[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 288 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 288

   To extend the moratorium enacted by the Internet Tax Freedom Act 
  through 2006, and encourage States to simplify their sales and use 
                                 taxes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 8, 2001

 Mr. Wyden (for himself and Mr. Leahy) introduced the following bill; 
    which was read twice and referred to the Committee on Commerce, 
                      Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
   To extend the moratorium enacted by the Internet Tax Freedom Act 
  through 2006, and encourage States to simplify 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 Nondiscrimination 
Act''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) The moratorium of the Internet Tax Freedom Act on taxes 
        on multiple and discriminatory taxes on electronic commerce 
        should be extended and taxes on Internet access should be 
        permanently banned.
            (2) States maintain the authority to determine what items 
        are included in the State's sales tax base and should be 
        encouraged to simplify and unify their sales and use tax 
        systems, including systems imposing transaction taxes on 
        telecommunications.
            (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 simplification and 
        uniformity by virtue of its constitutional power to regulate 
        interstate commerce.
            (5) If a sufficient number of States simplify and unify 
        their sales and use tax systems, the Congress should consider 
        authorizing those States to require sellers to collect taxes on 
        sales of goods or services delivered in-state.
            (6) Authorizing the States to require out-of-State sellers 
        to collect transaction taxes should have no impact on business 
        activity tax or income tax claims against sellers who lack 
        nexus with the State. The rules regarding taxable presence, 
        therefore, should be made clearer to reduce costly litigation 
        between out-of-State sellers and States.
            (7) Online consumer privacy is of paramount importance to 
        the growth of electronic commerce and must be protected in any 
        simplified and unified State sales and use tax system.

SEC. 3. EXTENSION OF INTERNET TAX FREEDOM ACT MORATORIUM THROUGH 2006.

    (a) Extension; Internet Access Taxes.--Section 1101 of the Internet 
Tax Freedom Act (47 U.S.C. 151 nt.) is amended--
            (1) by striking ``taxes during the period beginning on 
        October 1, 1998, and ending 3 years after the date of enactment 
        of this Act--'' in subsection (a) and inserting ``taxes--'';
            (2) by striking paragraph (1) of subsection (a) and 
        inserting the following:
            ``(1) Taxes on Internet access.'';
            (3) by inserting before ``multiple'' in paragraph (2) of 
        subsection (a) the following: ``During the period beginning on 
        October 1, 1998, and ending on December 31, 2006,'';
            (4) by striking subsection (d); and
            (5) by redesignating subsections (e) and (f) as subsections 
        (d) and (e), respectively.
    (b) Conforming Amendment.--Section 1104(10) of that Act (47 U.S.C. 
151 nt) is amended by striking ``services unless such tax was generally 
imposed and actually enforced prior to October 1, 1998.'' and inserting 
``services.''.

SEC. 4. SENSE OF THE CONGRESS.

    (a) In General.--It is the sense of the Congress that the following 
criteria are necessary elements of a State law providing for a 
simplified sales and use tax system for remote sales:
            (1) The law provides a centralized, one-stop, multi-state 
        registration system for sellers.
            (2) The law provides uniform definitions for goods or 
        services that are included in the tax base.
            (3) The law provides uniform and simple rules for 
        attributing transactions to particular taxing jurisdictions.
            (4) The law provides uniform rules for the designation and 
        identification of purchasers and transactions exempt from sales 
        and use taxes, including a database of all exempt entities and 
        a rule ensuring that reliance on that database immunizes 
        sellers from liability.
            (5) The law provides uniform procedures for the 
        certification of software that sellers rely on to determine 
        State and local use tax rates and taxability.
            (6) The law provides uniform bad debt rules.
            (7) The law provides uniform tax returns and remittance 
        forms.
            (8) The law provides uniform electronic filing and 
        remittance methods.
            (9) The law provides for State administration of all State 
        and local sales taxes and a single rate and a single filing for 
        all sales.
            (10) The law--
                    (A) provides for uniform audit procedures for out-
                of-State sellers; and
                    (B) includes an option under which a seller that 
                agrees to be subject to audit by any State that uses 
                those procedures is subject to no more than 1 audit per 
                year under those procedures.
            (11) The law provides reasonable compensation for tax 
        collection by sellers.
            (12) The law provides an exemption from use tax collection 
        requirements for out-of-State sellers whose gross annual sales 
        are less than a specified threshold of not less than 
        $5,000,000.
            (13) The law, or another State law, provides protection for 
        consumer privacy.
            (14) The law provides for a single uniform Statewide sales 
        and use tax rate on all transactions on which a sales or use 
        tax is assessed.
            (15) In any State that imposes a sales or use tax on goods 
        or services delivered via the Internet, the law--
                    (A) provides an origin State default rule for 
                transactions where the location of the customer is not 
                disclosed during the transaction; and
                    (B) permits the seller to rely upon information 
                given by the customer during the transaction.
            (16) The law provides clear standards for determining the 
        nexus of business activity, for tax purposes, that limit 
        business activity tax nexus to sellers that have continuous and 
        systematic contacts with the State.
            (17) Other features that will achieve a simplified and 
        uniform sales and use tax system.
    (b) Definitions.--In this section:
            (1) Uniform.--The term ``uniform'' when used in reference 
        to a tax, a procedure, a standard, or a system of 
        classification means that the tax, procedure, standard, or 
        system--
                    (A) does not discriminate unreasonably between 
                sellers that have a business location or presence in a 
                State and sellers that do not have a business location 
                or presence in the State; and
                    (B) is not inconsistent with a similar tax, 
                procedure, standard, or system employed by another 
                State in which a seller is located or does business.
            (2) Origin state default system.--The term ``origin State 
        default system'' means a system for determining the sales or 
        use tax liability associated with a purchase under which, if 
        the seller cannot determine the State or residence of the 
        purchaser from the purchase order, the seller may determine and 
        compute the sales or use tax liability, if any, for the 
        purchase according to the credit card information, payment 
        address, delivery address, or other data in accordance with the 
        law of the State in which the seller is located.
            (3) Leases and licenses.--The term ``sales'' and the term 
        ``seller'' include ``leases'' and ``lessor'', respectively, and 
        ``licenses'' and ``licensor'', respectively in any State in 
        which the leasing or licensing of property, whether tangible or 
        intangible, is treated for purposes of a sales or use tax 
        imposed by that State as the first retail sale of that 
        property.

SEC. 5. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.

    (a) Federal Authorization Required.--No State may require a seller, 
who lacks nexus with, or a tax obligation to, the State, to collect or 
remit sales or use tax on any sales in that State until Congress 
provides such authority to the States, by joint resolution under 
subsection (b).
    (b) Joint Resolution.--The Congress may authorize the States to 
require sellers to collect a sales or use tax on sales of goods or 
services delivered in the taxing State under any law that meets the 
criteria set forth in section 4 only by the adoption of a joint 
resolution--
            (1) the resolving clause of which is as follows: ``That the 
        Congress approves the State collection of sales or use taxes on 
        goods or services delivered in a State without regard to the 
        State in which the seller is physically present under the State 
        laws described in section 4. This resolution does not apply to 
        the collection of any State tax if the law under which the tax 
        is collected imposes multiple or discriminatory taxation.''; 
        and
            (2) the second section of which lists or describes the 
        State laws to which the resolution initially applies.
    (c) Fast-Track Procedure for Approval.--The procedures set forth in 
section 152 of the Trade Act of 1974 (19 U.S.C. 2192) apply to the 
joint resolution described in subsection (b) of this section, except 
that--
            (1) section 152(a) does not apply; and
            (2) the references to the House of Representatives 
        Committee on Ways and Means and the Senate Committee on Finance 
        are deemed, for purposes of this section, to refer to the House 
        of Representatives Committee on Commerce and the Senate 
        Committee on Commerce, Science, and Transportation.
    (d) Application With Other Law.--This subsection does not supersede 
section 1101 of the Internet Tax Freedom Act (47 U.S.C. 151 nt.)
    (e) No Effect on Nexus.--No obligation imposed by virtue of 
authority granted in the joint resolution described in subsection (b), 
or any provision of this Act, shall be considered in determining 
whether a seller has a nexus with, or other tax obligation to, any 
State for any tax other than a sales or use tax. Nothing in this Act 
permits 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 expressly 
        related to the authority granted by the joint resolution 
        described in subsection (b).
                                 <all>