< Back to S. 1586 (105th Congress, 1997–1998)

Text of the Consumer and Main Street Protection Act of 1997

This bill was introduced on January 29, 1998, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jan 29, 1998 (Introduced).

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S 1586 IS

105th CONGRESS

2d Session

S. 1586

To authorize collection of certain State and local taxes with respect to the sale, delivery, and use of tangible personal property.

IN THE SENATE OF THE UNITED STATES

January 29, 1998

Mr. BUMPERS (for himself, Mr. GRAHAM, Mr. CONRAD, and Mr. INOUYE) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To authorize collection of certain State and local taxes with respect to the sale, delivery, and use of tangible personal property.

    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 ‘Consumer and Main Street Protection Act of 1997’.

SEC. 2. FINDINGS.

    The Congress finds that--

      (1) merchandise purchased from out-of-State firms is subject to State and local sales taxes in the same manner as merchandise purchased from in-State firms,

      (2) State and local governments generally are unable to compel out-of-State firms to collect and remit such taxes, and consequently, many out-of-State firms choose not to collect State and local taxes on merchandise delivered across State lines,

      (3) moreover, many out-of-State firms fail to inform their customers that such taxes exist, with some firms even falsely claim that merchandise purchased out-of-State is tax-free, and consequently, many consumers unknowingly incur tax liabilities, including interest and penalty charges,

      (4) Congress has a duty to protect consumers from explicit or implicit misrepresentations of State and local sales tax obligations,

      (5) small businesses, which are compelled to collect State and local sales taxes, are subject to unfair competition when out-of-State firms cannot be compelled to collect and remit such taxes on their sales to residents of the State,

      (6) State and local governments provide a number of resources to out-of-State firms including government services relating to disposal of tons of catalogs, mail delivery, communications, and bank and court systems,

      (7) the inability of State and local governments to require out-of-State firms to collect and remit sales taxes deprives State and local governments of needed revenue and forces such State and local governments to raise taxes on taxpayers, including consumers and small businesses, in such State,

      (8) the Supreme Court ruled in Quill Corporation v. North Dakota, 112 S. Ct. 1904 (1992) that the due process clause of the Constitution does not prohibit a State government from imposing personal jurisdiction and tax obligations on out-of-State firms that purposefully solicit sales from residents therein, and that the Congress has the power to authorize State governments to require out-of-State firms to collect State and local sales taxes, and

      (9) as a matter of federalism, the Federal Government has a duty to assist State and local governments in collecting sales taxes on sales from out-of-State firms.

SEC. 3. AUTHORITY FOR COLLECTION OF SALES TAX.

    (a) IN GENERAL- A State is authorized to require a person who is subject to the personal jurisdiction of the State to collect and remit a State sales tax, a local sales tax, or both, with respect to tangible personal property if--

      (1) the destination of the tangible personal property is in the State,

      (2) during the 1-year period ending on September 30 of the calendar year preceding the calendar year in which the taxable event occurs, the person has gross receipts from sales of such tangible personal property--

        (A) in the United States exceeding $3,000,000, or

        (B) in the State exceeding $100,000, and

      (3) the State, on behalf of its local jurisdictions, collects and administers all local sales taxes imposed pursuant to this Act.

    (b) STATES MUST COLLECT LOCAL SALES TAXES- Except as provided in section 4(d), a State in which both State and local sales taxes are imposed may not require State sales taxes to be collected and remitted under subsection (a) unless the State also requires the local sales taxes to be collected and remitted under subsection (a).

    (c) AGGREGATION RULES- All persons that would be treated as a single employer under section 52 (a) or (b) of the Internal Revenue Code of 1986 shall be treated as one person for purposes of subsection (a).

    (d) DESTINATION- For purposes of subsection (a), the destination of tangible personal property is the State or local jurisdiction which is the final location to which the seller ships or delivers the property, or to which the seller causes the property to be shipped or delivered, regardless of the means of shipment or delivery or the location of the buyer.

SEC. 4. TREATMENT OF LOCAL SALES TAXES.

    (a) UNIFORM LOCAL SALES TAXES-

      (1) IN GENERAL- Sales taxes imposed by local jurisdictions of a State shall be deemed to be uniform for purposes of this Act and shall be collected under this Act in the same manner as State sales taxes if--

        (A) such local sales taxes are imposed at the same rate and on identical transactions in all geographic areas in the State, and

        (B) such local sales taxes imposed on sales by out-of-State persons are collected and administered by the State.

      (2) APPLICATION TO BORDER JURISDICTION TAX RATES- A State shall not be treated as failing to meet the requirements of paragraph (1)(A) if, with respect to a local jurisdiction which borders on another State, such State or local jurisdiction--

        (A) either reduces or increases the local sales tax in order to achieve a rate of tax equal to that imposed by the bordering State on identical transactions, or

        (B) exempts from the tax transactions which are exempt from tax in the bordering State.

    (b) NONUNIFORM LOCAL SALES TAXES-

      (1) IN GENERAL- Except as provided in subsection (d), nonuniform local sales taxes required to be collected pursuant to this Act shall be collected under one of the options provided under paragraph (2).

      (2) ELECTION- For purposes of paragraph (1), any person required under authority of this Act to collect nonuniform local sales taxes shall elect to collect either--

        (A) all nonuniform local sales taxes applicable to transactions in the State, or

        (B) a fee (at the rate determined under paragraph (3)) which shall be in lieu of the nonuniform local sales taxes described in subparagraph (A).

      Such election shall require the person to use the method elected for all transactions in the State while the election is in effect.

      (3) RATE OF IN-LIEU FEE- For purposes of paragraph (2)(B), the rate of the in-lieu fee for any calendar year shall be an amount equal to the product of--

        (A) the amount determined by dividing total nonuniform local sales tax revenues collected in the State for the most recently completed State fiscal year for which data is available by total State sales tax revenues for the same year, and

        (B) the State sales tax rate.

      Such amount shall be rounded to the nearest 0.25 percent.

      (4) NONUNIFORM LOCAL SALES TAXES- For purposes of this Act, nonuniform local sales taxes are local sales taxes which do not meet the requirements of subsection (a).

    (c) DISTRIBUTION OF LOCAL SALES TAXES-

      (1) IN GENERAL- Except as provided in subsection (d), a State shall distribute to local jurisdictions a portion of the amounts collected pursuant to this Act determined on the basis of--

        (A) in the case of uniform local sales taxes, the proportion which each local jurisdiction receives of uniform local sales taxes not collected pursuant to this Act,

        (B) in the case of in-lieu fees described in subsection (b)(2)(B), the proportion which each local jurisdiction’s nonuniform local sales tax receipts bears to the total nonuniform local sales tax receipts in the State, and

        (C) in the case of any nonuniform local sales tax collected pursuant to this Act, the geographical location of the transaction on which the tax was imposed.

      The amounts determined under subparagraphs (A) and (B) shall be calculated on the basis of data for the most recently completed State fiscal year for which the data is available.

      (2) TIMING- Amounts described in paragraph (1) (B) or (C) shall be distributed by a State to its local jurisdictions in accordance with State timetables for distributing local sales taxes, but not less frequently than every calendar quarter. Amounts described in paragraph (1)(A) shall be distributed by a State as provided under State law.

      (3) TRANSITION RULE- If, upon the effective date of this Act, a State has a State law in effect providing a method for distributing local sales taxes other than the method under this subsection, then this subsection shall not apply to that State until the 91st day following the adjournment sine die of that State’s next regular legislative session which convenes after the effective date of this Act (or such earlier date as State law may provide). Local sales taxes collected pursuant to this Act prior to the application of this subsection shall be distributed as provided by State law.

    (d) EXCEPTION WHERE STATE BOARD COLLECTS TAXES- Notwithstanding section 3(b) and subsections (b) and (c) of this section, if a State had in effect on January 1, 1995, a State law which provides that local sales taxes are collected and remitted by a board of elected States officers, then for any period during which such law continues in effect--

      (1) the State may require the collection and remittance under this Act of only the State sales taxes and the uniform portion of local sales taxes, and

      (2) the State may distribute any local sales taxes collected pursuant to this Act in accordance with State law.

SEC. 5. RETURN AND REMITTANCE REQUIREMENTS.

    (a) IN GENERAL- A State may not require any person subject to this Act--

      (1) to file a return reporting the amount of any tax collected or required to be collected under this Act, or to remit the receipts of such tax, more frequently than once with respect to sales in a calendar quarter, or

      (2) to file the initial such return, or to make the initial such remittance, before the 90th day after the person’s first taxable transaction under this Act.

    (b) LOCAL TAXES- The provisions of subsection (a) shall also apply to any person required by a State acting under authority of this Act to collect a local sales tax or in-lieu fee.

SEC. 6. NONDISCRIMINATION AND EXEMPTIONS.

    Any State which exercises any authority granted under this Act shall allow to all persons subject to this Act all exemptions or other exceptions to State and local sales taxes which are allowed to persons located within the State or local jurisdiction.

SEC. 7. APPLICATION OF STATE LAW.

    (a) PERSONS REQUIRED TO COLLECT STATE OR LOCAL SALES TAX- Any person required by section 3 to collect a State or local sales tax shall be subject to the laws of such State relating to such sales tax to the extent that such laws are consistent with the limitations contained in this Act.

    (b) LIMITATIONS- Except as provided in subsection (a), nothing in this Act shall be construed to permit a State--

      (1) to license or regulate any person,

      (2) to require any person to qualify to transact intrastate business, or

      (3) to subject any person to State taxes not related to the sales of tangible personnel property.

    (c) 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.

SEC. 8. TOLL-FREE INFORMATION SERVICE.

    A State shall not have power under this Act to require any person to collect a State or local sales tax on any sale unless, at the time of such sale, such State has a toll-free telephone service available to provide such person information relating to collection of such State or local sales tax. Such information shall include, at a minimum, all applicable tax rates, return and remittance addresses and deadlines, and penalty and interest information. As part of the service, the State shall also provide all necessary forms and instructions at no cost to any person using the service. The State shall prominently display the toll-free telephone number on all correspondence with any person using the service. This service may be provided jointly with other States.

SEC. 9. DEFINITIONS.

    For the purposes of this Act--

      (1) the term ‘compensating use tax’ means a tax imposed on or incident to the use, storage, consumption, distribution, or other use within a State or local jurisdiction or other area of a State, of tangible personal property;

      (2) the term ‘local sales tax’ means a sales tax imposed in a local jurisdiction or area of a State and includes, but is not limited to--

        (A) a sales tax or in-lieu fee imposed in a local jurisdiction or area of a State by the State on behalf of such jurisdiction or area, and

        (B) a sales tax imposed by a local jurisdiction or other State-authorized entity pursuant to the authority of State law, local law, or both;

      (3) the term ‘person’ means an individual, a trust, estate, partnership, society, association, company (including a limited liability company) or corporation, whether or not acting in a fiduciary or representative capacity, and any combination of the foregoing;

      (4) the term ‘sales tax’ means a tax, including a compensating use tax, that is--

        (A) imposed on or incident to the sale, purchase, storage, consumption, distribution, or other use of tangible personal property as may be defined or specified under the laws imposing such tax, and

        (B) measured by the amount of the sales price, cost, charge or other value of or for such property; and

      (5) the term ‘State’ means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

SEC. 10. EFFECTIVE DATE.

    This Act shall take effect 180 days after the date of the enactment of this Act. In no event shall this Act apply to any sale occurring before such effective date.