[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2775 Introduced in House (IH)]
114th CONGRESS
1st Session
H. R. 2775
To grant States authority to enforce State and local sales and use tax
laws on remote transactions, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 15, 2015
Mr. Chaffetz (for himself, Mr. Womack, Mrs. Noem, Mr. Conyers, Ms.
Speier, Mr. Welch, Mr. Stivers, Ms. DelBene, Mr. Dold, Mr. Rigell, Mrs.
Ellmers of North Carolina, Mr. Curbelo of Florida, Mr. Barletta, Mr.
Deutch, Mr. Larson of Connecticut, Mr. Kilmer, and Mr. Johnson of
Georgia) introduced the following bill; which was referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To grant States authority to enforce State and local sales and use tax
laws on remote transactions, and for other purposes.
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 ``Remote Transactions Parity Act of
2015''.
SEC. 2. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.
(a) Streamlined Sales and Use Tax Agreement.--Each Member State
under the Streamlined Sales and Use Tax Agreement is authorized
notwithstanding any other provision of law to require all remote
sellers not qualifying for the small remote seller exception described
in subsection (c) to collect and remit sales and use taxes with respect
to remote sales sourced to that Member State pursuant to the provisions
of the Streamlined Sales and Use Tax Agreement, but only if any changes
to the Streamlined Sales and Use Tax Agreement made after the date of
enactment of this Act, are not in conflict with the minimum
simplification requirements in subsection (b)(2). A State may exercise
authority under this Act on the 1st day of a month beginning 180 days
after the State publishes notice of the State's intent to exercise the
authority under this Act, but no earlier than the date provided in
section 3(h).
(b) Alternative.--A State that is not a Member State under the
Streamlined Sales and Use Tax Agreement is authorized notwithstanding
any other provision of law to require all remote sellers not qualifying
for the small remote seller exception described in subsection (c) to
collect and remit sales and use taxes with respect to remote sales
sourced to that State, but only if the State adopts and implements the
minimum simplification requirements in paragraph (2). Such authority
shall only begin on the 1st day of a month and commence beginning no
earlier than the first day of the calendar quarter that is at least 180
days after the date that the State--
(1) enacts legislation to exercise the authority granted by
this Act--
(A) specifying the tax or taxes to which such
authority and the minimum simplification requirements
in paragraph (2) shall apply; and
(B) specifying the products and services otherwise
subject to the tax or taxes identified by the State
under subparagraph (A) to which the authority of this
Act shall not apply; and
(2) implements each of the following minimum simplification
requirements:
(A) Provide--
(i) a single entity within the State
responsible for all State and local sales and
use tax administration, return processing, and
audits for remote sales sourced to the State;
(ii) except as provided in clause (iii) and
section 3(I), a single audit of a remote seller
for all State and local taxing jurisdictions
within that State;
(iii) unless there is reasonable suspicion
that the remote seller has engaged in
intentional misrepresentation, if a remote
seller utilizes a certified software provider
as described in section 4(1), the State
requesting the audit shall, at the option of
the remote seller, first contact the certified
software provider who shall have the
responsibility to provide the State with
complete records of transactions processed for
the remote seller and who will represent the
remote seller during the State's audit and be
responsible for the audit findings except as
provided in subparagraphs (F), (G), and (H)
(Nothing herein shall prevent the remote seller
from contesting audit findings, and the remote
seller utilizing a certified software provider
shall not be contacted by a State requesting an
audit unless the remote seller either was
reasonably suspected of intentional
misrepresentation or has declined to have a
certified software provider represent it during
the audit.); and
(iv) a single sales and use tax return to
be used by remote sellers to be filed with the
single entity responsible for tax
administration.
A State may not require a remote seller to file sales
and use tax returns any more frequently than returns
are required for nonremote sellers. No local
jurisdiction may require a remote seller to submit a
sales and use tax return or to collect sales and use
taxes other than as provided by this paragraph.
(B) Provide a uniform sales and use tax base among
the State and the local taxing jurisdictions within the
State pursuant to paragraph (1).
(C) Source all remote sales in compliance with the
sourcing definition set forth in section 4(10).
(D) Provide--
(i) a publicly available taxability and
exemption table which can be downloaded in an
easily usable format and accessed
electronically which indicates the taxability
of products and services along with any product
and service exemptions from sales and use tax
in the State, and which is updated each
calendar quarter for any changes to the
products and services specified under paragraph
(1)(B);
(ii) a rates and boundary database in an
easily downloadable format and which is updated
each calendar quarter for rate and boundary
changes;
(iii) free access to all of the national
certified software providers that have been
approved pursuant to section (3)(g) and that
can determine the proper sales and use tax in
every State qualified under this Act and that
will--
(I) determine the correct sales and
use tax rate based on sourcing rules in
section 4(10) and calculate the sales
and use tax due at the time of sale;
(II) generate and file sales and
use tax returns electronically;
(III) remit the sales and use taxes
to States electronically;
(IV) report all transactions
processed to the remote seller;
(V) respond to sales and use tax
audit requests by States for remote
sellers; and
(VI) provide safeguards and
protection of consumer privacy in any
data stored by the certified software
provider; and
(iv) certification procedures for persons
to be approved as certified software providers.
Such free access shall include installation, setup and
maintenance of the automated system into the remote
seller's system. For purposes of clause (iii), the
software provided by national certified software
providers shall be capable of calculating and filing
sales and use taxes in all States qualified under this
Act.
(E) Relieve remote sellers from liability to the
State or locality for the incorrect collection,
remittance, or noncollection of sales and use taxes,
including any penalties or interest, if the liability
is the result of an error or omission made by a
certified software provider unless the error or
omission is the result of misleading, incomplete, or
inaccurate information provided to the certified
software provider by the remote seller.
(F) Relieve certified software providers from
liability to the State or locality for the incorrect
collection, remittance, or noncollection of sales and
use taxes, including any penalties or interest, if the
liability is the result of misleading, incomplete, or
inaccurate information provided by a remote seller.
(G) Relieve remote sellers and certified software
providers from liability to the State or locality for
incorrect collection, remittance, or noncollection of
sales and use taxes, including any penalties or
interest, if the liability is the result of incorrect
information or software provided or certified by the
State.
(H) Provide remote sellers and certified software
providers with 90-days notice of rate and boundary
changes and any changes to the products and services
specified under paragraph (1)(B) by the State or any
locality in the State and update the information
described in clauses (i) and (ii) of subparagraph (D)
accordingly and relieve any remote seller or certified
software provider from liability for collecting sales
and use taxes at the immediately preceding effective
rate during the 90-day notice period if the required
notice is not provided.
(I) Provide the following, but only if the law of a
State allows a person, other than the State itself, to
pursue a cause of action against a seller for under-
collected or over-collected sales or use tax:
(i) That a person, other than the State
itself, may not pursue any cause of action
against a remote seller for under-collected or
over-collected sales or use tax unless the
remote seller has received written notice from
the person that the remote seller has over-
collected or under-collected sales and use tax,
the notice contains information sufficient to
determine the validity of the refund request or
asserted under-collection, and the remote
seller has not, within 60 days of receipt of
the notice, refunded affected customers the
amount of the over-collected sales and use tax
or paid the under-collected amount of sales and
use tax to the State. No penalties may be
imposed during the 60-day period in excess of
the penalties that would otherwise be imposed
by the State had no notice been provided
pursuant to this paragraph.
(ii) That a notice of over-collection from
a person is only valid if received within the
applicable statute of limitations for filing
refunds for sales and use tax, and that a
notice of under-collection from a person is
only valid if received within the applicable
statute of limitations for assessing
underpayments of sales and use tax.
(iii) That a person, other than the State
itself, may not pursue any cause of action
against a certified software provider for its
activities conducted for a remote seller
described in clause (i) unless the remote
seller provides a copy of the written notice to
the certified software provider within a
reasonable time for the certified software
provider to be able to assist the remote seller
in making the payments within the time frame
described in clause (i).
(iv) That a person, other than the State
itself, may pursue a cause of action against a
remote seller for under-collected or over-
collected sales or use tax if the remote seller
knew or should have known that it had under-
collected or over-collected and did not, within
60 days of its determination, refund affected
customers the amount of the over-collected
sales and use tax or pay the amount of under-
collected sales and use tax to the State.
(J) Accepts registrations at no charge to certified
software provider or remote seller from a central
online registration system that allows a remote seller
to register to collect and remit sales and use taxes in
all States that have exercised authority under this
Act.
(K) Relieve remote sellers and certified software
providers, except in cases of fraud, from liability for
tax, penalty, and interest on transactions if the
purchaser provides to the remote seller the necessary
documentation to claim an exemption within 90 days of
the sale.
(c) Small Remote Seller Phase-In.--
(1) Collection authorized.--A State is authorized to
require the collection of sales and use taxes by a remote
seller under this Act only as follows:
(A) For the 1st calendar year following the
effective date, if the remote seller--
(i) has gross annual receipts exceeding
$10,000,000 in the calendar year preceding the
date of enactment; or
(ii) utilizes an electronic marketplace for
the purpose of making products or services
available for sale to the public.
(B) For the 2d calendar year following the
effective date, if the remote seller--
(i) has gross annual receipts exceeding
$5,000,000 in the immediately preceding
calendar year; or
(ii) utilizes an electronic marketplace for
the purpose of making products or services
available for sale to the public.
(c) For the 3d calendar year following the
effective date, if the remote seller--
(i) has gross annual receipts exceeding
$1,000,000 in the immediately preceding
calendar year; or
(ii) utilizes an electronic marketplace for
the purpose of making products or services
available for sale to the public.
(2) Determination of threshold.--For purposes of
determining whether the threshold in this paragraph (1) is
met--
(A) the sales of all persons related within the
meaning of subsections (b) and (c) of section 267, or
section 707(b)(1), of the Internal Revenue Code of 1986
shall be aggregated; or
(B) persons with 1 or more ownership relationships
shall also be aggregated if such relationships were
designed with a principal purpose of avoiding the
application of these rules.
SEC. 3. LIMITATIONS.
(a) In General.--Nothing in this Act shall be construed as--
(1) subjecting a remote seller or any other person to
franchise, income, occupation, or any other type of taxes,
other than sales and use taxes;
(2) affecting the application of such taxes; or
(3) enlarging or reducing State authority to impose such
taxes.
(b) No Effect on Nexus.--This Act shall not be construed to create
any nexus between a person and a State or locality.
(c) Licensing and Regulatory Requirements.--Nothing in this Act
shall be construed as permitting or prohibiting a State from--
(1) licensing or regulating any person;
(2) requiring any person to qualify to transact intrastate
business;
(3) subjecting any person to State or local taxes not
related to the sale of goods or services; or
(4) exercising authority over matters of interstate
commerce.
(d) No New Taxes.--Nothing in this Act shall be construed as
encouraging a State to impose sales and use taxes on any goods or
services not subject to a sales and use tax prior to the date of the
enactment of this Act.
(e) No Effect on Intrastate Sales.--The provisions of this Act
shall apply only to remote sales and shall not apply to intrastate
sales or intrastate sourcing rules. States granted authority under
section 2(a) shall comply with all intrastate provisions of the
Streamlined Sales and Use Tax Agreement.
(f) No Effect on Mobile Telecommunications Sourcing Act.--Nothing
in this Act shall be construed as altering in any manner or preempting
the Mobile Telecommunications Sourcing Act (4 U.S.C. 116-126).
(g) Certification Requirements.--A State may not exercise authority
under this Act unless the following requirements are satisfied:
(1) The State provides certification procedures for persons
to be approved as certified software providers. A State may
delegate the certification procedures so long as the State
retains final approval over any certification decisions.
(2) The State (or its delegate) does not deny or revoke
certification to a software provider without a reasonable
basis, or arbitrarily or capriciously. A State must complete
the certification review of the software provider no later than
the first day of the calendar quarter that is at least 180 days
after the software provider requests certification by that
State.
(3) The State has certified multiple national certified
software providers, and the certifications are in effect.
Nothing in this Act shall be construed to deny the ability of a
remote seller to deploy and utilize a certified software
provider of the seller's choice.
(4) The State provides compensation for certified software
providers. A State may delegate the authority to negotiate the
compensation so long as the State retains final approval of the
compensation rate(s).
(h) Limitation on Initial Collection of Sales and Use Taxes From
Remote Sales.--A State may not begin to exercise the authority under
this title--
(1) before the date that is 1 year after the date of the
enactment of this Act; and
(2) during the period beginning October 1 and ending on
December 31 of the first calendar year beginning after the date
of the enactment of this Act.
(i) Limitation on Audits of Remote Sellers.--A State exercising
authority under this Act--
(1) may not audit a remote seller that--
(A) has registered in the State under section
2(b)(2)(J); and
(B) has gross annual receipts of less than
$5,000,000 in the taxable year as aggregated in
subsection (c) of section 2;
unless there is reasonable suspicion that such remote seller
has engaged in intentional misrepresentation or fraud; and
(2) may not have audits of remote sellers conducted by
persons whose compensation is contingent upon audit findings.
(j) Limitation on Time Period To Assess Remote Sellers and
Certified Software Providers.--A State may not hold a remote seller or
certified software provider liable for the incorrect collection,
remittance, or noncollection of sales and use taxes, including any
penalties or interest, if the liability is for a sales or use tax
assessed under the authority of this Act more than 3 years after the
later of the due date or the filing of the sales and use tax return
applicable to the sales and use tax assessed.
(k) Remote Seller Compensation.--A State must provide remote
sellers with compensation equaling no less than the amount, if any, the
State provides to nonremote sellers within the State.
SEC. 4. DEFINITIONS AND SPECIAL RULES.
In this Act:
(1) Certified software provider.--The term ``certified
software provider'' means a person that--
(A) provides software or access to software to
remote sellers to facilitate State and local sales and
use tax compliance; and
(B) is certified by a State or on a State's behalf
to so provide such software.
(2) Effective date.--The term ``effective date'' means the
date that is 1 year after the date of the enactment of this
Act. However, if the date that is 1 year after the date of the
enactment of this Act falls during the period beginning October
1 and ending on December 31, the effective date shall be
January 1 of the immediately following year.
(3) Electronic marketplace.--The term ``electronic
marketplace'' means a digital marketing platform where--
(A) products or services are offered for sale by
more than 1 remote seller; and
(B) buyers may purchase such products or services
through a common system of financial transaction
processing.
(4) Locality; local.--The terms ``locality'' and ``local''
refer to any political subdivision of a State.
(5) 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 any associate member or a
member that is not a full member under the Streamlined
Sales and Use Tax Agreement.
(6) National certified software provider.--The term
``national certified software provider'' means a certified
software provider that has been certified by all States that
are certifying States. A ``certifying State'' is a State that
has a generally applicable sales and use tax, that has met the
requirements set forth under section 3(g)(1), and that has not
violated the requirements set forth in section 3(g)(2). Once a
certified software provider is a national certified software
provider, it shall not lose its status as such when a State
becomes a certifying State so long as the national certified
software provider requested certification from the new
certifying State within 30 days from the date that the State
became a certifying State and the certifying State has not
violated section 3(g)(2).
(7) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, limited
liability company, or other legal entity, and a State or local
government.
(8) Remote sale.--The term ``remote sale'' means a sale
that originates in one State and is sourced to another State as
provided in section 4(10) which the seller would not legally be
required to pay, collect, or remit State or local sales and use
taxes without the authority provided by this Act.
(9) Remote seller.--The term ``remote seller'' means a
person that makes remote sales in the State without a physical
presence. For purposes of this paragraph, a person has a
physical presence in a State only if such person's business
activities in the State include any of the following during
such person's tax able year:
(A) Being an individual physically in the State, or
assigning one or more employees to be in the State.
(B) Using the services of an agent (excluding an
employee) to establish or maintain the market in the
State, if such agent does not perform business services
in the State for any other person during such taxable
year.
(c) The leasing or owning of tangible personal
property or of real property in the State.
For purposes of this paragraph, the term ``physical presence'''
shall not include presence in a State for less than 15 days in
a taxable year (or a greater number of days if provided by
State law), or presence in a State to conduct limited or
transient business activity.
(10) Sourced.--For purposes of a State granted authority
under section 2(b), the location to which a remote sale is
sourced refers to the location where the product or service
sold is received by the purchaser, based on the location
indicated by instructions for delivery that the purchaser
furnishes to the seller. When no delivery location is
specified, the remote sale is sourced to the customer's
address, including the customer's place of primary use that is
either known to the seller or, if not known, obtained by the
seller during the consummation of the transaction, including
the address of the customer's payment instrument if no other
address is available. If an address or place of primary use is
unknown and a billing address cannot be obtained, the remote
sale is sourced to the address of the seller from which the
remote sale was made. The term ``received'' means taking
possession of product or making first use of services. A State
granted authority under section 2(a) shall comply with the
sourcing provisions of the Streamlined Sales and Use Tax
Agreement.
(11) State.--The term ``State'' means any 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, or any
territory or possession of the United States.
(12) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax 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
as further amended from time to time.
SEC. 5. SEVERABILITY.
If any provision of this Act, or the application of such provision
to any person or circumstance, is held to be unconstitutional, then the
remainder of this Act, and the application of the provisions of such to
any person or circumstance, shall not be affected thereby.
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