[Congressional Record Volume 159, Number 62 (Monday, May 6, 2013)]
[Senate]
[Pages S3081-S3084]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MARKETPLACE FAIRNESS ACT OF 2013
The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 743, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 743) to restore States' sovereign rights to
enforce State and local sales and use tax laws, and for other
purposes.
Pending:
Reid (for Enzi) amendment No. 741, of a perfecting nature.
Durbin amendment No. 745 (to amendment No. 741), to change
the enactment date.
The PRESIDING OFFICER. Under the previous order, all postcloture time
is considered expired.
Under the previous order, amendment No. 745 is withdrawn.
The question is on agreeing to amendment No. 741, offered by the
Senator from Nevada, Mr. Reid.
Mr. ALEXANDER. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from New Jersey (Mr.
Lautenberg) and the Senator from Alaska (Mr. Begich) are necessarily
absent.
Mr. THUNE. The following Senators are necessarily absent: the Senator
from North Carolina (Mr. Burr), the Senator from Texas (Mr. Cornyn),
the Senator from South Carolina (Mr. Graham), and the Senator from
Kansas (Mr. Moran).
Further, if present and voting, the Senator from Texas (Mr. Cornyn)
would have voted ``nay.''
The PRESIDING OFFICER (Mr. Donnelly). Are there any other Senators in
the Chamber desiring to vote?
[[Page S3082]]
The result was announced--yeas 70, nays 24, as follows:
[Rollcall Vote No. 112 Leg.]
YEAS--70
Alexander
Baldwin
Bennet
Blumenthal
Blunt
Boozman
Boxer
Brown
Cantwell
Cardin
Carper
Casey
Chambliss
Coats
Cochran
Collins
Coons
Corker
Cowan
Crapo
Donnelly
Durbin
Enzi
Feinstein
Fischer
Franken
Gillibrand
Grassley
Hagan
Harkin
Heinrich
Heitkamp
Hirono
Hoeven
Isakson
Johanns
Johnson (SD)
Kaine
King
Klobuchar
Landrieu
Leahy
Levin
Manchin
McCain
McCaskill
Menendez
Mikulski
Murphy
Murray
Nelson
Portman
Pryor
Reed
Reid
Risch
Rockefeller
Sanders
Schatz
Schumer
Sessions
Shelby
Stabenow
Thune
Udall (CO)
Udall (NM)
Warner
Warren
Whitehouse
Wicker
NAYS--24
Ayotte
Barrasso
Baucus
Coburn
Cruz
Flake
Hatch
Heller
Inhofe
Johnson (WI)
Kirk
Lee
McConnell
Merkley
Murkowski
Paul
Roberts
Rubio
Scott
Shaheen
Tester
Toomey
Vitter
Wyden
NOT VOTING--6
Begich
Burr
Cornyn
Graham
Lautenberg
Moran
The amendment (No. 741) was agreed to.
UNANIMOUS CONSENT REQUEST--H. CON. RES. 25
The PRESIDING OFFICER. The majority leader.
Mr. REID. Mr. President, this afternoon I offered a consent agreement
dealing with the budget. I withdrew that because we did not have anyone
here to object, and I had an inkling there would be an objection if a
Republican were here.
We have been asked to move with regular order. We have done that. We
have done our very best to do that. People wanted amendments. We have
done our best to have bills with amendments. We have been asked, let's
do as much work as we can with committees, and we have done that. We
have bills reported out from the committee. Those are the bills we have
handled here, with rare exception.
Now we have had our Republican friends saying for months and months,
let's do things with regular order. We know how hard it was to get a
budget passed. We have had over 100 amendments on which we actually
voted. We were here until 5 o'clock in the morning. We got a budget,
even though--you know, we have been through this before. We do not need
to go into more detail. We had a law signed by the President of the
United States that gave us our budget allocations for several years.
But we decided to do a resolution. It didn't have to be signed by the
President. I am glad we did. It was hard. Senators Murray and Sessions
did a good job allowing us to move forward on that, so now it is time
to go forward. We have a budget resolution we passed in the Senate. We
want to meet with the House and work out our differences. That is what
we have done here for two centuries. We should do it on this bill.
I ask unanimous consent that the Senate proceed to the consideration
of Calendar No. 33, H. Con. Res. 25; that the amendment which is at the
desk, the text of S. Con. Res. 8, the budget resolution passed by the
Senate, be inserted in lieu thereof; that H. Con. Res. 25, as amended,
be agreed to, with the motions to reconsider being considered made and
laid on the table; that the Senate insist on its amendment, request a
conference with the House on the disagreeing votes of the two Houses,
and the Chair be authorized to appoint conferees on the part of the
Senate, all without intervening action or debate.
The PRESIDING OFFICER. Is there objection?
The Senator from Texas.
Mr. CRUZ. Mr. President, reserving the right to object, one of my
concerns is that this conference report could be used to pass a
reconciliation bill that would increase the debt ceiling without
sufficient input from the minority party and without addressing the
fundamental structural spending problems we have in the Federal
Government that are leading to our unsustainable debt. I believe this
concern is well founded in history in that reconciliation bills have
been used to increase the debt ceiling at least three times--in 1986,
1990, and in 1993. So for that reason, reserving the right to object, I
ask consent that the leader modify his request so that it not be in
order for the Senate to consider a conference report that includes tax
increases or reconciliation instructions to increase taxes or to raise
the debt limit.
The PRESIDING OFFICER. Is there objection to the modified request?
Mr. REID. I would make a comment before making a decision on that.
The PRESIDING OFFICER. The majority leader.
Mr. REID. The Senate considered the budget--and that is an
understatement. We voted on more than 100 amendments, as I mentioned a
few minutes ago. It was hard. The votes were hard. The Senate passed
its budget. It should now go to conference, that which the Senate
passed. It is our budget. The Senator from Texas was on the losing
side. He had his view and it lost, but now he wants us to agree by
consent to adopt the losing side's view or else he is not going to
allow us to go to conference.
For more than two centuries, I repeat, the two bodies have been able
to go work out their differences. The Senate passes something. The
House passes something. You talk about regular order, that is it. We
are able at that time to sit down and talk about the differences. The
debt ceiling--he wants to talk about that. He wants to talk about
taxes. We are happy to do that, but let's do it in the context of
regular order. That is what we should be doing around here.
My friend from Texas is like the schoolyard bully. He pushes
everybody around and is losing, and instead of playing the game
according to the rules, he not only takes the ball home with him but
changes the rules. That way, no one wins--except the bully who tries to
indicate to people that he has won. We are asking the Republicans to
play by the rules and let us go to conference.
I don't think it takes a lot of wizardry to figure out that we know
how the American people feel about what they want done in this country.
They want us to get on a pathway of growth and economic vitality. It
has been hindered.
The Republicans have things they want to do. We have things we want
to do. Why can't we sit down as reasonable men and women and work out
our differences? That is what a conference is all about.
I object to what my friend suggests. It is actually fairly
ridiculous, if you want the truth: Before we go to conference,
determine what you are going to do or not do in the conference. That is
not how we do things around here.
The PRESIDING OFFICER. Objection is heard.
Is there objection to the original request? The Senator from Texas.
Mr. CRUZ. Mr. President, I was not aware we were at a schoolyard.
Mr. REID. Mr. President, is there an objection or no objection? Let's
hear about it. We have had enough.
Mrs. BOXER. Regular order.
Mr. CRUZ. Reserving the right to object.
Mr. REID. Mr. President, there is no such thing.
The PRESIDING OFFICER. Is there objection?
Mr. CRUZ. Yes. I object.
The PRESIDING OFFICER. The clerk will read the bill for a third time.
The bill was ordered to be engrossed for a third reading and was read
the third time.
Implementation
Ms. COLLINS. Mr. President, I rise to speak on the Marketplace
Fairness Act. I applaud Senator Enzi for his many years of work on this
legislation, of which I am a cosponsor. This bill rectifies a
fundamental unfairness in our current system. Right now, out-of-State
Internet sellers, so-called remote sellers, have an advantage over Main
Street businesses. Main Street businesses have to collect sales taxes
on every transaction. Because remote sellers don't have to charge this
tax, they enjoy a price advantage over the mom-and-pop businesses that
form the backbone of our communities. This bill would allow States to
collect sales taxes on remote sales, thereby leveling the playing field
with Main Street businesses.
[[Page S3083]]
It is important to recognize that this bill does not authorize any
new or higher tax, nor does it impose an Internet tax. It simply helps
ensure that taxes already owed are paid.
I would like to engage Senator Enzi in a colloquy regarding the
manner in which the bill is to be implemented. As introduced, the bill
would require some businesses to start collecting sales taxes in as
little as 90 days. I hope that my colleague from Wyoming would agree
that is too short a time period, and I appreciate the fact that he has
offered an amendment that includes a 6-month delay. I believe, however,
that a delay of at least 1 year is needed to allow businesses time to
implement the new systems and software necessary for compliance. I do
appreciate that the Senator from Wyoming exempted small businesses with
sales under $1 million, as I had urged.
Nevertheless, from a covered seller's perspective, complying with the
Marketplace Fairness Act requires more than just installing new
software. Multichannel retailers--those who sell online, through
catalogs, over the phones, and in stores--have their own unique order
processing systems. Tax collection software must be programmed to link
to each component of their order processing systems. This step alone
could involve considerable programming time for each online retailer.
Each retailer's tax department, or outside consultants, will be
required to research and develop a comprehensive understanding of the
unique sales and use tax policies in every State where their online
customers reside to make sure the programming for their tax collection
software is correct. That involves answering a number of questions for
each State.
The differing treatment of athletic apparel provides a great example
of the complexity involved. In some States, clothing and athletic
footwear are exempt from tax. In others, they are exempt only up to a
certain price level. Yet other States make a distinction between
clothing and footwear used for athletic purposes--which they tax--and
clothing and footwear used for general purposes--which they do not tax.
In those States, systems must be programmed to correctly treat articles
that can be viewed as either athletic apparel or general clothing,
depending on the user. Board shorts, sneakers, and windbreakers are
just a few examples of common items that give rise to substantial
complexity.
Retailers will need to invest additional hours in tax analyst and
programmer time to ensure their systems are able to address these
issues seamlessly. Even with a 1-year delay, retailers will have to
begin early, and move quickly, to implement the Marketplace Fairness
Act.
Mr. ENZI. I thank my friend from Maine, and wholeheartedly agree with
her conclusion that we must ensure that the Marketplace Fairness Act is
correctly implemented. I have spent many years working on this
legislation and strongly believe that leveling the playing field for
Main Street businesses is the right thing to do. We must implement the
solution to that problem in a reasonable manner, and I agree with the
Senator that the 1-year delay she proposes is appropriate to do this.
Ms. COLLINS. I would also like to note that the collection of sales
taxes online will be new not only for many retailers, but also for
consumers who are used to the current system. It is important to
implement the new law correctly, from the outset, for these retailers
and their customers.
In this regard, I believe that it is also important to make sure that
the implementation of the new law does not disrupt the busy holiday
season. For this reason, I believe that States should be prohibited
from exercising their new authority under the Marketplace Fairness Act
during the last quarter of the first year after enactment.
Mr. ENZI. I think both the proposals made by my friend from Maine are
commonsense items that will improve the Marketplace Fairness Act. As
this bill moves through the legislative process, I suggest my
colleagues on both sides of the aisle--and in both Chambers--adopt a 1-
year delay in implementation and prohibit States from beginning to
exercise their new authority to require the collection of sales taxes
during the holiday season.
The PRESIDING OFFICER. Under the previous order, the question is on
passage of S. 743, as amended.
Mr. REID. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The clerk will call the roll.
The bill clerk called the roll.
Mr. DURBIN. I announce that the Senator from Alaska (Mr. Begich) and
the Senator from New Jersey (Mr. Lautenberg) are necessarily absent.
Mr. THUNE. The following Senators are necessarily absent: the Senator
from Texas (Mr. Cornyn) and the Senator from Kansas (Mr. Moran).
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 69, nays 27, as follows:
[Rollcall Vote No. 113 Leg.]
YEAS--69
Alexander
Baldwin
Bennet
Blumenthal
Blunt
Boozman
Boxer
Brown
Burr
Cantwell
Cardin
Carper
Casey
Chambliss
Coats
Cochran
Collins
Coons
Corker
Cowan
Donnelly
Durbin
Enzi
Feinstein
Fischer
Franken
Gillibrand
Graham
Hagan
Harkin
Heinrich
Heitkamp
Hirono
Hoeven
Isakson
Johanns
Johnson (SD)
Kaine
King
Klobuchar
Landrieu
Leahy
Levin
Manchin
McCain
McCaskill
Menendez
Mikulski
Murphy
Murray
Nelson
Portman
Pryor
Reed
Reid
Rockefeller
Sanders
Schatz
Schumer
Sessions
Shelby
Stabenow
Thune
Udall (CO)
Udall (NM)
Warner
Warren
Whitehouse
Wicker
NAYS--27
Ayotte
Barrasso
Baucus
Coburn
Crapo
Cruz
Flake
Grassley
Hatch
Heller
Inhofe
Johnson (WI)
Kirk
Lee
McConnell
Merkley
Murkowski
Paul
Risch
Roberts
Rubio
Scott
Shaheen
Tester
Toomey
Vitter
Wyden
NOT VOTING--4
Begich
Cornyn
Lautenberg
Moran
The bill (S. 743), as amended, was passed, as follows:
S. 743
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 ``Marketplace Fairness Act of
2013''.
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 to require all sellers not qualifying for the
small 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 the 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 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 first day of the calendar quarter
that is at least 180 days after the date of the enactment of
this Act.
(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
sellers not qualifying for the small 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 commence beginning no earlier than the first day of the
calendar quarter that is at least 6 months 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;
[[Page S3084]]
(ii) a single audit of a remote seller for all State and
local taxing jurisdictions within that State; and
(iii) 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 or impose requirements on remote sellers
that the State does not impose on nonremote sellers with
respect to the collection of sales and use taxes under this
Act. 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(7).
(D) Provide--
(i) information indicating the taxability of products and
services along with any product and service exemptions from
sales and use tax in the State and a rates and boundary
database;
(ii) software free of charge for remote sellers that
calculates sales and use taxes due on each transaction at the
time the transaction is completed, that files sales and use
tax returns, and that is updated to reflect rate changes as
described in subparagraph (H); and
(iii) certification procedures for persons to be approved
as certified software providers.
For purposes of clause (iii), the software provided by
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.
(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 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
by the State.
(H) Provide remote sellers and certified software providers
with 90 days notice of a rate change by the State or any
locality in the State and update the information described in
subparagraph (D)(i) 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.
(c) Small Seller Exception.--A State is authorized to
require a remote seller to collect sales and use taxes under
this Act only if the remote seller has gross annual receipts
in total remote sales in the United States in the preceding
calendar year exceeding $1,000,000. For purposes of
determining whether the threshold in this section is met, the
gross annual receipts from remote sales of 2 or more persons
shall be aggregated if--
(1) such persons are related to the remote seller within
the meaning of subsections (b) and (c) of section 267 or
section 707(b)(1) of the Internal Revenue Code of 1986; or
(2) such persons have 1 or more ownership relationships and
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 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 or alter the standards for determining nexus
between a person and a State or locality.
(c) No Effect on Seller Choice.--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.
(d) 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 products or services; or
(4) exercising authority over matters of interstate
commerce.
(e) No New Taxes.--Nothing in this Act shall be construed
as encouraging a State to impose sales and use taxes on any
products or services not subject to taxation prior to the
date of the enactment of this Act.
(f) 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.
(g) 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).
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 to remote sellers to facilitate State
and local sales and use tax compliance pursuant to section
2(b)(2)(D)(ii); and
(B) is certified by a State to so provide such software.
(2) Locality; local.--The terms ``locality'' and ``local''
refer to any political subdivision of a State.
(3) 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 under the
Streamlined Sales and Use Tax Agreement.
(4) 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.
(5) Remote sale.--The term ``remote sale'' means a sale
into a State, as determined under the sourcing rules under
paragraph (7), in which the seller would not legally be
required to pay, collect, or remit State or local sales and
use taxes unless provided by this Act.
(6) Remote seller.--The term ``remote seller'' means a
person that makes remote sales in the State.
(7) 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 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 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. A State granted authority under section
2(a) shall comply with the sourcing provisions of the
Streamlined Sales and Use Tax Agreement.
(8) 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, and any
tribal organization (as defined in section 4 of the Indian
Self-Determination and Education Assistance Act (25 U.S.C.
450b)).
(9) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax Agreement'' means the multi-
State 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, the remainder of this Act and the
application of the provisions of such to any person or
circumstance shall not be affected thereby.
SEC. 6. PREEMPTION.
Except as otherwise provided in this Act, this Act shall
not be construed to preempt or limit any power exercised or
to be exercised by a State or local jurisdiction under the
law of such State or local jurisdiction or under any other
Federal law.
The PRESIDING OFFICER. The majority leader.
____________________