[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>