATE LAW.

    (a) Persons Required To Collect State or Local Sales Tax.--Any 
person required by section 3 to collect a State or local sales tax 
shall be subject to the laws of such State relating to such sales tax 
to the extent that such laws are consistent with the limitations 
contained in this Act.
    (b) Limitations.--Except as provided in subsection (a), nothing in 
this Act shall be construed to permit 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 
        sales of tangible personnel property.
    (c) 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.

SEC. 8. TOLL-FREE INFORMATION SERVICE.

    A State shall not have power under this Act to require any person 
to collect a State or local sales tax on any sale unless, at the time 
of such sale, such State has a toll-free telephone service available to 
provide such person information relating to collection of such State or 
local sales tax. Such information shall include, at a minimum, all 
applicable tax rates, return and remittance addresses and deadlines, 
and penalty and interest information. As part of the service, the State 
shall also provide all necessary forms and instructions at no cost to 
any person using the service. The State shall prominently display the 
toll-free telephone number on all correspondence with any person using 
the service. This service may be provided jointly with other States.

SEC. 9. DEFINITIONS.

    For the purposes of this Act--
            (1) the term ``compensating use tax'' means a tax imposed 
        on or incident to the use, storage, consumption, distribution, 
        or other use within a State or local jurisdiction or other area 
        of a State, of tangible personal property;
            (2) the term ``local sales tax'' means a sales tax imposed 
        in a local jurisdiction or area of a State and includes, but is 
        not limited to--
                    (A) a sales tax or in-lieu fee imposed in a local 
                jurisdiction or area of a State by the State on behalf 
                of such jurisdiction or area, and
                    (B) a sales tax imposed by a local jurisdiction or 
                other State-authorized entity pursuant to the authority 
                of State law, local law, or both;
            (3) the term ``person'' means an individual, a trust, 
        estate, partnership, society, association, company (including a 
        limited liability company) or corporation, whether or not 
        acting in a fiduciary or representative capacity, and any 
        combination of the foregoing;
            (4) the term ``sales tax'' means a tax, including a 
        compensating use tax, that is--
                    (A) imposed on or incident to the sale, purchase, 
                storage, consumption, distribution, or other use of 
                tangible personal property as may be defined or 
                specified under the laws imposing such tax, and
                    (B) measured by the amount of the sales price, 
                cost, charge or other value of or for such property; 
                and
            (5) the term ``State'' means any of the several States of 
        the United States, the District of Columbia, the Commonwealth 
        of Puerto Rico, and any territory or possession of the United 
        States.

SEC. 10. EFFECTIVE DATE.

    This Act shall take effect 180 days after the date of the enactment 
of this Act. In no event shall this Act apply to any sale occurring 
before such effective date.
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