IN THE SENATE OF THE UNITED STATES
November 9, 2011
Mr. Enzi (for himself, Mr. Durbin, Mr. Alexander, Mr. Johnson of South Dakota, Mr. Boozman, Mr. Reed, Mr. Blunt, Mr. Whitehouse, Mr. Corker, and Mr. Pryor) introduced the following bill; which was read twice and referred to the Committee on Finance
To restore States’ sovereign rights to enforce State and local sales and use tax laws, and for other purposes.
This Act may be cited as the
Sense of Congress
It is the sense of Congress that States should have the ability to enforce their existing sales and use tax laws and to treat similar sales transactions equally, without regard to the manner in which the sale is transacted, and the right to collect—or decide not to collect—taxes that are already owed under State law.
Authorization to require collection of sales and use taxes
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 a small seller exception 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. Such authority shall commence beginning no earlier than the first day of the calendar quarter that is at least 90 days after the date of the enactment of this Act.
A State that is not a Member State under the Streamlined Sales and Use Tax Agreement is authorized to require all sellers not qualifying for the small seller exception 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 minimum simplification requirements. 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 enacts legislation to implement each of the following minimum simplification requirements:
a single State-level agency to administer all sales and use tax laws, including the collection and administration of all State and applicable locality sales and use taxes for all sales sourced to the State made by remote sellers,
a single audit for all State and local taxing jurisdictions within that State, and
a single sales and use tax return to be used by remote sellers and single and consolidated providers and to be filed with the State-level agency.
Provide a uniform sales and use tax base among the State and the local taxing jurisdictions within the State.
Require remote sellers and single and consolidated providers to collect sales and use taxes pursuant to the applicable destination rate, which is the sum of the applicable State rate and any applicable rate for the local jurisdiction into which the sale is made.
adequate software and services to remote sellers and single and consolidated providers that identifies the applicable destination rate, including the State and local sales tax rate (if any), to be applied on sales sourced to the State, and
certification procedures for both single providers and consolidated providers to make software and services available to remote sellers, and hold such providers harmless for any errors or omissions as a result of relying on information provided by the State.
Hold remote sellers using a single or consolidated provider harmless for any errors and omissions by that provider.
Relieve remote sellers from liability to the State or locality for collection of the incorrect amount of sales or use tax, including any penalties or interest, if collection of the improper amount is the result of relying on information provided by the State.
Provide remote sellers and single and consolidated providers with 30 days notice of a rate change by any locality in the State.
Treatment of local rate changes
For purposes of this subsection, local rate changes may only be effective on the first day of a calendar quarter. Failure to provide notice under paragraph (1)(G) shall require the State and locality to hold the remote seller or single or consolidated provider harmless for collecting tax at the immediately preceding effective rate during the 30-day period. Each State must provide updated rate information as part of the software and services required by paragraph (1)(D).
Small seller exception
A State shall be authorized to require a remote seller, or a single or consolidated provider acting on behalf of a remote seller, to collect sales or use tax under this Act if the remote seller has gross annual receipts in total remote sales in the United States in the preceding calendar year exceeding $500,000. For purposes of determining whether the threshold in this subsection is met, 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.
Termination of authority
The authority granted by this Act shall terminate on the date that the highest court of competent jurisdiction makes a final determination that the State no longer meets the requirements of this Act, and the determination of such court is no longer subject to appeal.
Nothing in this Act shall be construed as—
subjecting a seller or any other person to franchise, income, occupation, or any other type of taxes, other than sales and use taxes,
affecting the application of such taxes, or
enlarging or reducing State authority to impose such taxes.
No effect on nexus
No obligation imposed by virtue of the authority granted by this Act shall be considered in determining whether a seller or any other person has a nexus with any State for any tax purpose other than sales and use taxes.
Licensing and regulatory requirements
Other than the limitation set forth in subsection (a), and section 3, nothing in this Act shall be construed as permitting or prohibiting a State from—
licensing or regulating any person,
requiring any person to qualify to transact intrastate business,
subjecting any person to State taxes not related to the sale of goods or services, or
exercising authority over matters of interstate commerce.
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 taxation prior to the date of the enactment of this Act.
The provisions of this Act shall only apply to remote sales and shall not apply to intrastate sales or intrastate sourcing rules. States granted authority under section 3(a) shall comply with the intrastate provisions of the Streamlined Sales and Use Tax Agreement.
Definitions and special rules
In this Act:
The term consolidated provider means any person certified by a State who has the rights and responsibilities for sales and use tax administration, collection, remittance, and audits for transactions serviced or processed for the sale of goods or services made by remote sellers on an aggregated basis.
The terms locality and local refer to any political subdivision of a State.
The term Member State—
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
does not include any associate member under the Streamlined Sales and Use Tax Agreement.
The term person means an individual, trust, estate, fiduciary, partnership, corporation, limited liability company, or other legal entity, and a State or local government.
The term remote sale means a sale of goods or services attributed to a State with respect to which a seller does not have adequate physical presence to establish nexus under Quill Corp. v. North Dakota, 504 U.S. 298 (1992).
The term remote seller means a person that makes remote sales.
The term single provider means any person certified by a State who has the rights and responsibilities for sales and use tax administration, collection, remittance, and audits for transactions serviced or processed for the sale of goods or services made by remote sellers.
For purposes of a State granted authority under section 3(b), the location to which a remote sale is sourced refers to the location where the item 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 3(a) shall comply with the sourcing provisions of the Streamlined Sales and Use Tax Agreement.
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.
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.
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.