II

Calendar No. 41
113TH CONGRESS 1ST SESSION

S. 743

To restore States sovereign rights to enforce State and local sales and use tax laws, and for other purposes.

IN THE SENATE OF THE UNITED STATES

A BILL
To restore States sovereign rights to enforce State and local sales and use tax laws, and for other purposes. 1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled, 3 4

This Act may be cited as the Marketplace Fairness

5 Act of 2013.
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SEC. 2. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.

(a) STREAMLINED SALES

AND

USE TAX AGREE-

Member State under the Streamlined Sales

5 and Use Tax Agreement is authorized to require all sellers 6 not qualifying for the small seller exception described in 7 subsection (c) to collect and remit sales and use taxes with 8 respect to remote sales sourced to that Member State pur9 suant to the provisions of the Streamlined Sales and Use 10 Tax Agreement, but only if the Streamlined Sales and Use 11 Tax Agreement includes the minimum simplification re12 quirements in subsection (b)(2). A State may exercise au13 thority under this Act beginning 90 days after the State 14 publishes notice of the States intent to exercise the au15 thority under this Act, but no earlier than the first day 16 of the calendar quarter that is at least 90 days after the 17 date of the enactment of this Act. 18 (b) ALTERNATIVE.A State that is not a Member

19 State under the Streamlined Sales and Use Tax Agree20 ment is authorized notwithstanding any other provision of 21 law to require all sellers not qualifying for the small seller 22 exception described in subsection (c) to collect and remit 23 sales and use taxes with respect to remote sales sourced
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24 to that State, but only if the State adopts and implements 25 the minimum simplification requirements in paragraph 26 (2). Such authority shall commence beginning no earlier
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3 1 than the first day of the calendar quarter that is at least 2 6 months after the date that the State 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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(1) enacts legislation to exercise the authority granted by this Act (A) specifying the tax or taxes to which such authority and the minimum simplification requirements in paragraph (2) shall apply; and (B) specifying the products and services otherwise subject to the tax or taxes identified by the State under subparagraph (A) to which the authority of this Act shall not apply; and (2) implements each of the following minimum simplification requirements: (A) Provide (i) a single entity within the State responsible for all State and local sales and use tax administration, return processing, and audits for remote sales sourced to the State; (ii) a single audit of a remote seller for all State and local taxing jurisdictions within that State; and (iii) a single sales and use tax return to be used by remote sellers to be filed

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with the single entity responsible for tax administration. A State may not require a remote seller to file sales and use tax returns any more frequently than returns are required for nonremote sellers. No local jurisdiction may require a remote seller to submit a sales and use tax return or to collect sales and use taxes other than as provided by this paragraph. (B) Provide a uniform sales and use tax base among the State and the local taxing jurisdictions within the State pursuant to paragraph (1). (C) Source all interstate sales in compliance with the sourcing definition set forth in section 4(7). (D) Provide (i) information indicating the taxability of products and services along with any product and service exemptions from sales and use tax in the State and a rates and boundary database; (ii) software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the

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transaction is completed, that files sales and use tax returns, and that is updated to reflect rate changes as described in subparagraph (H); and (iii) certification procedures for persons to be approved as certified software providers. For purposes of clause (iii), the software provided by certified software providers shall be capable of calculating and filing sales and use taxes in all States qualified under this Act. (E) Relieve remote sellers from liability to the State or locality for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of an error or omission made by a certified software provider. (F) Relieve certified software providers from liability to the State or locality for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of misleading or inaccurate information provided by a remote seller.

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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (G) Relieve remote sellers and certified software providers from liability to the State or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of incorrect information or software provided by the State. (H) Provide remote sellers and certified software providers with 90 days notice of a rate change by the State or any locality in the State and update the information described in subparagraph (D)(i) accordingly and relieve any remote seller or certified software provider from liability for collecting sales and use taxes at the immediately preceding effective rate during the 90-day notice period if the required notice is not provided. (c) SMALL SELLER EXCEPTION.A State is author-

19 ized to require a remote seller to collect sales and use taxes 20 under this Act only if the remote seller has gross annual 21 receipts in total remote sales in the United States in the 22 preceding calendar year exceeding $1,000,000. For pur23 poses of determining whether the threshold in this subtkelley on DSK3SPTVN1PROD with BILLS

24 section is met

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7 1 2 3 4 5 6 7 8 9 10 (1) 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; or (2) persons with 1 or more ownership relationships shall also be aggregated if such relationships were designed with a principal purpose of avoiding the application of these rules.
SEC. 3. LIMITATIONS.

(a) IN GENERAL.Nothing in this Act shall be con-

11 strued as 12 13 14 15 16 17 18 (1) subjecting a seller or any other person to franchise, income, occupation, or any other type of taxes, other than sales and use taxes; (2) affecting the application of such taxes; or (3) enlarging or reducing State authority to impose such taxes. (b) NO EFFECT
ON

NEXUS.This Act shall not be

19 construed to create any nexus between a person and a 20 State or locality. 21 (c) LICENSING AND REGULATORY REQUIREMENTS.

22 Nothing in this Act shall be construed as permitting or 23 prohibiting a State from

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(1) licensing or regulating any person;

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8 1 2 3 4 5 6 7 (2) requiring any person to qualify to transact intrastate business; (3) subjecting any person to State or local taxes not related to the sale of goods or services; or (4) exercising authority over matters of interstate commerce. (d) NO NEW TAXES.Nothing in this Act shall be

8 construed as encouraging a State to impose sales and use 9 taxes on any goods or services not subject to taxation prior 10 to the date of the enactment of this Act. 11 (e) NO EFFECT
ON INTRASTATE

SALES.The provi-

12 sions of this Act shall apply only to remote sales and shall 13 not apply to intrastate sales or intrastate sourcing rules. 14 States granted authority under section 2(a) shall comply 15 with all intrastate provisions of the Streamlined Sales and 16 Use Tax Agreement. 17 (f) NO EFFECT
ON

MOBILE TELECOMMUNICATIONS

18 SOURCING ACT.Nothing in this Act shall be construed 19 as altering in any manner or preempting the Mobile Tele20 communications Sourcing Act (4 U.S.C. 116126). 21 22 23
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SEC. 4. DEFINITIONS AND SPECIAL RULES.

In this Act: (1) CERTIFIED

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term certified software provider means a person that

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(A) provides software to remote sellers to facilitate State and local sales and use tax compliance pursuant to section 2(b)(2)(D); and (B) is certified by a State to so provide such software. (2) LOCALITY;
LOCAL.The

terms locality

and local refer to any political subdivision of a State. (3) 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; and (B) does not include any associate member under the Streamlined Sales and Use Tax Agreement. (4) PERSON.The term person means an individual, trust, estate, fiduciary, partnership, corporation, limited liability company, or other legal entity, and a State or local government. (5) REMOTE
SALE.The STATE.The

term Member

term remote sale

means a sale into a State in which the seller would not legally be required to pay, collect, or remit State

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or local sales and use taxes unless provided by this Act. (6) REMOTE
SELLER.The

term remote sell-

er means a person that makes remote sales in the State. (7) SOURCED.For purposes of a State granted authority under section 2(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 customers 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 customers 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 2(a) shall comply with the sourcing provisions of the Streamlined Sales and Use Tax Agreement. (8) STATE.The term State means each of the several States, the District of Columbia, the

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11 1 2 3 4 5 6 7 8 9 10 11 12 13 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. (9) STREAMLINED
MENT.The SALES AND USE TAX AGREE-

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.
SEC. 5. SEVERABILITY.

If any provision of this Act or the application of such

14 provision to any person or circumstance is held to be un15 constitutional, the remainder of this Act and the applica16 tion of the provisions of such to any person or cir17 cumstance shall not be affected thereby. 18 19
SEC. 6. PREEMPTION.

Except as otherwise provided in this Act, this Act

20 shall not be construed to preempt or limit any power exer21 cised or to be exercised by a State or local jurisdiction 22 under the law of such State or local jurisdiction or under 23 any other Federal law.
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Calendar No. 41
113TH CONGRESS 1ST SESSION

S. 743

A BILL
To restore States sovereign rights to enforce State and local sales and use tax laws, and for other purposes.
APRIL 17, 2013 Read the second time and placed on the calendar

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