[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1452 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1452

   To promote simplification and fairness in the administration and 
                   collection of sales and use taxes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 29, 2011

  Mr. Durbin (for himself, Mr. Johnson of South Dakota, and Mr. Reed) 
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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Main Street 
Fairness Act''.
    (b) Table of Contents.--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. Determinations by governing board and judicial review of such 
                            determinations.
Sec. 6. Minimum simplification requirements.
Sec. 7. Limitation.
Sec. 8. Expedited judicial review.
Sec. 9. Definitions.
Sec. 10. Severability.
Sec. 11. Sense of Congress on digital goods and services.

SEC. 2. CONSENT OF CONGRESS.

    Congress consents to the Streamlined Sales and Use Tax Agreement.

SEC. 3. FINDINGS.

    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.

SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.

    (a) Grant of Authority.--
            (1) In general.--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 authority.--The 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 for sales and use 
                taxes and the taxability matrix described in the 
                Agreement, pursuant to requirements of the Governing 
                Board.
            (3) Limitation of authority.--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 6.
    (b) Termination of Authority.--
            (1) In general.--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 inconsistent 
                with the provisions of this Act.
            (2) Loss of member state status.--The 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) Determination of Status.--
            (1) In general.--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 6, and shall 
        reevaluate such determination on an annual basis.
            (2) Compliance determination.--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 determination.--Upon a final 
        determination by the Governing Board that a Member State is not 
        in compliance with the minimum simplification requirements of 
        section 6 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 5 shall not operate 
                to stay a State's loss of collection authority.
            (4) Restoration of authority.--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.

SEC. 5. DETERMINATIONS BY GOVERNING BOARD AND JUDICIAL REVIEW OF SUCH 
              DETERMINATIONS.

    (a) Petition.--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 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 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 6; 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 Review.--An 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) Standard of Review.--
            (1) In general.--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) Remand.--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) Nonmonetary relief.--In connection with any remand 
        under paragraph (2), the court may not award monetary relief, 
        but may award declaratory and injunctive relief.
    (e) Jurisdiction.--
            (1) Generally.--Chapter 91 of title 28, United States Code, 
        is amended by adding at the end the following new section:

``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 Main Street 
Fairness Act.''.
            (2) Conforming amendment to table of sections.--The 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.''.

SEC. 6. MINIMUM SIMPLIFICATION REQUIREMENTS.

    (a) In General.--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 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.
            (10) 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.
            (11) 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.
            (12) 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.
            (13)(A) Subject to subparagraphs (B), (C), (D), and (E), a 
        provision requiring that in order for a Member State to require 
        collection with respect to remote sales under section 4, the 
        Member State shall provide compensation for expenses incurred 
        by a seller directly in administering, collecting, and 
        remitting sales and use taxes to that Member State. Such 
        compensation may vary in each Member State as provided in the 
        Agreement.
            (B) Congress hereby finds that the compensation for 
        expenses incurred by sellers required of Member States under 
        the terms of the Agreement, as in effect on the enactment of 
        this Act, is the minimum compensation necessary, when 
        considered in connection with the simplification requirements 
        contained in the Agreement on the date authority to require 
        collection commences under section 4, to satisfy the 
        requirement under subparagraph (A) on such date.
            (C)(i) A provision requiring that the minimum compensation 
        required of a Member State under subparagraph (A) may be 
        modified as follows:
                    (I) Adjusted in relationship to changes in the size 
                of the small business exemption adopted by the 
                Governing Board.
                    (II) Decreased as additional simplifications and 
                improvements in technology reduce collection costs.
                    (III) Increased if provisions of the Agreement are 
                adopted that increase collection costs.
            (ii) Any such modification in the minimum required 
        compensation must be based on an independent review of the 
        expenses incurred by sellers in administering, collecting, and 
        remitting sales and use taxes and shall consider all changes 
        impacting such expenses and take into account and be 
        proportional to the increase or decrease in the expenses 
        incurred by sellers in administering, collecting, and remitting 
        sales and use taxes.
            (D) The compensation required by subparagraph (A) shall be 
        provided pursuant to the implementation schedule set out in the 
        Agreement. Nothing in this Act shall prohibit a Member State 
        from providing compensation greater than the amount required by 
        this Act or the Agreement or on a date earlier than required by 
        this Act or the Agreement.
            (E) Compensation necessary to meet the requirement of 
        subparagraph (A) may be provided to a seller or a third party 
        service provider whom a seller has contracted with to perform 
        the sales and use tax responsibilities of a seller.
            (14) Appropriate protections for consumer privacy.
            (15) 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.
            (16) A uniform rule to establish a small seller exception 
        to a requirement to collect authorized by this Act.
            (17) Uniform rules and procedures for sales tax holidays.
            (18) 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) In general.--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 burdens.--The 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) Exception.--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.
    (c) No Requirement To Exempt From or Impose Tax.--Nothing 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.

SEC. 7. LIMITATION.

    (a) In General.--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) No Effect on Nexus, etc.--
            (1) In general.--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 authority.--Except 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.

SEC. 8. EXPEDITED JUDICIAL REVIEW.

    (a) Three-Judge District Court Hearing.--Notwithstanding 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) Appellate Review.--
            (1) In general.--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) Thirty-day time limit.--Any appeal under paragraph (1) 
        shall be filed not more than 30 days after the date of entry of 
        such judgment, decree, or order.

SEC. 9. DEFINITIONS.

    For the purposes of this Act the following definitions apply:
            (1) Governing board.--The term ``Governing Board'' means 
        the governing board established by the Streamlined Sales and 
        Use Tax Agreement.
            (2) Member state.--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; and
                    (B) does not include associate members under the 
                Agreement.
            (3) Nondiscretionary duty of the governing board.--The 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) Person.--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) Remote sale.--The term ``remote sale'' means 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) Remote seller.--The term ``remote seller'' means any 
        seller who makes a remote sale.
            (7) State.--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 agreement.--The 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.

SEC. 10. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of the provisions 
of such to any person or circumstance shall not be affected thereby.

SEC. 11. SENSE OF CONGRESS ON DIGITAL GOODS AND SERVICES.

    It 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.
                                 <all>