HR 4460 IH

To amend the Internet Tax Freedom Act to extend the moratorium applicable to State and local taxes on Internet access and electronic commerce; and for other purposes.

May 16, 2000

Mr. HYDE (for himself, Mr. CONYERS, Mr. GEKAS, and Mr. NADLER) introduced the following bill; which was referred to the Committee on the Judiciary

To amend the Internet Tax Freedom Act to extend the moratorium applicable to State and local taxes on Internet access and electronic commerce; 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 `Internet Tax Simplification Act of 2000'.

SEC. 2. AMENDMENTS.

(a) MORATORIUM AMENDMENT- Section 1101(a) of title XI of division C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended to read as follows:

`(a) MORATORIA ON STATE AND LOCAL TAXES ON THE INTERNET- No State or political subdivision thereof shall impose any of the following taxes:

`(1) Taxes on Internet access during the period beginning on October 1, 1998, and ending on October 1, 2006, unless such tax was generally imposed and actually enforced prior to October 1, 1998.

`(2) During the period beginning on October 1, 1998, and ending on December 31, 2003, multiple or discriminatory taxes on electronic commerce.'.

(b) STREAMLINED UNIFORM SALES AND USE TAX- Title XI of division C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended--

(1) by redesignating section 1104 as section 1109; and

(2) by inserting after section 1103 the following:

`SEC. 1104. DEVELOPMENT OF STREAMLINED UNIFORM SALES AND USE TAX ACT.

`It is the sense of the Congress that, not later than January 1, 2004, States and political subdivisions of States should work cooperatively with the National Conference of Commissioners on Uniform State Laws (in this section referred to as the `Conference') to develop and draft a Streamlined Uniform Sales and Use Tax Act that--

`(1) is characterized by simplicity, uniformity, neutrality, efficiency, and fairness; and

`(2) includes, but is not limited to--

`(A) a centralized, one-stop registration system;

`(B) uniform tax base definitions;

`(C) uniform and simple sourcing rules;

`(D) uniform exemption administration rules (including a database of all exempt entities and removal of the `good faith' acceptance rule);

`(E) appropriate protection of consumer privacy;

`(F) a methodology for certifying software used in the sales tax administration process for tax rate and taxability determinations;

`(G) uniform bad debt rules;

`(H) uniform tax returns and remittance forms;

`(I) consistent electronic filing and remittance methods;

`(J) State administration of all State and local use taxes on sales by sellers that are not physically present in a State, to purchasers that are physically present in such State, with distribution of revenues to political subdivisions of such State according to precedent and applicable State law;

`(K) uniform audit procedures;

`(L) reasonable compensation for such sellers that reflects the complexity of the tax structure of such State (including the tax structures of political subdivisions of such State); and

`(M) an appropriate sales volume threshold below which such sellers that are small businesses would not be required to collect use taxes payable on sales to purchasers that are physically present in such State.

`SEC. 1105. INTERSTATE SALES AND USE TAX COMPACT.

`(a) AUTHORIZATION AND CONSENT- States are authorized to enter into an Interstate Sales and Use Tax Compact, and Congress hereby consents to such a compact. The Compact shall provide that member States agree

to adopt a uniform, streamlined uniform sales and use tax system consistent with section 1104(a).

`(b) EXPIRATION- The authorization and consent in subsection (a) shall automatically expire if the Compact has not been formed before January 1, 2004.

`(c) COMPLIANCE- The streamlined uniform sales and use tax system prescribed by the Compact as provided in subsection (a) shall be evaluated against the requirements of section 1104(a) in a report submitted to Congress in a timely fashion by the Secretary of the Treasury who shall certify whether such a system has met the requirements in section 1104(a).

`SEC. 1106. AUTHORIZATION TO SIMPLIFY STATE USE TAX RATES.

`Notwithstanding any other provision of law, any State levying a sales tax is authorized to administer a single uniform statewide use tax rate relating to all remote sales (as defined in section 1107 of this title) on which it assesses a use tax, provided that for each calendar year in which such statewide rate is applicable, if such rate had been assessed during the second calendar year prior to such year on all such sales on which a sales tax was assessed by such State or its local jurisdictions, the total taxes assessed on such sales would not have exceeded the total taxes actually assessed on such sales during such year. A State may use a blended rate that reflects the weighted average of State and local taxes across such State.

`SEC. 1107. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.

`(a) GRANT OF AUTHORITY- (1) A State that has adopted the streamlined uniform system prescribed by the Compact referred to in section 1105 of this title is authorized to begin collecting use taxes on remote sales by January 1, 2004, or by the date of adoption of the Compact, whichever is earlier.

`(2) Paragraph (1) shall not apply to a State that does not choose to simplify its tax collection system.

`(3) A State that neither simplifies its sales and use tax system nor meets the criteria spectified in section 1104, by December 31, 2001, may adopt the streamlined uniform system prescribed by the Compact and begin collecting use taxes on remote sales with any succeeding calendar year by meeting such criteria.

`(b) NO EFFECT ON NEXUS- No obligation imposed by virtue of authority granted in subsection (a) shall be considered in determining whether a seller has a nexus with any State for any tax purpose.

`(c) DEFINITION OF REMOTE SALE- For purposes of this section, the term `remote sale' means a sale by a seller that is not physically present in a State, to a purchaser that is physically present in such State.

`SEC. 1108. LIMITATIONS.

`Nothing in this Act shall be construed as subjecting sellers to sales taxes, franchise taxes, income taxes, or licensing requirements of a State or political subdivision thereof, nor shall anything in this Act be construed as affecting the application of such taxes or requirements or enlarging or reducing the authority of any State or political subdivision to impose such taxes or requirements.'.

SEC. 3. SENSE OF THE CONGRESS REGARDING STATE AND LOCAL TELECOMMUNICATIONS TAXES.

It is the sense of the Congress that States and political subdivisions of States should continue to work cooperatively with the telecommunications industry and other relevant groups--

(1) to dramatically reduce the complexity and cost of complying with State and local telecommunications taxes;

(2) to create more uniform telecommunication State tax laws that include the adoption of common definitions and sourcing rules; and

(3) to address taxes that appear to be discriminatory toward the telecommunications industry.

SEC. 4. CONFORMING AMENDMENTS.

(a) CROSS REFERENCE IN THE TRADE ACT OF 1974- Section 181(d) of the Trade Act of 1974 (19 U.S.C. 2241(d)) is amended by striking `section 1104(3)' and inserting `1109(3)'.

(b) OTHER CROSS REFERENCE- Section 1203(c) of division C of Public Law 105-277 (112 Stat. 2681-727; 19 U.S.C. 2241 note) by striking `section 1104(3)' and inserting `1109(3)'.

END