Marketplace and Internet Tax Fairness Act

Summary: Marketplace and Internet Tax Fairness Act - Authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of that Agreement, but only if changes to such Agreement made after the enactment of this Act are not in conflict with the minimum simplification requirements of this Act (providing for a single state entity for all tax administration, audits, and returns of remote sales sourced to the state). Defines "remote sale" as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act. Amends the Internet Tax Freedom Act to extend until November 1, 2024: (1) the ban on state and local taxation of Internet access and on multiple or discriminatory taxes on electronic commerce, and (2) the exemption from such ban for states that generally imposed and actually enforced a tax on internet access prior to October 1, 1998. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Marketplace and Internet Tax 
Fairness Act''.

                     TITLE I--MARKETPLACE FAIRNESS

SEC. 101. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.

    (a) 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 the small seller exception 
described in subsection (c) 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, but only 
if any changes to the Streamlined Sales and Use Tax Agreement made 
after the date of the enactment of this Act are not in conflict with 
the minimum simplification requirements in subsection (b)(2). Subject 
to section 102(h), a State may exercise authority under this title 
beginning 180 days after the State publishes notice of the State's 
intent to exercise the authority under this title.
    (b) Alternative.--A State that is not a Member State under the 
Streamlined Sales and Use Tax Agreement is authorized notwithstanding 
any other provision of law to require all sellers not qualifying for 
the small seller exception described in subsection (c) 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 the minimum 
simplification requirements in paragraph (2). Subject to section 
102(h), 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--
            (1) enacts legislation to exercise the authority granted by 
        this title--
                    (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 
                title shall not apply; and
            (2) implements each of the following minimum simplification 
        requirements:
                    (A) Provide, with respect to all remote sales 
                sourced to the State--
                            (i) a single entity within the State 
                        responsible for all State and local sales and 
                        use tax administration, return processing, and 
                        audits;
                            (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 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 or impose 
                requirements on remote sellers that the State does not 
                impose on nonremote sellers with respect to the 
                collection of sales and use taxes under this title. 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 with respect to products and services to which 
                paragraph (1)(B) does not apply.
                    (C) Source all remote sales in compliance with the 
                sourcing definition set forth in section 103(7).
                    (D)(i) Make publicly available 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) Provide software free of charge for remote 
                sellers that calculates sales and use taxes due on each 
                transaction at the time the transaction is completed, 
                that files sales and use tax returns, and that is 
                updated to reflect any rate changes and any changes to 
                the products and services specified under paragraph 
                (1)(B), as described in subparagraph (H); and
                    (iii) Establish certification procedures for 
                persons to be approved as certified software providers, 
                with any software provided by such providers to be 
                capable of calculating and filing sales and use taxes 
                in all States qualified under this title.
                    (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.
                    (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 any rate change or any 
                change to the products and services specified under 
                paragraph (1)(B) 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 authorized to require a 
remote seller to collect sales and use taxes under this title only if 
the remote seller has gross annual receipts in total remote sales in 
the United States in the preceding calendar year exceeding $1,000,000. 
For purposes of determining whether the threshold in this section is 
met, the gross annual receipts from remote sales of 2 or more persons 
shall be aggregated if--
            (1) such persons are related to the remote seller within 
        the meaning of subsections (b) and (c) of section 267 or 
        section 707(b)(1) of the Internal Revenue Code of 1986; or
            (2) such persons have 1 or more ownership relationships and 
        such relationships were designed with a principal purpose of 
        avoiding the application of these rules.

SEC. 102. LIMITATIONS.

    (a) In General.--Nothing in this title shall be construed as--
            (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 title shall not be construed to 
create any nexus or alter the standards for determining nexus between a 
person and a State or locality.
    (c) No Effect on Seller Choice.--Nothing in this title shall be 
construed to deny the ability of a remote seller to deploy and utilize 
a certified software provider of the seller's choice.
    (d) Licensing and Regulatory Requirements.--Nothing in this title 
shall be construed as permitting or prohibiting a State from--
            (1) licensing or regulating any person;
            (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 products or services; or
            (4) exercising authority over matters of interstate 
        commerce.
    (e) No New Taxes.--Nothing in this title shall be construed as 
encouraging a State to impose sales and use taxes on any products or 
services not subject to taxation prior to the date of the enactment of 
this Act.
    (f) No Effect on Intrastate Sales.--The provisions of this title 
shall apply only to remote sales and shall not apply to intrastate 
sales or intrastate sourcing rules. States granted authority under 
section 101(a) shall comply with all intrastate provisions of the 
Streamlined Sales and Use Tax Agreement.
    (g) No Effect on Mobile Telecommunications Sourcing Act.--Nothing 
in this title shall be construed as altering in any manner or 
preempting the Mobile Telecommunications Sourcing Act (4 U.S.C. 116-
126).
    (h) Limitation on Initial Collection of Sales and Use Taxes From 
Remote Sales.--A State may not begin to exercise the authority under 
this title--
            (1) before the date that is 1 year after the date of the 
        enactment of this Act; and
            (2) during the period beginning October 1 and ending on 
        December 31 of the first calendar year beginning after the date 
        of the enactment of this Act.

SEC. 103. DEFINITIONS AND SPECIAL RULES.

    In this title:
            (1) Certified software provider.--The term ``certified 
        software provider'' means a person that--
                    (A) provides software to remote sellers to 
                facilitate State and local sales and use tax compliance 
                pursuant to section 101(b)(2)(D)(ii); 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.--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; 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 term ``remote sale'' means a sale 
        into a State, as determined under the sourcing rules under 
        paragraph (7), in which the seller would not legally be 
        required to pay, collect, or remit State or local sales and use 
        taxes unless provided by this title.
            (6) Remote seller.--The term ``remote seller'' means a 
        person that makes remote sales in the State.
            (7) Sourced.--For purposes of a State granted authority 
        under section 101(b), the location to which a remote sale is 
        sourced refers to the location where the product or service 
        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 101(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 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, and any tribal 
        organization (as defined in section 4 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b)).
            (9) 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.

SEC. 104. SEVERABILITY.

    If any provision of this title or the application of such provision 
to any person or circumstance is held to be unconstitutional, the 
remainder of this title and the application of the provisions of such 
to any person or circumstance shall not be affected thereby.

SEC. 105. PREEMPTION.

    Except as otherwise provided in this title, this title 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.

                   TITLE II--INTERNET TAX FREEDOM ACT

SEC. 201. EXTENSION OF INTERNET TAX FREEDOM ACT.

    (a) In General.--Section 1101(a) of the Internet Tax Freedom Act 
(47 U.S.C. 151 note) is amended by striking ``November 1, 2014'' and 
inserting ``November 1, 2024''.
    (b) Grandfathering of States That Tax Internet Access.--Section 
1104(a)(2)(A) of such Act is amended by striking ``November 1, 2014'' 
and inserting ``November 1, 2024''.