1.Short title; table of
contents
(a)This Act may be cited
as the Main Street Fairness
Act
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Consent of Congress.
Sec. 3. Findings.
Sec. 4. Authorization to require collection of sales and use
taxes.
Sec. 5. Tribal governments.
Sec. 6. Determinations by governing board and judicial review
of such determinations.
Sec. 7. Minimum simplification requirements.
Sec. 8. Limitation.
Sec. 9. Expedited judicial review.
Sec. 10. Definitions.
Sec. 11. Sense of Congress on digital goods and
services.
2.Congress consents to
the Streamlined Sales and Use Tax Agreement.
3.Congress makes the following
findings:
(1)States should be encouraged to simplify
their sales and use tax systems.
(2)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
mail, over the telephone, on the Internet, or by other means.
(3)Congress may facilitate such equal taxation
consistent with the United States Supreme Court's decision in Quill Corp. v.
North Dakota.
(4)States that voluntarily and adequately
simplify their tax systems should be authorized to correct the present
inequities in taxation through requiring sellers to collect taxes on sales of
goods or services delivered in-state, without regard to the location of the
seller.
(5)The States have experience, expertise, and
a vital interest in the collection of sales and use taxes, and thus should take
the lead in developing and implementing sales and use tax collection systems
that are fair, efficient, and non-discriminatory in their application and that
will simplify the process for both sellers and buyers.
(6)Online consumer privacy is of paramount
importance to the growth of electronic commerce and must be protected.
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 seller exception 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)Ten States
comprising at least 20 percent of the total population of all States imposing a
sales tax, as determined by the most recent 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 online 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 the enactment of this Act is—
(i)not
within the scope of the administration of sales and use taxes by the Member
States; or
(ii)inconsistent with
the provisions of this Act.
(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 or the
provisions of this Act.
(c)
(1)The Governing Board shall determine if Member States are
in compliance with the requirements of subsections (a) and (b) and whether each
Member State meets the minimum simplification requirements of section 7, and
shall reevaluate such determination on an annual basis.
(2)Upon the determination of the Governing Board that
all the requirements of subsection (a) have been satisfied, the authority 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.
(3)Noncompliance
determinationUpon a final determination by the Governing Board
that a Member State is not in compliance with the minimum simplification
requirements of section 7 or is otherwise not in compliance with the Agreement,
that Member State shall lose its remote seller collection authority on the
earlier of—
(A)the date specified
by the Governing Board; or
(B)the later
of—
(i)the
first day of January at least 2 years after the Governing Board finally
determined the State was not compliant; or
(ii)the
first day of a calendar quarter following the end of one full session of the
State’s legislature beginning after the Governing Board finally determined the
State was not compliant.
For
purposes of this section, the terms final determination or
finally determined shall mean that all appeals processes provided
for in the Agreement have been exhausted or the time for pursuing such appeals
has expired. An action before the Federal Court of Claims pursuant to section 6
shall not operate to stay a State’s loss of collection authority.(4)Any Member State that loses its collection authority
under this section must comply with all provisions of this section to have its
remote seller collection authority restored.
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)if granted Member
State status pursuant to paragraph (2), exercise the authority provided under
section 4.
(2)Decision of the
governing board
(A)If the effect of any federally recognized Indian tribe’s
laws, rules, regulations, and policies is compliant with each of the terms of
the Agreement, and the Indian tribe has entered into an agreement with the
primary State where such tribe 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 such tribe 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 tribe is accorded
Member State status under the Agreement under this section, such tribe 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 determinations required under
section 4(c), any person who may be affected by the Agreement may petition the
Governing Board for a determination on any issue related to the implementation
of the Agreement or on a Member State's compliance with this Act or 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—
(i)continues to
satisfy the minimum simplification requirements of section 7; or
(ii)otherwise
continues to be consistent with the provisions of this Act; 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 the 6-month period beginning on the day after the date on which
the petition was 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 fails 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.
(3)In connection with any remand under paragraph (2), the
court may not award monetary relief, but may award declaratory and injunctive
relief.
(e)
(1)Chapter
91 of title 28, United States Code, is amended by adding at the end the
following new section:
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
6 of the Main Street Fairness
Act.
.
(2)Conforming
amendment to table of sectionsThe table of sections for 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
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 with respect to which a tax is imposed or
collected, shall have a common tax base identical to the State tax base of that
Member State. A Member State may enact 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 in effect on the date of the 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 as provided in
section 308 of the Agreement.
(10)A provision
requiring the elimination by each Member State of 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 sections 308C,
322, and 323 of the Agreement, as in effect on the date of the 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 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. The Governing Board, in its discretion, may authorize such a single
audit.
(14)Effective on the
date authority to require collection commences under section 4, each Member
State shall provide reasonable compensation for expenses incurred by all
sellers 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)A uniform rule to
establish a small seller exception to a requirement to collect authorized by
this Act.
(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)Application of
minimum simplification requirements to taxes on communications
servicesEach Member State shall apply the minimum simplification
requirements of subsection (a) to sales and use taxes on communications
services.
(c)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 simplification to
its sales and use tax system to warrant the collection authority granted to
such Member State 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.
(d)No requirement
To exempt from or impose taxNothing in this Act or the Agreement
shall require any Member State or any local taxing jurisdiction to exempt, or
to impose a tax on any product, or to adopt any particular type of tax, or to
impose the same rate of tax as any other taxing jurisdiction.
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 3 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 3 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 United States 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 Governing Board means the governing
board established by the Streamlined Sales and Use Tax Agreement.
(2)The term Member State—
(A)means a Member
State as that term is used under the Streamlined Sales and Use Tax Agreement as
in effect on the date of the 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.
(3)Nondiscretionary
duty of the governing boardThe term 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
.
(4)The
term person means an individual, trust, estate, fiduciary,
partnership, corporation, limited liability company, or any other legal entity,
and includes a State or local government.
(5)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 the 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 taxes covered by this Act with
respect to such sale.
(6)The term remote seller means any seller who
makes a remote sale.
(7)The
term State means each of the several States, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the United
States Virgin Islands, the Commonwealth of the Northern Mariana Islands, and
any other territory or possession of the United States.
(8)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 in effect on the
date of the enactment of this Act and unless the context otherwise indicates as
further amended from time to time.
11.Sense of
Congress on digital goods and servicesIt is the sense of Congress that each Member
State that is a party to the Agreement should work with other Member States
that are also parties to the Agreement to prevent double taxation in situations
where a foreign country has imposed a transaction tax on a digital good or
service.