1.This Act may be cited as the
Sales Tax Fairness and Simplification
Act
.
2.The Congress consents
to the Streamlined Sales and Use Tax Agreement.
3.
(a)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 7, provides sufficient simplification
and uniformity to warrant Federal authorization to Member 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
Member States and of local taxing jurisdictions of such Member States.
(b)The purpose of this Act is to—
(1)effectuate the limited authority granted to
Member States under the Streamlined Sales and Use Tax Agreement; and
(2)not grant additional authority unrelated to
the accomplishment of the purpose described in paragraph (1).
4.Authorization to
require collection of sales and use taxes
(a)
(1)Each Member State under the Streamlined Sales and Use Tax
Agreement is authorized, subject to the requirements of this section, to
require all sellers not qualifying for the small business exception provided
under subsection (d) to collect and remit sales and use taxes with respect to
remote sales sourced to that Member State under the Agreement.
(2)Requirements
for authorityThe authorization provided under paragraph (1)
shall be granted once all of the following have occurred:
(A)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 and have become Member States under the Agreement.
(B)The following
necessary operational aspects of the Agreement have been implemented by the
Governing Board:
(i)Provider and
system certification.
(ii)Setting of
monetary allowance by contract with providers.
(iii)Implementation
of an on-line multistate registration system.
(iv)Adoption of a
standard form for claiming exemptions electronically.
(v)Establishment of
advisory councils.
(vi)Promulgation of
rules and procedures for dispute resolution.
(vii)Promulgation of
rules and procedures for audits.
(viii)Provisions for
funding and staffing the Governing Board.
(C)Each Member State
has met the requirements to provide and maintain the databases and the
taxability matrix described in the Agreement, pursuant to requirements of the
Governing Board.
(3)The authorization provided under paragraph (1)—
(A)shall be granted
notwithstanding any other provision of law; and
(B)is dependent upon
the Agreement, as amended, meeting the minimum simplification requirements of
section 7.
(b)
(1)The authorization provided under subsection (a) shall
terminate for all States if—
(A)the requirements
contained in subsection (a) cease to be satisfied; or
(B)any amendment
adopted to the Agreement after the date of enactment of this Act is not within
the scope of the administration of sales and use taxes or taxes on
telecommunications services by the Member States.
(2)Loss of Member
State statusThe authorization provided under subsection (a)
shall terminate for a Member State, if such Member State no longer meets the
requirements for Member State status under the terms of the Agreement.
(c)
(1)The Governing Board shall determine if Member States are
in compliance with the requirements of subsections (a) and (b).
(2)Upon the determination of the Governing Board that
all the requirements of subsection (a) have been satisfied, the authority of
each Member State to require a seller to collect and remit sales and use taxes
shall commence on the first day of a calendar quarter at least 6 months after
the date the Governing Board makes its determination.
(d)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
if—
(1)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; or
(2)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.
5.
(a)
(1)Any federally recognized Indian Tribe that imposes a
generally applicable sales tax may, if such Tribe complies with the terms of
this Act—
(A)petition to
become a Member State under the Agreement; and
(B)exercise the
authority provided under section 4.
(2)Decision of the
Governing Board
(A)If the effect of any federally recognized Indian Tribe’s
law, rules, regulations, and policies is compliant with each of the terms of
the Agreement, and the Indian Tribe has entered an agreement with the primary
State where it is located, the Governing Board shall consider such Tribe for
admission as a Member State to the Agreement on the same basis as
States.
(B)No State-tribal
agreement presentIf a petitioning Indian Tribe and the primary
State in which it is located have attempted to negotiate, but have not reached,
an agreement as described in subparagraph (A) within 2 years after the date of
the submission of such petition, the Governing Board shall consider such Tribe
for admission as a Member State to the Agreement on the same basis as States
without regard to the presence of a State-tribal agreement.
(3)Membership on
the Governing Board
(A)If any federally recognized Indian Tribes are accorded
Member State status under the Agreement under this section, those Tribes shall
be represented on the Governing Board by at least 1 member.
(B)If 2 or more federally recognized Indian Tribes are
accorded Member State status under the Agreement under this section, additional
representation of such Tribes on the Governing Board shall be determined by the
Governing Board, in consultation with those Tribes that are Member
States.
(b)Nothing in this Act or the Agreement shall be
construed as—
(1)diminishing an
Indian Tribe’s sovereignty or characterizing an Indian Tribe as a State for
other purposes;
(2)affecting
existing tax agreements between Indian Tribal Governments and States;
(3)preventing Indian
Tribal Governments and States from entering into bilateral agreements for the
collection and allocation of sales taxes (whether or not such bodies are
admitted as Member States to the Agreement); or
(4)overriding
established principles of Federal law governing—
(A)the taxing
jurisdiction of Indian Tribal Governments; and
(B)the immunities of
Indian Tribal Governments and their members from State taxation with respect to
on-reservation transactions.
6.Determinations
by Governing Board and judicial review of such determinations
(a)At
any time after the Governing Board has made the determination required under
section 4(c)(2), 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 claimsAny 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 Member State
has satisfied or continues to satisfy 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 satisfy the minimum simplification requirements set forth in
section 7; or
(D)any other
requirement of section 4 has been satisfied; 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 6 months after the date on which the petition is
submitted.
(c)Timing of
action for reviewAn action for review under this section shall
be initiated not later than 60 days after the denial of the petition by the
Governing Board, or, if the Governing Board failed to act on the petition, not
later than 60 days after the end of the 6-month period beginning on the day
after the date on which the petition was submitted.
(d)
(1)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.
(2)If
the court sets aside any action, finding, or conclusion of the Governing Board
under paragraph (1), the court shall remand the case to the Governing Board for
further action consistent with the decision of the court.
(e)
(1)Chapter
91 of title 28, United States Code, is amended by adding at the end the
following:
1510.Jurisdiction
regarding the Streamlined Sales and Use Tax AgreementThe 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
Sales Tax Fairness and Simplification
Act.
.
(2)Conforming
amendment to table of sectionsThe 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.
.
7.Minimum
simplification requirements
(a)The minimum
simplification requirements for the Agreement, which shall relate to the
conduct of Member States under the Agreement and to the administration and
supervision of such conduct, are as follows:
(1)A centralized,
one-stop, multistate registration system that a seller may elect to use to
register with the Member States, provided a 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. Furthermore, no taxing authority within a Member State or
a Member State that has withdrawn or been expelled from the Agreement may use
registration with the centralized registration system for the purpose of, or as
a factor in determining, whether a seller has a nexus with that Member State
for any tax at any time.
(2)Uniform
definitions of products and product-based exemptions from which a Member State
may choose its individual tax base, provided, however, that all local
jurisdictions in that Member State shall have a common tax base identical to
the State tax base of that Member State. A Member State 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. A Member
State shall relax the good faith requirement for acceptance of exemption
certificates in accordance with section 317 of the Agreement, as amended
through the date of enactment of this Act.
(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 Member State sales and use tax
rates and taxability.
(5)Uniform rules for
bad debts and rounding.
(6)Uniform
requirements for tax returns and remittances.
(7)Consistent
electronic filing and remittance methods.
(8)Single,
State-level administration of all Member State and local sales and use taxes,
including a requirement for a State-level filing of tax returns in each Member
State.
(9)A single sales
and use tax rate per taxing jurisdiction, except that a State may impose a
single additional rate, which may be zero, on food, food ingredients, and
drugs, provided that this limitation does not apply to the items identified in
section 308 C of the Agreement, as amended through the date of enactment of
this Act.
(10)A Member State
shall eliminate caps and thresholds on the application of sales and use tax
rates and exemptions based on value, provided that this limitation does not
apply to the items identified in section 308 C of the Agreement, as amended
through the date of enactment of this Act.
(11)A provision
requiring each Member State to complete a taxability matrix, as adopted by the
Governing Board. The matrix shall include information regarding terms defined
by the Agreement in the Library of Definitions. The matrix shall also include,
pursuant to the requirements of the Governing Board, information on use,
entity, and product based exemptions.
(12)A provision
requiring that each Member State relieves a seller or service provider from
liability to that Member State and local jurisdiction for collection of the
incorrect amount of sales or use tax, and relieves the purchaser from penalties
stemming from such liability, provided that collection of the improper amount
is the result of relying on information provided by that Member State regarding
tax rates, boundaries, or taxing jurisdiction assignments, or in the taxability
matrix regarding terms defined by the Agreement in the Library of
Definitions.
(13)Audit procedures
for sellers, including an option under which a seller not qualifying for the
small business exception in section 4(d) may request, by notifying the
Governing Board, to be subject to a single audit on behalf of all Member States
for sales and use taxes (other than use taxes on goods and services purchased
for the consumption of the seller). The Governing Board, in its discretion,
shall authorize such a single audit.
(14)As of the day
that authority to require collection commences under section 4, each Member
State shall provide reasonable compensation for expenses incurred by a seller
directly in administering, collecting, and remitting sales and use taxes (other
than use taxes on goods and services purchased for the consumption of the
seller) to that Member State. Such compensation may vary in each Member State
depending on the complexity of the sales and use tax laws in that Member State
and may vary by the characteristics of sellers in order to reflect differences
in collection costs. Such compensation may be provided to a seller or a third
party service provider whom a seller has contracted with to perform all the
sales and use tax responsibilities of a seller.
(15)Appropriate
protections for consumer privacy.
(16)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.
(17)Each Member
State shall apply the simplification requirements of the Agreement to taxes on
telecommunications services, except as provided herein. This requirement is
applicable to Member States as of July 1, 2010, except that sales and use taxes
on telecommunications services shall be subject to the Agreement and the
authority granted to the Member States when the requirements of section 4(a)
are met. On or after July 1, 2010, for those Member States which meet the
requirements of this paragraph, the authority granted such Member States under
section 4 may be exercised by such Member States, pursuant to the terms of
section 4 and section 6, with respect to taxes on telecommunications services
other than sales and use taxes on such services. The following are exceptions
to the requirement established under this paragraph:
(A)The requirement
for one uniform return shall not apply, provided, however, there shall be one
uniform return for each type of tax on telecommunications services within a
State.
(B)The requirements
for rate simplification are modified to require that each taxing jurisdiction
shall have only one rate for each type of tax on telecommunications
services.
(C)The requirements
for tax base uniformity in section 302 of the Agreement shall apply to each
type of tax on telecommunications services within a State, but shall not be
construed to require that the tax base for different types of taxes on
telecommunications services must be identical to the tax base for sales and use
taxes imposed on telecommunications services.
(18)Uniform rules
and procedures for sales tax holidays
.
(19)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.
(b)Requirement to
provide simplified tax systems
(1)The requirements of this section are intended to ensure
that each Member State provides and maintains the necessary simplifications to
its sales and use tax system to warrant the collection authority granted to it
in section 4.
(2)Reduction of
administrative burdensThe requirements of this section should be
construed—
(A)to require each
Member State to substantially reduce the administrative burdens associated with
sales and use taxes; and
(B)as allowing each
Member State to exercise flexibility in how these requirements are
satisfied.
(3)In
instances where exceptions to the requirements of this section can be exercised
in a manner that does not materially increase the administrative burden on a
seller obligated to collect or pay the taxes, such exceptions are
permissible.
8.
(a)Nothing in this Act shall be construed as—
(1)subjecting a
seller to franchise taxes, income taxes, or licensing requirements of a Member
State or political subdivision thereof; or
(2)affecting the
application of such taxes or requirements or enlarging or reducing the
authority of any Member State to impose such taxes or requirements.
(b)
(1)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 Member State for any other tax purpose.
(2)Permissible
Member State authorityExcept as provided in subsection (a), and
in section 4, nothing in this Act permits or prohibits a Member State
from—
(A)licensing or
regulating any person;
(B)requiring any
person to qualify to transact intrastate business;
(C)subjecting any
person to State taxes not related to the sale of goods or services; or
(D)exercising
authority over matters of interstate commerce.
9.Expedited
judicial review
(a)Three-Judge
district court hearingNotwithstanding any other provision of
law, any civil action challenging the constitutionality 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)
(1)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.
(2)Any appeal under paragraph (1) shall be filed not more than
30 days after the date of entry of such judgment, decree, or order.
10.For the purposes of this Act the following
definitions apply:
(1)The
term affiliate means any entity that controls, is controlled by,
or is under common control with a seller.
(2)The term Governing Board means the governing
board established by the Streamlined Sales and Use Tax Agreement.
(3)The term Member State—
(A)means a Member
State as that term is used under the Streamlined Sales and Use Tax Agreement as
of the date of enactment of this Act;
(B)does not include
associate members under the Agreement; and
(C)includes any
federally recognized Indian Tribe that is accorded Member State status under
the Agreement pursuant to section 5.
(4)The
term nationwide
means throughout each of the several States and
the District of Columbia, the Commonwealth of Puerto Rico, Guam, American
Samoa, the Virgin Islands, the Northern Mariana Islands, and any other
territory or possession of the United States.
(5)Nondiscretionary
duty of the Governing BoardThe phrase nondiscretionary
duty of the Governing Board
means any duty of the Governing Board
specified in the Agreement as a requirement for action by use of the term
shall
, will
, or is required
to
.
(6)The
term person means an individual, trust, estate, fiduciary,
partnership, corporation, federally recognized Indian Tribe or Tribal
government, State or local government, or any other legal entity.
(7)The term remote sale refers to a sale of goods
or services attributed to a particular Member State with respect to which a
seller does 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 Member State to require, without regard to the authority granted by this
Act, the seller to collect and remit sales or use taxes with respect to such
sale.
(8)The term remote seller
means any seller who
makes a remote sale.
(9)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.
(10)Streamlined
Sales and Use Tax AgreementThe term Streamlined Sales and
Use Tax Agreement (or the Agreement
) means the multistate
agreement with that title adopted on November 12, 2002, as amended through the
date of enactment of this Act and unless the context otherwise indicates as
further amended from time to time.
(11)Tax on
telecommunications servicesThe term tax on
telecommunications services
or taxes on telecommunication
services
shall encompass the same taxes, charges, or fees as are
included in section 116 of title 4, United States Code, except that
telecommunication services
shall replace mobile
telecommunications services
whenever such term appears.
(12)Telecommunications
service
(A)The term telecommunications service
means
the electronic transmission, conveyance, or routing of voice, data, audio,
video, or any other information or signals to a point, or between or among
points.
(B)The
term telecommunication service
—
(i)includes
transmission services in which computer processing applications are used to act
on the form, code, or protocol of the content for purposes of transmission,
conveyance, or routing without regard to whether such services are referred to
as voice over Internet protocol services or are classified by the Federal
Communications Commission as enhanced or value added services; and
(ii)does not include
the data processing and information services that allow data to be generated,
acquired, stored, processed, or retrieved and delivered by an electronic
transmission to a purchaser where the primary purpose of such purchaser for the
underlying transaction is the processed data or information.
11.Sense of the
Congress on digital goods and servicesIt is the sense of the Congress that each
State that is a party to the Agreement should work with other States that are
also party to the Agreement to prevent double taxation in situations where a
foreign country has imposed a transaction tax on a digital good or
service.