HR 4462 IH

To provide for the simplification of sales and use taxes on interstate commerce and to ensure that such taxes are equitably applied.

May 16, 2000

Mr. BACHUS (for himself, Ms. MCCARTHY of Missouri, Mr. ISTOOK, and Mr. DELAHUNT) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To provide for the simplification of sales and use taxes on interstate commerce and to ensure that such taxes are equitably applied.

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 `Fair and Equitable Interstate Tax Compact Simplification Act of 2000'.

SEC. 2. FINDINGS.

The Congress finds that--

(1) the moratorium of the Internet Tax Freedom Act on new taxes on Internet access and on multiple and discriminatory taxes on electronic commerce should be extended;

(2) States should be encouraged to simplify their sales and use tax systems;

(3) as a matter of economic policy and basic fairness, similar sales transactions should be treated equitably, without regard to the manner in which the sales are transacted, whether in person, through the mails, over the telephone, on the Internet, or by other means;

(4) Congress may facilitate such equitable taxation consistent with the Supreme Court's decision in Quill Corp. v. North Dakota, 502 U.S. 808 (1992), which based its decision not to extend States' collection powers in significant part on its view that Congress has, by virtue of its constitutional power to regulate interstate commerce, the ability to authorize States to require out-of-State sellers to collect taxes on sales to in-State residents;

(5) States that adequately simplify their tax systems should be authorized to correct the present inequities in taxation by requiring sellers to collect taxes on sales of goods or services delivered in-State, without regard to the location of the seller or to the means by which the good or service is sold;

(6) 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 nondiscriminatory in their application;

(7) States, by their own initiative, have formed the Streamlined Sales Tax System Project, a cooperative effort with local governments to radically simplify the sales and use tax system by bringing uniformity to tax bases, definitions, and administration, by simplifying the tax rate structure and administration, and by incorporating stringent privacy controls and technology into the collection process to preserve the basic tenets of consumer privacy, and that such project should be allowed to proceed without intervention by Congress; and

(8) online consumer privacy is of paramount importance to the growth of electronic commerce and must be protected.

SEC. 3. EXTENSION OF INTERNET TAX FREEDOM ACT MORATORIUM THROUGH 2006.

Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking `3 years after the date of the enactment of this Act--' and inserting `on October 21, 2006:'.

SEC. 4. STREAMLINED SALES AND USE TAX SYSTEM.

(a) DEVELOPMENT OF STREAMLINED SYSTEM- It is the sense of the Congress that States and localities should work together to develop a streamlined sales and use tax system that addresses the following:

(1) A centralized, one-stop, multi-state registration system for sellers.

(2) Uniform definitions for goods or services that may be included in the tax base.

(3) Uniform and simple rules for attributing transactions to particular taxing jurisdictions.

(4) Uniform rules for the designation and identification of purchasers exempt from sales and use taxes, including a database of all exempt entities and a rule ensuring that reliance on such database shall immunize sellers from liability.

(5) Uniform procedures for the certification of software that sellers rely on to determine State and local use tax rates and taxability.

(6) Uniform bad debt rules.

(7) Uniform tax returns and remittance forms.

(8) Consistent electronic filing and remittance methods.

(9) State administration of all State and local sales taxes.

(10) Uniform audit procedures.

(11) Reasonable compensation for sellers for tax collection obligations that reflects the complexity of an individual State's tax structure, including the structure of its local taxes.

(12) Exemption from use tax collection requirements for remote sellers falling below a specified de minimis threshold.

(13) Appropriate protections for consumer privacy.

(14) Such other features that the member States deem warranted to promote simplicity, uniformity, neutrality, efficiency, and fairness.

(b) NO UNDUE BURDEN- Congress finds that if States adopt the streamlined system described in subsection (a), such a system does not place an undue burden on interstate commerce or burden the growth of electronic commerce and related technologies in any material way.

SEC. 5. 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 sales and use tax system consistent with section 4(a).

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

SEC. 6. AUTHORIZATION TO SIMPLIFY STATE USE TAX RATES THROUGH AVERAGING.

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 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.

SEC. 7. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.

(a) GRANT OF AUTHORITY- Subject to the limitations in subsection (b), any member State that has adopted and participates in the streamlined system prescribed by the Compact is authorized, notwithstanding any other provision of law, to require all sellers not qualifying for the de minimis exception specified in such system to collect and remit use taxes on remote sales in such State.

(b) CONDITIONS- The authority in subsection (a) shall be of no effect unless all of the following conditions are met:

(1) The streamlined system prescribed by the Compact has been submitted to the President of the United States prior to January 31, 2004, with the approval of at least 20 member States.

(2) The President has submitted a report to the Congress certifying that the streamlined system prescribed by the Compact satisfies the requirements of section 4(a).

(3) 90 days have passed from the date of the submission of the report to Congress under paragraph (2), and no joint resolution disapproving the system has been enacted pursuant to the procedures in subsection (c).

(c) PROCEDURE FOR JOINT RESOLUTION OF DISAPPROVAL- A joint resolution disapproving the streamlined system prescribed by the Compact may be enacted no later than 90 days from the date of the submission of the report to Congress under subsection (b)(2). Such submission and such 90-day period shall be governed by the provision of section 2194 of title 19, United States Code. Consideration of such joint resolution shall be pursuant to the expedited procedures prescribed in section 2192 of title 19, United States Code, with the following modifications:

(1) Sections 2192(b) and 2192(f)(1)(a)(i) shall be inapplicable.

(2) Section 2192(a) shall be inapplicable, and shall for purposes of this section be replaced by the following:

`(a) CONTENTS OF RESOLUTION- For purposes of this section, the term `resolution' means only a joint resolution of the 2 Houses of the Congress, the matter after the resolving clause of which is as follows: `That the Congress does not approve of the determination of the President under section 7(b)(2) of the Fair and Equitable Interstate Tax Compact Simplification Act of 2000 transmitted on XX.', the blank space being filled with the appropriate date.'.

(3) Section 2192(f)(3) shall be applicable in the case of a veto message with respect to any joint resolution under this section.

SEC. 8. LIMITATIONS.

(a) NO EFFECT ON NEXUS- No obligation imposed by virtue of authority granted in section 7(a) shall be considered in determining whether a seller has a nexus with any State for any tax purpose.

(b) NO EFFECT ON LICENSING, REGULATION, ETC- Nothing in this Act shall be construed to permit a State to license or regulate any person, to require any person to qualify to transact intrastate business, or to subject any person to State taxes not related to the sales of tangible personal property.

SEC. 9. DEFINITIONS.

For purposes of this Act--

(1) the term `State' means 1 of the 50 States of the United States and the District of Columbia;

(2) the term `the Compact' means the Interstate Sales and Use Tax Compact authorized by section 5;

(3) the term `goods or services' includes any tangible or intangible personal property and services;

(4) the term `member State' means a State that has joined the Compact;

(5) the term `remote sale' means a sale in interstate commerce of goods or services attributed, under the rules of section 4(a)(3) of this Act, to a particular taxing jurisdiction which jurisdiction could not, except for the authority granted by this Act, require the seller of such goods or services to collect and remit sales or use taxes on such sale;

(6) a remote sale `in' a particular taxing jurisdiction means a remote sale of goods or services attributed, under the rules of section 4(a)(3) of this Act, to a particular taxing jurisdiction;

(7) the term `seller' means a seller of goods or services; and

(8) the term `uniform' refers to interstate uniformity.

END