[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1643 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1643

 To provide Federal reimbursement to State and local governments for a 
       limited sales, use, and retailers' occupation tax holiday.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 7, 2001

 Mrs. Murray (for herself, Ms. Snowe, Mr. Lieberman, Mr. Santorum, Mr. 
Dorgan, Mr. Thurmond, Mr. Durbin, Mr. Craig, Mr. Cleland, Mr. Bond, and 
Mrs. Feinstein) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide Federal reimbursement to State and local governments for a 
       limited sales, use, and retailers' occupation tax holiday.

    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 Holiday Act of 2001''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Consumer confidence and spending is critical to a 
        healthy United States economy.
            (2) In order to prevent a further decline in consumer 
        spending, which fell 1.8 percent in September 2001, and 
        consumer confidence, which is at its lowest level since 
        February 1994, the Federal Government needs to provide an 
        immediate and targeted tax incentive to encourage consumer 
        spending.
            (3) The most immediate and targeted incentive for 
        consumption would be to reduce the price of goods to consumers, 
        which can be done most effectively by removing sales taxes 
        imposed on those goods.
            (4) A 10-day sales tax holiday, prior to the 2001 Holiday 
        season, would encourage Americans to make immediate purchases 
        and help to counteract the decline in consumer confidence 
        Americans have experienced since September 11, 2001. The direct 
        boost to consumption resulting from a sales tax holiday would 
        enhance the benefits of individual tax cuts provided by any 
        Federal tax stimulus legislation.
            (5) A State and local sales tax holiday would allow all 
        taxpayers to benefit, especially lower-income Americans who 
        spend a larger portion of their income.
            (6) To encourage a State and local sales tax holiday, the 
        Federal Government should ensure that each participating State 
        and local government receives fast and fair reimbursement for 
        lost sales tax revenue.
            (7) Florida, Texas, Pennsylvania, South Carolina, Iowa, 
        Connecticut, Maryland, Ohio, North Carolina, and the District 
        of Columbia currently provide consumers with similar temporary 
        sales tax holidays. Consumer response to these holidays has 
        been extraordinary, with retailers reporting greatly increased 
        foot traffic in stores as well as an increase in incremental 
        retail sales.

SEC. 3. STATE AND LOCAL SALES TAX RELIEF FOR CONSUMERS.

    (a) In General.--The Secretary shall reimburse each State for the 
amount of State and local sales tax payable and not collected during 
the sales tax holiday period.
    (b) Determination and Timing of Reimbursement.--
            (1) Predetermined amount.--Not later than December 20, 
        2001, the Secretary shall pay to each State an amount equal to 
        the sum of--
                    (A)(i) the amount of State and local sales tax 
                payable and collected in such State during the same 
                period in 2000 as the sales tax holiday period, times
                    (ii) an acceleration factor equal to 1.73, plus
                    (B) an amount equal to 1 percent of the amount 
                determined under subparagraph (A) for State 
                administrative costs.
            (2) Reconciliation amount.--Not later than February 20, 
        2002, the Secretary shall pay to each electing State under 
        subsection (c)(2) an amount equal to the excess (if any) of--
                    (A) the amount of State and local sales tax payable 
                and not collected in such State during the sales tax 
                holiday period, over
                    (B) the amount determined under paragraph (1)(A) 
                and paid to such State.
    (c) Requirement for Reimbursement.--The Secretary may not pay a 
reimbursement under this section unless--
            (1) the chief executive officer of the State informs the 
        Secretary, not later than November 15, 2001, of the intention 
        of the State to qualify for such reimbursement by not 
        collecting sales tax payable during the sales tax holiday 
        period,
            (2) in the case of a State which elects to receive the 
        reimbursement of a reconciliation amount under subsection 
        (b)(2)--
                    (A) the chief executive officer of the State 
                informs the Secretary and the Director of Management 
                and Budget and the retail sellers of tangible property 
                in such State, not later than November 15, 2001, of the 
                intention of the State to make such an election,
                    (B) the chief executive officer of the State 
                informs the retail sellers of tangible property in such 
                State, not later than November 15, 2001, of the 
                intention of the State to make such an election and the 
                additional information (if any) that will be required 
                as an addendum to the standard reports required of such 
                retail sellers with respect to the reporting periods 
                including the sales tax holiday period,
                    (C) the chief executive officer reports to the 
                Secretary and the Director of Management and Budget, 
                not later than January 31, 2002, the amount determined 
                under subsection (b)(2) in a manner specified by the 
                Secretary,
                    (D) if amount determined under subsection (b)(1)(A) 
                and paid to such State exceeds the amount determined 
under subsection (b)(2)(A), the chief executive officer agrees to remit 
to the Secretary such excess not later than February 20, 2002, and
                    (E) the chief executive officer of the State 
                certifies that such State--
                            (i) in the case of any retail seller unable 
                        to identify and report sales which would 
                        otherwise be taxable during the sales tax 
                        holiday period, shall treat the reporting by 
                        such seller of sales revenue during such 
                        period, multiplied by the ratio of taxable 
                        sales to total sales for the same period in 
                        2000 as the sales tax holiday period, as a good 
                        faith effort to comply with the requirements 
                        under subparagraph (B), and
                            (ii) shall not treat any such retail seller 
                        of tangible property who has made such a good 
                        faith effort liable for any error made as a 
                        result of such effort to comply unless it is 
                        shown that the retailer acted recklessly or 
                        fraudulently,
            (3) in the case of any home rule State, the chief executive 
        officer of such State certifies that all local governments that 
        impose sales taxes in such State agree to provide a sales tax 
        holiday during the sales tax holiday period,
            (4) the chief executive officer of the State agrees to pay 
        each local government's share of the reimbursement (as 
        determined under subsection (d)) not later than 20 days after 
        receipt of such reimbursement, and
            (5) in the case of not more than 20 percent of the States 
        which elect to receive the reimbursement of a reconciliation 
        amount under subsection (b)(2), the Director of Management and 
        Budget certifies the amount of the reimbursement required under 
        subsection (b)(2) based on the reports by the chief executive 
        officers of such States under paragraph (2)(C).
    (d) Determination of Reimbursement of Local Sales Taxes.--For 
purposes of subsection (c)(4), a local government's share of the 
reimbursement to a State under this section shall be based on the ratio 
of the local sales tax to the State sales tax for such State for the 
same time period taken into account in determining such reimbursement, 
based on data published by the Bureau of the Census.
    (e) Definitions.--For purposes of this section--
            (1) Home rule state.--The term ``home rule State'' means a 
        State that does not control imposition and administration of 
        local taxes.
            (2) Local.--The term ``local'' means a city, county, or 
        other subordinate revenue or taxing authority within a State.
            (3) Sales tax.--The term ``sales tax'' means--
                    (A) a tax imposed on or measured by general retail 
                sales of taxable tangible property, or services 
                performed incidental to the sale of taxable tangible 
                property, that is--
                            (i) calculated as a percentage of the 
                        price, gross receipts, or gross proceeds, and
                            (ii) can or is required to be directly 
                        collected by retail sellers from purchasers of 
                        such property,
                    (B) a use tax, or
                    (C) the Illinois Retailers' Occupation Tax, as 
                defined under the law of the State of Illinois,
        but excludes any tax payable with respect to food and beverages 
        sold for immediate consumption on the premises, beverages 
        containing alcohol, and tobacco products.
            (4) Sales tax holiday period.--The term ``sales tax holiday 
        period'' means the period beginning after November 22, 2001, 
        and ending before December 3, 2001.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (6) State.--The term ``State'' means any of the several 
        States, the District of Columbia, or the Commonwealth of Puerto 
        Rico.
            (7) Use tax.--The term ``use tax'' means a tax imposed on 
        the storage, use, or other consumption of tangible property 
        that is not subject to sales tax.
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