[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2193 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 2193

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

                             April 27, 2017

  Mrs. Noem (for herself, Mr. Womack, Mr. Chaffetz, Mr. Stivers, Mr. 
  Barletta, Mr. Conyers, Ms. Speier, Ms. DelBene, Mr. Welch, and Mr. 
  Cicilline) 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 
2017''.

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 timeframe 
                        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 one 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 taxable 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.
                                 <all>