Internet Tax Simplification Act of 2000

Summary: Expresses the sense of Congress that States and local entities should work with the National Conference of Commissioners on Uniform State Laws to develop a Streamlined Uniform Sales and Use Tax Act. Authorizes, and grants congressional consent for, States to enter into an Interstate Sales and Use Tax Compact. Stipulates that such authorization and consent shall terminate if the Compact has not been formed by a certain date.
Authorizes States to administer a single uniform statewide use tax rate for all remote sales under specified circumstances.
Expresses the sense of Congress that States and local entities should continue to work with the telecommunications industry to simplify and unify telecommunications taxes.
Makes a conforming amendment to the Trade Act of 1974 and other Federal law.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Tax Simplification Act of 
2000''.

SEC. 2. AMENDMENTS.

    (a) Moratorium Amendment.--Section 1101(a) of title XI of division 
C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is 
amended to read as follows:
    ``(a) Moratoria on State and Local Taxes on the Internet.--No State 
or political subdivision thereof shall impose any of the following 
taxes:
            ``(1) Taxes on Internet access during the period beginning 
        on October 1, 1998, and ending on October 1, 2006, unless such 
        tax was generally imposed and actually enforced prior to 
        October 1, 1998.
            ``(2) During the period beginning on October 1, 1998, and 
        ending on December 31, 2003, multiple or discriminatory taxes 
        on electronic commerce.''.
    (b) Streamlined Uniform Sales and Use Tax.--Title XI of division C 
of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is 
amended--
            (1) by redesignating section 1104 as section 1109; and
            (2) by inserting after section 1103 the following:

``SEC. 1104. DEVELOPMENT OF STREAMLINED UNIFORM SALES AND USE TAX ACT.

    ``It is the sense of the Congress that, not later than January 1, 
2004, States and political subdivisions of States should work 
cooperatively with the National Conference of Commissioners on Uniform 
State Laws (in this section referred to as the `Conference') to develop 
and draft a Streamlined Uniform Sales and Use Tax Act that--
            ``(1) is characterized by simplicity, uniformity, 
        neutrality, efficiency, and fairness; and
            ``(2) includes, but is not limited to--
                    ``(A) a centralized, one-stop registration system;
                    ``(B) uniform tax base definitions;
                    ``(C) uniform and simple sourcing rules;
                    ``(D) uniform exemption administration rules 
                (including a database of all exempt entities and 
                removal of the `good faith' acceptance rule);
                    ``(E) appropriate protection of consumer privacy;
                    ``(F) a methodology for certifying software used in 
                the sales tax administration process for tax rate and 
                taxability determinations;
                    ``(G) uniform bad debt rules;
                    ``(H) uniform tax returns and remittance forms;
                    ``(I) consistent electronic filing and remittance 
                methods;
                    ``(J) State administration of all State and local 
                use taxes on sales by sellers that are not physically 
                present in a State, to purchasers that are physically 
                present in such State, with distribution of revenues to 
                political subdivisions of such State according to 
                precedent and applicable State law;
                    ``(K) uniform audit procedures;
                    ``(L) reasonable compensation for such sellers that 
                reflects the complexity of the tax structure of such 
                State (including the tax structures of political 
                subdivisions of such State); and
                    ``(M) an appropriate sales volume threshold below 
                which such sellers that are small businesses would not 
                be required to collect use taxes payable on sales to 
                purchasers that are physically present in such State.

``SEC. 1105. 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 uniform sales and use tax 
system consistent with section 1104(a).
    ``(b) Expiration.--The authorization and consent in subsection (a) 
shall automatically expire if the Compact has not been formed before 
January 1, 2004.
    ``(c) Compliance.--The streamlined uniform sales and use tax system 
prescribed by the Compact as provided in subsection (a) shall be 
evaluated against the requirements of section 1104(a) in a report 
submitted to Congress in a timely fashion by the Secretary of the 
Treasury who shall certify whether such a system has met the 
requirements in section 1104(a).

``SEC. 1106. AUTHORIZATION TO SIMPLIFY STATE USE TAX RATES.

    ``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 (as defined in section 1107 of 
this title) 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. A State may use a blended rate that reflects the weighted 
average of State and local taxes across such State.

``SEC. 1107. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.

    ``(a) Grant of Authority.--(1) A State that has adopted the 
streamlined uniform system prescribed by the Compact referred to in 
section 1105 of this title is authorized to begin collecting use taxes 
on remote sales by January 1, 2004, or by the date of adoption of the 
Compact, whichever is earlier.
    ``(2) Paragraph (1) shall not apply to a State that does not choose 
to simplify its tax collection system.
    ``(3) A State that neither simplifies its sales and use tax system 
nor meets the criteria spectified in section 1104, by December 31, 
2001, may adopt the streamlined uniform system prescribed by the 
Compact and begin collecting use taxes on remote sales with any 
succeeding calendar year by meeting such criteria.
    ``(b) No Effect on Nexus.--No obligation imposed by virtue of 
authority granted in subsection (a) shall be considered in determining 
whether a seller has a nexus with any State for any tax purpose.
    ``(c) Definition of Remote Sale.--For purposes of this section, the 
term `remote sale' means a sale by a seller that is not physically 
present in a State, to a purchaser that is physically present in such 
State.

``SEC. 1108. LIMITATIONS.

    ``Nothing in this Act shall be construed as subjecting sellers to 
sales taxes, franchise taxes, income taxes, or licensing requirements 
of a State or political subdivision thereof, nor shall anything in this 
Act be construed as affecting the application of such taxes or 
requirements or enlarging or reducing the authority of any State or 
political subdivision to impose such taxes or requirements.''.

SEC. 3. SENSE OF THE CONGRESS REGARDING STATE AND LOCAL 
              TELECOMMUNICATIONS TAXES.

    It is the sense of the Congress that States and political 
subdivisions of States should continue to work cooperatively with the 
telecommunications industry and other relevant groups--
            (1) to dramatically reduce the complexity and cost of 
        complying with State and local telecommunications taxes;
            (2) to create more uniform telecommunication State tax laws 
        that include the adoption of common definitions and sourcing 
        rules; and
            (3) to address taxes that appear to be discriminatory 
        toward the telecommunications industry.

SEC. 4. CONFORMING AMENDMENTS.

    (a) Cross Reference in the Trade Act of 1974.--Section 181(d) of 
the Trade Act of 1974 (19 U.S.C. 2241(d)) is amended by striking 
``section 1104(3)'' and inserting ``1109(3)''.
    (b) Other Cross Reference.--Section 1203(c) of division C of Public 
Law 105-277 (112 Stat. 2681-727; 19 U.S.C. 2241 note) by striking 
``section 1104(3)'' and inserting ``1109(3)''.