State and local sales tax relief for consumers

(a)

In general

The Secretary shall reimburse each State for 60 percent of 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 May 1, 2008, the Secretary shall pay to each State an amount equal to the sum of— (A)(i)60 percent of the amount of State and local sales tax payable and collected in such State during the same period in 2007 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 July 1, 2008, the Secretary shall pay to each electing State under subsection (c)(2) an amount equal to the excess (if any) of— (A)60 percent of 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 March 1, 2008, 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 March 1, 2008, 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 March 1, 2008, 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 June 1, 2008, 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 July 1, 2008, 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 2008 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 April 3, 2008, and ending before April 14, 2008. (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.