[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5660 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5660
To promote simplification and fairness in the administration and
collection of sales and use taxes, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 1, 2010
Mr. Delahunt (for himself, Mr. Conyers, Mr. Capuano, Ms. Herseth
Sandlin, and Mr. Welch) introduced the following bill; which was
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To promote simplification and fairness in the administration and
collection of sales and use taxes, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Main Street
Fairness Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Consent of Congress.
Sec. 3. Findings.
Sec. 4. Authorization to require collection of sales and use taxes.
Sec. 5. Tribal governments.
Sec. 6. Determinations by governing board and judicial review of such
determinations.
Sec. 7. Minimum simplification requirements.
Sec. 8. Limitation.
Sec. 9. Expedited judicial review.
Sec. 10. Definitions.
Sec. 11. Sense of Congress on digital goods and services.
SEC. 2. CONSENT OF CONGRESS.
Congress consents to the Streamlined Sales and Use Tax Agreement.
SEC. 3. FINDINGS.
Congress makes the following findings:
(1) States should be encouraged to simplify their sales and
use tax systems.
(2) As a matter of economic policy and basic fairness,
similar sales transactions should be treated equally, without
regard to the manner in which sales are transacted, whether in
person, through the mail, over the telephone, on the Internet,
or by other means.
(3) Congress may facilitate such equal taxation consistent
with the United States Supreme Court's decision in Quill Corp.
v. North Dakota.
(4) States that voluntarily and adequately simplify their
tax systems should be authorized to correct the present
inequities in taxation through requiring sellers to collect
taxes on sales of goods or services delivered in-state, without
regard to the location of the seller.
(5) 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 non-
discriminatory in their application and that will simplify the
process for both sellers and buyers.
(6) Online consumer privacy is of paramount importance to
the growth of electronic commerce and must be protected.
SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.
(a) Grant of Authority.--
(1) In general.--Each Member State under the Streamlined
Sales and Use Tax Agreement is authorized, subject to the
requirements of this section, 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 Member State under the Agreement.
(2) Requirements for authority.--The authorization provided
under paragraph (1) shall be granted once all of the following
have occurred:
(A) Ten States comprising at least 20 percent of
the total population of all States imposing a sales
tax, as determined by the most recent Federal census,
have petitioned for membership and have become Member
States under the Agreement.
(B) The following necessary operational aspects of
the Agreement have been implemented by the Governing
Board:
(i) Provider and system certification.
(ii) Setting of monetary allowance by
contract with providers.
(iii) Implementation of an online
multistate registration system.
(iv) Adoption of a standard form for
claiming exemptions electronically.
(v) Establishment of advisory councils.
(vi) Promulgation of rules and procedures
for dispute resolution.
(vii) Promulgation of rules and procedures
for audits.
(viii) Provisions for funding and staffing
the Governing Board.
(C) Each Member State has met the requirements to
provide and maintain the databases and the taxability
matrix described in the Agreement, pursuant to
requirements of the Governing Board.
(3) Limitation of authority.--The authorization provided
under paragraph (1)--
(A) shall be granted notwithstanding any other
provision of law; and
(B) is dependent upon the Agreement, as amended,
meeting the minimum simplification requirements of
section 7.
(b) Termination of Authority.--
(1) In general.--The authorization provided under
subsection (a) shall terminate for all States if--
(A) the requirements contained in subsection (a)
cease to be satisfied; or
(B) any amendment adopted to the Agreement after
the date of the enactment of this Act is--
(i) not within the scope of the
administration of sales and use taxes by the
Member States; or
(ii) inconsistent with the provisions of
this Act.
(2) Loss of member state status.--The authorization
provided under subsection (a) shall terminate for a Member
State, if such Member State no longer meets the requirements
for Member State status under the terms of the Agreement or the
provisions of this Act.
(c) Determination of Status.--
(1) In general.--The Governing Board shall determine if
Member States are in compliance with the requirements of
subsections (a) and (b) and whether each Member State meets the
minimum simplification requirements of section 7, and shall
reevaluate such determination on an annual basis.
(2) Compliance determination.--Upon the determination of
the Governing Board that all the requirements of subsection (a)
have been satisfied, the authority to require a seller to
collect and remit sales and use taxes shall commence on the
first day of a calendar quarter at least 6 months after the
date the Governing Board makes its determination.
(3) Noncompliance determination.--Upon a final
determination by the Governing Board that a Member State is not
in compliance with the minimum simplification requirements of
section 7 or is otherwise not in compliance with the Agreement,
that Member State shall lose its remote seller collection
authority on the earlier of--
(A) the date specified by the Governing Board; or
(B) the later of--
(i) the first day of January at least 2
years after the Governing Board finally
determined the State was not compliant; or
(ii) the first day of a calendar quarter
following the end of one full session of the
State's legislature beginning after the
Governing Board finally determined the State
was not compliant.
For purposes of this section, the terms ``final
determination'' or ``finally determined'' shall mean
that all appeals processes provided for in the
Agreement have been exhausted or the time for pursuing
such appeals has expired. An action before the Federal
Court of Claims pursuant to section 6 shall not operate
to stay a State's loss of collection authority.
(4) Restoration of authority.--Any Member State that loses
its collection authority under this section must comply with
all provisions of this section to have its remote seller
collection authority restored.
SEC. 5. TRIBAL GOVERNMENTS.
(a) Status as Member State.--
(1) In general.--Any federally recognized Indian tribe that
imposes a generally applicable sales tax may, if such tribe
complies with the terms of this Act--
(A) petition to become a Member State under the
Agreement; and
(B) if granted Member State status pursuant to
paragraph (2), exercise the authority provided under
section 4.
(2) Decision of the governing board.--
(A) In general.--If the effect of any federally
recognized Indian tribe's laws, rules, regulations, and
policies is compliant with each of the terms of the
Agreement, and the Indian tribe has entered into an
agreement with the primary State where such tribe is
located, the Governing Board shall consider such tribe
for admission as a Member State to the Agreement on the
same basis as States.
(B) No state-tribal agreement present.--If a
petitioning Indian tribe and the primary State in which
such tribe is located have attempted to negotiate, but
have not reached, an agreement as described in
subparagraph (A) within 2 years after the date of the
submission of such petition, the Governing Board shall
consider such tribe for admission as a Member State to
the Agreement on the same basis as States without
regard to the presence of a State-tribal agreement.
(3) Membership on the governing board.--
(A) In general.--If any federally recognized Indian
tribe is accorded Member State status under the
Agreement under this section, such tribe shall be
represented on the Governing Board by at least 1
member.
(B) Multiple tribes.--If 2 or more federally
recognized Indian tribes are accorded Member State
status under the Agreement under this section,
additional representation of such tribes on the
Governing Board shall be determined by the Governing
Board, in consultation with those tribes that are
Member States.
(b) Rule of Construction.--Nothing in this Act or the Agreement
shall be construed as--
(1) diminishing an Indian tribe's sovereignty or
characterizing an Indian tribe as a State for other purposes;
(2) affecting existing tax agreements between Indian tribal
governments and States;
(3) preventing Indian tribal governments and States from
entering into bilateral agreements for the collection and
allocation of sales taxes (whether or not such bodies are
admitted as Member States to the Agreement); or
(4) overriding established principles of Federal law
governing--
(A) the taxing jurisdiction of Indian tribal
governments; and
(B) the immunities of Indian tribal governments and
their members from State taxation with respect to on-
reservation transactions.
SEC. 6. DETERMINATIONS BY GOVERNING BOARD AND JUDICIAL REVIEW OF SUCH
DETERMINATIONS.
(a) Petition.--At any time after the Governing Board has made the
determinations required under section 4(c), any person who may be
affected by the Agreement may petition the Governing Board for a
determination on any issue related to the implementation of the
Agreement or on a Member State's compliance with this Act or the
Agreement.
(b) Review in Court of Federal Claims.--Any person who submits a
petition under subsection (a) may bring an action against the Governing
Board in the United States Court of Federal Claims for judicial review
of the action of the Governing Board on that petition if--
(1) the petition relates to an issue of whether--
(A) a Member State has satisfied or continues to
satisfy the requirements for Member State status under
the Agreement;
(B) the Governing Board has performed a
nondiscretionary duty of the Governing Board under the
Agreement;
(C) the Agreement--
(i) continues to satisfy the minimum
simplification requirements of section 7; or
(ii) otherwise continues to be consistent
with the provisions of this Act; or
(D) any other requirement of section 4 has been
satisfied; and
(2) the petition is denied by the Governing Board in whole
or in part with respect to that issue, or the Governing Board
fails to act on the petition with respect to that issue not
later than the 6-month period beginning on the day after the
date on which the petition was submitted.
(c) Timing of Action for Review.--An action for review under this
section shall be initiated not later than 60 days after the denial of
the petition by the Governing Board, or, if the Governing Board fails
to act on the petition, not later than 60 days after the end of the 6-
month period beginning on the day after the date on which the petition
was submitted.
(d) Standard of Review.--
(1) In general.--In any action for review under this
section, the court shall set aside the actions, findings, and
conclusions of the Governing Board found to be arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.
(2) Remand.--If the court sets aside any action, finding,
or conclusion of the Governing Board under paragraph (1), the
court shall remand the case to the Governing Board for further
action consistent with the decision of the court.
(3) Nonmonetary relief.--In connection with any remand
under paragraph (2), the court may not award monetary relief,
but may award declaratory and injunctive relief.
(e) Jurisdiction.--
(1) Generally.--Chapter 91 of title 28, United States Code,
is amended by adding at the end the following new section:
``SEC. 1510. JURISDICTION REGARDING THE STREAMLINED SALES AND USE TAX
AGREEMENT.
``The United States Court of Federal Claims shall have exclusive
jurisdiction over actions for judicial review of determinations of the
Governing Board of the Streamlined Sales and Use Tax Agreement under
the terms and conditions provided in section 6 of the Main Street
Fairness Act.''.
(2) Conforming amendment to table of sections.--The table
of sections for chapter 91 of title 28, United States Code, is
amended by adding at the end the following new item:
``1510. Jurisdiction regarding the streamlined sales and use tax
agreement.''.
SEC. 7. MINIMUM SIMPLIFICATION REQUIREMENTS.
(a) In General.--The minimum simplification requirements for the
Agreement are as follows:
(1) A centralized, one-stop, multistate registration system
that a seller may elect to use to register with the Member
States, provided a seller may also elect to register directly
with a Member State, and further provided that privacy and
confidentiality controls shall be placed on the multistate
registration system so that it may not be used for any purpose
other than the administration of sales and use taxes.
Furthermore, no taxing authority within a Member State or a
Member State that has withdrawn or been expelled from the
Agreement may use registration with the centralized
registration system for the purpose of, or as a factor in
determining, whether a seller has a nexus with that Member
State for any tax at any time.
(2) Uniform definitions of products and product-based
exemptions from which a Member State may choose its individual
tax base, provided, however, that all local jurisdictions in
that Member State with respect to which a tax is imposed or
collected, shall have a common tax base identical to the State
tax base of that Member State. A Member State may enact
product-based exemptions without restriction if the Agreement
does not have a definition for the product or for a term that
includes the product. A Member State shall relax the good faith
requirement for acceptance of exemption certificates in
accordance with section 317 of the Agreement, as in effect on
the date of the enactment of this Act.
(3) Uniform rules for sourcing and attributing transactions
to particular taxing jurisdictions.
(4) Uniform procedures for the certification of service
providers and software on which a seller may elect to rely in
order to determine Member State sales and use tax rates and
taxability.
(5) Uniform rules for bad debts and rounding.
(6) Uniform requirements for tax returns and remittances.
(7) Consistent electronic filing and remittance methods.
(8) Single, State-level administration of all Member State
and local sales and use taxes, including a requirement for a
State-level filing of tax returns in each Member State.
(9) A single sales and use tax rate per taxing
jurisdiction, except as provided in section 308 of the
Agreement.
(10) A provision requiring the elimination by each Member
State of caps and thresholds on the application of sales and
use tax rates and exemptions based on value, provided that this
limitation does not apply to the items identified in sections
308C, 322, and 323 of the Agreement, as in effect on the date
of the enactment of this Act.
(11) A provision requiring each Member State to complete a
taxability matrix, as adopted by the Governing Board. The
matrix shall include information regarding terms defined by the
Agreement in the Library of Definitions. The matrix shall also
include, pursuant to the requirements of the Governing Board,
information on use-, entity-, and product-based exemptions.
(12) A provision requiring that each Member State relieves
a seller or service provider from liability to that Member
State and local jurisdiction for collection of the incorrect
amount of sales or use tax, and relieves the purchaser from
penalties stemming from such liability, provided that
collection of the improper amount is the result of relying on
information provided by that Member State regarding tax rates,
boundaries, or taxing jurisdiction assignments, or in the
taxability matrix regarding terms defined by the Agreement in
the Library of Definitions.
(13) Audit procedures for sellers, including an option
under which a seller not qualifying for the small business
exception may request, by notifying the Governing Board, to be
subject to a single audit on behalf of all Member States for
sales and use taxes. The Governing Board, in its discretion,
may authorize such a single audit.
(14) Effective on the date authority to require collection
commences under section 4, each Member State shall provide
reasonable compensation for expenses incurred by all sellers in
administering, collecting, and remitting sales and use taxes
(other than use taxes on goods and services purchased for the
consumption of the seller) to that Member State. Such
compensation may vary in each Member State depending on the
complexity of the sales and use tax laws in that Member State
and may vary by the characteristics of sellers in order to
reflect differences in collection costs. Such compensation may
be provided to a seller or a third-party service provider whom
a seller has contracted with to perform all the sales and use
tax responsibilities of a seller.
(15) Appropriate protections for consumer privacy.
(16) Governance procedures and mechanisms to ensure timely,
consistent, and uniform implementation and adherence to the
principles of the streamlined system and the terms of the
Agreement.
(17) A uniform rule to establish a small seller exception
to a requirement to collect authorized by this Act.
(18) Uniform rules and procedures for sales tax holidays.
(19) Uniform rules and procedures to address refunds and
credits for sales taxes relating to customer returns,
restocking fees, discounts and coupons, and rules to address
allocations of shipping and handling and discounts applied to
multiple item and multiple seller orders.
(b) Application of Minimum Simplification Requirements to Taxes on
Communications Services.--Each Member State shall apply the minimum
simplification requirements of subsection (a) to sales and use taxes on
communications services.
(c) Requirement To Provide Simplified Tax Systems.--
(1) In general.--The requirements of this section are
intended to ensure that each Member State provides and
maintains the necessary simplification to its sales and use tax
system to warrant the collection authority granted to such
Member State in section 4.
(2) Reduction of administrative burdens.--The requirements
of this section should be construed--
(A) to require each Member State to substantially
reduce the administrative burdens associated with sales
and use taxes; and
(B) as allowing each Member State to exercise
flexibility in how these requirements are satisfied.
(3) Exception.--In instances where exceptions to the
requirements of this section can be exercised in a manner that
does not materially increase the administrative burden on a
seller obligated to collect or pay the taxes, such exceptions
are permissible.
(d) No Requirement To Exempt From or Impose Tax.--Nothing in this
Act or the Agreement shall require any Member State or any local taxing
jurisdiction to exempt, or to impose a tax on any product, or to adopt
any particular type of tax, or to impose the same rate of tax as any
other taxing jurisdiction.
SEC. 8. LIMITATION.
(a) In General.--Nothing in this Act shall be construed as--
(1) subjecting a seller to franchise taxes, income taxes,
or licensing requirements of a Member State or political
subdivision thereof; or
(2) affecting the application of such taxes or requirements
or enlarging or reducing the authority of any Member State to
impose such taxes or requirements.
(b) No Effect on Nexus, etc.--
(1) In general.--No obligation imposed by virtue of the
authority granted by section 4 shall be considered in
determining whether a seller has a nexus with any Member State
for any other tax purpose.
(2) Permissible member state authority.--Except as provided
in subsection (a), and in section 4, nothing in this Act
permits or prohibits a Member State from--
(A) licensing or regulating any person;
(B) requiring any person to qualify to transact
intrastate business;
(C) subjecting any person to State taxes not
related to the sale of goods or services; or
(D) exercising authority over matters of interstate
commerce.
SEC. 9. EXPEDITED JUDICIAL REVIEW.
(a) Three-Judge District Court Hearing.--Notwithstanding any other
provision of law, any civil action challenging the constitutionality of
this Act, or any provision thereof, shall be heard by a district court
of 3 judges convened pursuant to the provisions of section 2284 of
title 28, United States Code.
(b) Appellate Review.--
(1) In general.--Notwithstanding any other provision of
law, an interlocutory or final judgment, decree, or order of
the court of 3 judges in an action under subsection (a) holding
this Act, or any provision thereof, unconstitutional shall be
reviewable as a matter of right by direct appeal to the United
States Supreme Court.
(2) 30-day time limit.--Any appeal under paragraph (1)
shall be filed not more than 30 days after the date of entry of
such judgment, decree, or order.
SEC. 10. DEFINITIONS.
For the purposes of this Act the following definitions apply:
(1) Governing board.--The term ``Governing Board'' means
the governing board established by the Streamlined Sales and
Use Tax Agreement.
(2) 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;
(B) does not include associate members under the
Agreement; and
(C) includes any federally recognized Indian Tribe
that is accorded Member State status under the
Agreement pursuant to section 5.
(3) Nondiscretionary duty of the governing board.--The term
``nondiscretionary duty of the Governing Board'' means any duty
of the Governing Board specified in the Agreement as a
requirement for action by use of the term ``shall'', ``will'',
or ``is required to''.
(4) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, limited
liability company, or any other legal entity, and includes a
State or local government.
(5) Remote sale.--The term ``remote sale'' refers to a sale
of goods or services attributed to a particular Member State
with respect to which a seller does not have adequate physical
presence to establish nexus under the law existing on the day
before the date of the enactment of this Act so as to allow
such Member State to require, without regard to the authority
granted by this Act, the seller to collect and remit taxes
covered by this Act with respect to such sale.
(6) Remote seller.--The term ``remote seller'' means any
seller who makes a remote sale.
(7) 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.
(8) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax Agreement'' (or ``the
Agreement'') means the multistate agreement with that title
adopted on November 12, 2002, as in effect on the date of the
enactment of this Act and unless the context otherwise
indicates as further amended from time to time.
SEC. 11. SENSE OF CONGRESS ON DIGITAL GOODS AND SERVICES.
It is the sense of Congress that each Member State that is a party
to the Agreement should work with other Member States that are also
parties to the Agreement to prevent double taxation in situations where
a foreign country has imposed a transaction tax on a digital good or
service.
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