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SALES TAX FAIRNESS AND SIMPLIFICATION ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

ON

H.R. 3396 

DECEMBER 6, 2007 

Serial No. 110–167 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

LINDA T. SA ́ NCHEZ, California, Chairwoman 

JOHN CONYERS, JR., Michigan 

HANK JOHNSON, Georgia 

ZOE LOFGREN, California 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

STEVE COHEN, Tennessee 

CHRIS CANNON, Utah 

JIM JORDAN, Ohio 

RIC KELLER, Florida 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

DECEMBER 6, 2007 

Page 

TEXT OF THE BILL 

H.R. 3396, the ‘‘Sales Tax Fairness and Simplification Act’’ ............................... 2 

OPENING STATEMENTS 

The Honorable Linda T. Sa ́nchez, a Representative in Congress from the 

State of California, and Chairwoman, Subcommittee on Commercial and 

Administrative Law ............................................................................................. 1 

The Honorable Chris Cannon, a Representative in Congress from the State 

of Utah, and Ranking Member, Subcommittee on Commercial and Administrative Law ........................................................................................................... 8 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 9 

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Member, Subcommittee on Commercial and Administrative Law ................................................................................................................ 10 

The Honorable William D. Delahunt, a Representative in Congress from 

the State of Massachusetts, and Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 11 

WITNESSES 

Ms. Joan Wagnon, Secretary of Revenue, State of Kansas, Topeka, KS, on 

behalf of the Streamlined Sales Tax Governing Board 

Oral Testimony ..................................................................................................... 17 

Prepared Statement ............................................................................................. 19 

Wayne Zakrzewski, Esquire, Vice President, Associate General Counsel— 

Tax, J.C. Penney Corporation, Inc., Dallas, TX, on behalf of the National 

Retail Federation 

Oral Testimony ..................................................................................................... 37 

Prepared Statement ............................................................................................. 39 

Mr. George Isaacson, Brann & Isaacson, Lewiston, ME, on behalf of the 

Direct Marketing Association 

Oral Testimony ..................................................................................................... 44 

Prepared Statement ............................................................................................. 46 

Mr. Steven J. Rauschenberger, Rauschenberger Partners, LLC, Elgin, IL, 

on behalf of the National Conference of State Legislatures 

Oral Testimony ..................................................................................................... 97 

Prepared Statement ............................................................................................. 99 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 10 

Prepared Statement of the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Commercial and Administrative Property ....................................................................... 10 

Page

IV 

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Member, Subcommittee on Commercial and Administrative Law ............................................................................... 15 

Articles submitted by the Honorable Chris Cannon, a Representative in Congress from the State of Utah, and Ranking Member, Subcommittee on 

Commercial and Administrative Law ................................................................. 132 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Responses to Post-Hearing Questions submitted to Joan Wagnon by the Honorable Linda T. Sa ́nchez, a Representative in Congress from the State 

of California, and Chairwoman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 138 

Responses to Post-Hearing Questions submitted to Wayne Zakrzewski by 

the Honorable Linda T. Sa ́nchez, a Representative in Congress from the 

State of California, and Chairwoman, Subcommittee on Commercial and 

Administrative Law ............................................................................................. 144 

Responses to Post-Hearing Questions submitted to George Isaacson by the 

Honorable Linda T. Sa ́nchez, a Representative in Congress from the State 

of California, and Chairwoman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 147 

Responses to Post-Hearing Questions submitted to the Honorable Steven 

J. Rauschenberger by the Honorable Linda T. Sa ́nchez, a Representative 

in Congress from the State of California, and Chairwoman, Subcommittee 

on Commercial and Administrative Law ........................................................... 148 

Prepared Statement of Paul Misener, Vice President, Global Public Policy, 

Amazon.com .......................................................................................................... 151 

Letter from Steve DelBianco, Executive Director, The NetChoice Coalition ...... 162 

Prepared Statement of Brian Bieron, Senior Director of Federal Government 

Relations, eBay Inc. ............................................................................................. 165 

Letter from the United States Telecom Association and CTIA—The Wireless 

Association ............................................................................................................ 172 

(1) 

SALES TAX FAIRNESS AND 

SIMPLIFICATION ACT 

THURSDAY, DECEMBER 6, 2007 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:06 a.m., in 

room 2237, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Conyers, Sa ́nchez, Lofgren, Delahunt, 

Cohen, Johnson, and Cannon. 

Staff present: Norberto Salinas, Majority Counsel; Stewart 

Jeffries, Minority Counsel; and Adam Russell, Majority Professional Staff Member. 

Ms. SA ́ NCHEZ. This hearing of the Committee on the Judiciary 

Subcommittee on Commercial and Administrative Law will now 

come to order. I will recognize myself first for a short statement. 

A recently released report on e-commerce revealed that online 

sales on Cyber Monday, 2007, the Monday following the Thanksgiving weekend, were $733 million, a 21 percent increase from the 

same shopping day last year. And the total online sales for this holiday season are predicted to be $29.5 billion, an increase of $5 billion from the same shopping period last year. 

These numbers reflect the growing number of consumers who see 

the benefits of shopping online: no waiting in line, no traffic to deal 

with, no parking hassles, and the convenience of items being 

shipped to your front door. But there is an additional benefit that 

some consumers enjoy when purchasing items online: not having to 

pay sales taxes. 

Some companies actually post this on their Web sites to increase 

sales. States currently have limited legal authority to require remote sellers to collect sales taxes on items they sell. Instead, the 

burden is on consumers to remit use taxes, which are the equivalent of sales taxes, to their state of residence. 

However, most consumers do not, partly due to the complexity in 

calculating how much taxes they need to pay partly because they 

are not even aware of their obligation and partly because, let us 

face it, those who do know about the obligation are actually going 

to go out of their way to avoid paying additional taxes for their 

purchases. 

State and local governments have voiced their concerns that the 

increasing online sales and the resulting loss in collection of sales 

2 

taxes are affecting an ever-larger portion of their revenue. On the 

other hand, online businesses remind us that the Supreme Court 

has ruled that States do not require them to collect sales taxes and 

remit them to the States because the tax systems are overly complex. 

In an effort to remedy this issue, Congressman Delahunt has introduced H.R. 3396. H.R. 3396 will give Congress’ consent to the 

Streamlined Sales and Use Tax Agreement, which several States 

have entered into to simplify their sales tax system and respond to 

the Supreme Court’s ruling. The legislation also sets forth 19 minimum simplification requirements which the States must follow to 

receive authorization to require remote sellers to collect sales taxes 

on items they sell. 

[The text of the bill, H.R. 3396, follows:] 

I 

110TH CONGRESS 

1ST SESSION H. R. 3396 

To promote simplification and fairness in the administration and collection of sales 

and use taxes. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 3, 2007 

Mr. DELAHUNT (for himself, Mr. LAHOOD, and Mr. BACHUS) 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. 

Be it enacted by the Senate and House of Representatives of the United States 

of America in Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Sales Tax Fairness and Simplification Act’’. 

SEC. 2. CONSENT OF CONGRESS. 

The Congress consents to the Streamlined Sales and Use Tax Agreement. 

SEC. 3. SENSE OF THE CONGRESS. 

(a) SALES AND USE TAX SYSTEM.—-It is the sense of the Congress that the sales 

and use tax system established by the Streamlined Sales and Use Tax Agreement, 

to the extent that it meets the minimum simplification requirements of section 6, 

provides sufficient simplification and uniformity to warrant Federal authorization to 

Member States that are parties to the Agreement to require remote sellers, subject 

to the conditions provided in this Act, to collect and remit the sales and use taxes 

of such Member States and of local taxing jurisdictions of such Member States. 

(b) PURPOSE.—The purpose of this Act is to— 

(1) effectuate the limited authority granted to Member States under the 

Streamlined Sales and Use Tax Agreement; and 

(2) not grant additional authority unrelated to the accomplishment of the 

purpose described in paragraph (1). 

SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES. 

(a) GRANT OF AUTHORITY.— 

3 

(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 business exception provided under 

subsection (d) 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) 10 States comprising at least 20 percent of the total population of 

all States imposing a sales tax, as determined by the 2000 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 on-line 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 6. 

(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 enactment of this Act is not within the scope of the administration of sales and 

use taxes or taxes on telecommunications services by the Member States. 

(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. 

(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). 

(2) COMPLIANCE DETERMINATION.—Upon the determination of the Governing Board that all the requirements of subsection (a) have been satisfied, the 

authority of each Member State 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. 

(d) SMALL BUSINESS EXCEPTION.—No seller shall be subject to a requirement of 

any State to collect and remit sales and use taxes with respect to a remote sale if— 

(1) the seller and its affiliates collectively had gross remote taxable sales 

nationwide of less than $5,000,000 in the calendar year preceding the date of 

such sale; or 

(2) the seller and its affiliates collectively meet the $5,000,000 threshold of 

this subsection but the seller has less than $100,000 in gross remote taxable 

sales nationwide. 

SEC. 5. DETERMINATIONS BY GOVERNING BOARD AND JUDICIAL REVIEW OF SUCH DETERMINATIONS. 

(a) PETITION.—At any time after the Governing Board has made the determination required under section 4(c)(2), any person who may be affected by the Agreement may petition the Governing Board for a determination on any issue relating 

to the implementation of 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 

4 

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 continues to satisfy the minimum simplification requirements set forth in section 6; 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 6 months after the date on which the petition is 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 failed 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. 

(e) JURISDICTION.— 

(1) GENERALLY.—Chapter 91 of title 28, United States Code, is amended by 

adding at the end the following: 

‘‘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 5 of the Sales Tax Fairness and Simplification Act.’’. 

(2) CONFORMING AMENDMENT TO TABLE OF SECTIONS.—The table of sections 

at the beginning of 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. 6. MINIMUM SIMPLIFICATION REQUIREMENTS. 

(a) IN GENERAL.—The minimum simplification requirements for the Agreement, 

which shall relate to the conduct of Member States under the Agreement and to the 

administration and supervision of such conduct, 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 shall have a common tax base 

identical to the State tax base of that Member State. A Member State may 

enact other 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 amended 

through the date of enactment of this Act. 

(3) Uniform rules for sourcing and attributing transactions to particular 

taxing jurisdictions. 

5 

(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 that a 

State may impose a single additional rate, which may be zero, on food, food ingredients, and drugs, provided that this limitation does not apply to the items 

identified in section 308 C of the Agreement, as amended through the date of 

enactment of this Act. 

(10) A Member State shall eliminate 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 section 308 C of the Agreement, as amended through the date of 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 in section 4(d) 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 (other than use taxes on goods and services purchased for the consumption of the seller). The Governing Board, in its 

discretion, shall authorize such a single audit. 

(14) As of the day that authority to require collection commences under section 4, each Member State shall provide reasonable compensation for expenses 

incurred by a seller directly 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) Each Member State shall apply the simplification requirements of the 

Agreement to taxes on telecommunications services, except as provided herein. 

This requirement is applicable to Member States as of July 1, 2010, except that 

sales and use taxes on telecommunications services shall be subject to the 

Agreement and the authority granted to the Member States when the requirements of section 4(a) are met. On or after July 1, 2010, for those Member States 

which meet the requirements of this paragraph, the authority granted such 

Member States under section 4 may be exercised by such Member States, pursuant to the terms of section 4 and section 5, with respect to taxes on telecommunications services other than sales and use taxes on such services. The 

following are exceptions to the requirement established under this paragraph: 

(A) The requirement for one uniform return shall not apply, provided, 

however, there shall be one uniform return for each type of tax on telecommunications services within a State. 

(B) The requirements for rate simplification are modified to require 

that each taxing jurisdiction shall have only one rate for each type of tax 

on telecommunications services. 

6 

(C) The requirements for tax base uniformity in section 302 of the 

Agreement shall apply to each type of tax on telecommunications services 

within a State, but shall not be construed to require that the tax base for 

different types of taxes on telecommunications services must be identical to 

the tax base for sales and use taxes imposed on telecommunications services. 

(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) 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 simplifications 

to its sales and use tax system to warrant the collection authority granted to 

it 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. 

SEC. 7. 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. 8. 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 three 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 three 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 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. 9. DEFINITIONS. 

For the purposes of this Act the following definitions apply: 

(1) AFFILIATE.—The term ‘‘affiliate’’ means any entity that controls, is controlled by, or is under common control with a seller. 

(2) GOVERNING BOARD.—The term ‘‘Governing Board’’ means the governing 

board established by the Streamlined Sales and Use Tax Agreement. 

(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 of the date of enactment of this Act; and 

7 

(B) does not include associate members under the Agreement. 

(4) NATIONWIDE.—The term ‘‘nationwide’’ means throughout each of the 

several States and the District of Columbia, the Commonwealth of Puerto Rico, 

Guam, American Samoa, the Virgin Islands, the Northern Mariana Islands, and 

any other territory or possession of the United States. 

(5) NONDISCRETIONARY DUTY OF THE GOVERNING BOARD.—The phrase ‘‘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’’. 

(6) PERSON.—The term ‘‘person’’ means an individual, trust, estate, fiduciary, partnership, corporation, or any other legal entity, and includes a State 

or local government. 

(7) 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 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 sales or use taxes with respect to such sale. 

(8) REMOTE SELLER.—The term ‘‘remote seller’’ means any seller who makes 

a remote sale. 

(9) STATE.—The term ‘‘State’’ means any State of the United States of 

America and includes the District of Columbia, Puerto Rico, and any other territory or possession of the United States. 

(10) 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 amended through 

the date of enactment of this Act and unless the context otherwise indicates as 

further amended from time to time. 

(11) TAX ON TELECOMMUNICATIONS SERVICES.—The term ‘‘tax on telecommunications services’’ or ‘‘taxes on telecommunication services’’ shall encompass the same taxes, charges, or fees as are included in section 116 of title 4, 

United States Code, except that ‘‘telecommunication services’’ shall replace ‘‘mobile telecommunications services’’ whenever such term appears. 

(12) TELECOMMUNICATIONS SERVICE.— 

(A) IN GENERAL.—The term ‘‘telecommunications service’’ means the 

electronic transmission, conveyance, or routing of voice, data, audio, video, 

or any other information or signals to a point, or between or among points. 

(B) INCLUSION.—The term ‘‘telecommunication service’’— 

(i) includes transmission services in which computer processing applications are used to act on the form, code, or protocol of the content 

for purposes of transmission, conveyance, or routing without regard to 

whether such services are referred to as voice over Internet protocol 

services or are classified by the Federal Communications Commission 

as enhanced or value added services; and 

(ii) does not include the data processing and information services 

that allow data to be generated, acquired, stored, processed, or retrieved and delivered by an electronic transmission to a purchaser 

where the primary purpose of such purchaser for the underlying transaction is the processed data or information. 

SEC. 10. SENSE OF THE CONGRESS ON DIGITAL GOODS AND SERVICES. 

It is the sense of the Congress that each State that is a party to the Agreement 

should work with other States that are also party to the Agreement to prevent double taxation in situations where a foreign country has imposed a transaction tax on 

a digital good or service. 

Æ 

Ms. SA ́ NCHEZ. Today’s hearing serves three purposes. First, the 

witnesses will help us understand whether there is a need for a 

simplified sales and use tax system. Second, this hearing will provide us with an opportunity to hear about the progress that States 

have made in coming to an agreement to simplify their sales and 

use tax system. And finally, the testimony will help us determine 

8 

how soon the States can meet the requirements established in H.R. 

3396 and whether the legislation fully addresses the concerns of 

consumers, States and businesses. 

We have four witnesses with us this morning to testify about the 

issues addressed by H.R. 3396 and to answer our questions about 

the legislation and the agreement and what impact H.R. 3396 

would have on consumers, business and States’ local revenue. Accordingly, I look forward to today’s hearing. 

I now recognize my colleague and distinguished Ranking Member, Mr. Cannon and the co-author of the bill that we are examining today for his opening remarks. 

Mr. CANNON. I thank you, Madam Chair. I am pleased that we 

are holding this hearing after the passage of the Internet Tax Act 

Amendments of 2007. In years past, these issues have become 

intertwined. I appreciate the leadership of Chairman Conyers and 

Chairwoman Sa ́nchez in keeping them separate during the consideration of Internet tax moratorium. 

The Streamlined Sales Tax and Use Agreement, which is now expanded—I am trying to figure out whether we should call it the 

SST, which seems simpler and more innocuous, or the SSUTA, 

which is a little more cumbersome. I think it deserves the cumbersome title. But I may lapse into the SST. 

This agreement was borne out of a desire to simplify and reduce 

the administrative burden of imposing sales taxes for businesses. 

And it was also designed to drive a framework for the remote collection of sales taxes. 

And this was done to address two decisions by the U.S. Supreme 

Court that held that States cannot compel out-of-state vendors— 

that is businesses that do not have any physical nexus with the 

State—to collect and remit the sales tax owed by that State’s residents. With the growth of Internet commerce, there is concern on 

behalf of many States that their sales tax revenues will decline as 

more consumers buy goods from retailers that the States cannot 

compel to collect sales taxes. 

A 2000 study conducted by two University of Tennessee professors showed that by 2006 the total sales that would be lost to 

States due to e-commerce would be about $45 billion. I thought 

that laughable years ago when we first viewed that study. And 

those authors have revised their study repeatedly, and the latest 

estimate is that States and local governments will lose in uncollected sales taxes between $21.5 billion and $32.6 billion in 2008. 

However, these numbers are not beyond dispute. Direct Marketing Association estimates that in 2006 States lost only $4.2 billion, less than 10 percent of what the Tennessee study estimated. 

Further, as more e-commerce is transacted on the Web sites than 

more traditional brick and mortar stores, the so-called—I call them 

the click and brick stores—the number of sales that are conducted 

tax-free continues to decline. That is because the click and brick 

stores have a physical presence in many taxing jurisdictions and 

accordingly, collect taxes in those jurisdictions, even for sales on 

the Internet. 

In fact, forbes.com recently reported that one of the authors of 

the original University of Tennessee study estimates that 50 percent of all sales taxes—or all sales conducted on the Internet are 

9 

subject to sales taxes. So while I appreciate the concerns of the 

States involved in this process, it appears to me that many of the 

original reasons for implementing a streamlined sales agreement 

have not materialized and, in fact, are being gradually abated by 

the presence of the so-called click and brick enterprises. 

Further, while I laud the goals of a streamline tax, it seems to 

me that the SST or the SSUTA as it has been implemented is not 

streamlined at all. The agreement as it exists today is over 130 

pages, been modified no less than 10 times in its 5-year history. If 

Congress enacts H.R. 3396, I fear that we will be giving our imprimatur to something that is just a work in progress. 

Which brings me to my final point. If Congress enacts H.R. 3396, 

it would require businesses in all 50 States, including the 5 States 

that have no sales tax, to collect and remit sales taxes—sales and 

use taxes—to the 17 States that actually have implemented the 

SSUTA. This is different from the approach that Congress usually 

takes when it approves interstate compacts. 

That is, permitting the States in the compact to share resources. 

Rather, H.R. 3396 would require businesses in States that are not 

party to the SSUTA to, in effect, participate against their will. 

Madam Chair, while I commend you for holding a hearing on 

this legislation, I would much prefer that we think of other issues 

affecting interstate commerce and discriminatory taxes. To that 

end, may I suggest the Subcommittee hold hearings on bills that 

prevent the States from imposing discriminatory taxes on pipelines, 

rental cars and multi-channel video services? I hope the Subcommittee will deal with these issues next session, in the interest 

of putting more money into the pockets of consumers and less in 

the coffers of tax collectors. 

And may I just say as a final note that it has been a great pleasure to work with Mr. Delahunt on this issue over a very long period of time. He is expert in these issues, and our disagreements 

tend to be relatively minor and pleasant. And I appreciate that, 

Madam Chair, and yield back. 

Ms. SA ́ NCHEZ. I thank the gentleman for his statement. I want 

to apologize. I misspoke earlier when I introduced you. I said that 

you were a co-author of the bill. And I understand that you are not. 

I apologize. My apologies—— 

Mr. CANNON. But a dear friend was the author. 

Ms. SA ́ NCHEZ. My apologies and so noted that you are a dear 

friend of Mr. Delahunt. And I am sure he is not offended. 

Mr. CANNON. Not in the least, Madam Chair. 

Ms. SA ́ NCHEZ. At this time, I would like to recognize for an opening statement, Mr. Conyers, the distinguished Member of our Subcommittee and the Chairman of the full Committee on the Judiciary. Mr. Conyers? 

Mr. CONYERS. Thank you, Chairwoman Sa ́nchez. 

And good morning to all of you. 

I commend you, Madam Chairwoman, for holding hearings on 

the important legislation, and I was just busily lining out my commendations to Chris Cannon before I found out he was not a sponsor of the bill. But he is still a good friend. 

I join Bill Delahunt and the gentleman from Alabama, Mr. Bachus and others, Ray LaHood, in looking at this very important quesVerDate Aug 31 2005 12:13 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6601 H:\WORK\COMM\120607\39479.000 HJUD1 PsN: 39479
10 

tion. And I think that holding hearings about a simplified, streamlined tax agreement could increase our Nation’s economic efficiency, facilitate the growth of electronic commerce, and help our 

States and local government maintain financial support for public 

health, education, safety. 

And so, I come here with the encouragement of my governor, Jennifer Granholm, who has lost somewhere between $700 million 

and $1.1 billion in foregone sales tax because of the complex system which we are here to examine how we can simplify. So I am 

very happy to join you and would ask that my statement be included in the record. 

Ms. SA ́ NCHEZ. Without objection, so ordered. 

[The prepared statement of Mr. Conyers follows:] 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDI- CIARY, AND MEMBER, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

Sales taxes constitute a significant state and local revenue source, with the census 

bureau estimating that nearly one third of State and local revenues come from general sales and use taxes. With ever increasing online sales, states and local governments must plan their budgets anticipating huge revenue loses due to uncollected 

sales and use taxes from online sales. For example, my beloved state of Michigan 

is estimated to lose between $700 million and $1.1 billion in foregone sales taxes 

in 2008, with online sales accounting for over half of those losses. Even the most 

conservative estimates suggest that Michigan will lose in the hundreds of millions 

of dollars in 2008, at a time when the state is hemorrhaging and is in dire need 

of revenue to support quality education, effective public safety, and other basic services. And that is just Michigan. Think of how much each state could do to reduce 

class sizes, build new schools, strengthen our bridges, and protect our communities 

and citizens with these funds. 

However, the Supreme Court has ruled that partly because the states had very 

complex tax systems, state do not have the authority to require out-of-state sellers 

to collect sales taxes. This bipartisan legislation, of which I proudly cosponsor, addresses the Supreme Court’s concern for a simplified tax system. It authorizes states 

to develop and enter into an interstate sales and use tax agreement where states 

joining the agreement and adopting a simplified sales tax system would be authorized to require remote sellers to collect sales taxes. Many states have already settled 

on a framework and streamlined their tax code for the benefit of consumers and 

both small businesses and national retailers. Thus, the framework makes it easier 

for businesses to collect sales taxes across state lines. 

I thank my colleague from Massachusetts, Mr. Delahunt, for introducing this legislation. And I am pleased that the Chair of this Subcommittee is holding this hearing on the important legislation. I believe that a simplified streamlined tax agreement would increase our nation’s economic efficiency, facilitate the growth of electronic commerce, and help our states and local government maintain financial support for public education, health and safety. H.R. 3396 accomplishes this goal. 

Ms. SA ́ NCHEZ. I want to thank Mr. Conyers for coming. And I 

would also like to recognize a colleague of mine from the state of 

California, Zoe Lofgren. 

Ms. LOFGREN. Thank you, Madam Chair. And I would ask unanimous consent that my full statement be made a part of the record. 

Ms. SA ́ NCHEZ. Without objection, so ordered. 

[The prepared statement of Ms. Lofgren follows:] 

PREPARED STATEMENT OF THE HONORABLE ZOE LOFGREN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA, AND MEMBER, SUBCOMMITTEE ON

COMMERCIAL AND ADMINISTRATIVE PROPERTY

Thank you Madam Chairwoman. I would also like to thank the witnesses and 

thank Mr. Delahunt for all of his work on this issue. 

I’m sorry that I can’t attend today’s hearing in its entirety. Unfortunately I will 

have to leave shortly to chair a hearing on the use of robocalls in federal elections 

11 

Simplification and interoperation of state sales and use tax systems is a worthy 

goal and area in which state and local governments as well as private businesses 

have many shared interests. 

I have watched this issue closely and with each iteration, the Streamlined Sales 

Tax Project and authorizing legislation gets closer to a system that is simple, fair, 

and does not unduly burden interstate commerce. 

That being said, I am uncertain that we have reached the conclusion of this process. Numerous question and concerns remain. 

For example, it is still unclear how to reconcile a dual-sourcing system that would 

accommodate either origin or destination sourcing with the requirement in HR 3396 

to maintain uniform sourcing. 

Similarly it is unclear exactly what is entailed by the bill’s requirement that 

states provide ‘‘reason compensation for expenses incurred by the seller’’ in implementing the SSUTA. Given that there are over 7,500 distinct taxing jurisdictions 

in the United States with their own rates, exclusions, and tax holidays, compliance 

will be significantly more difficult and costly than simply purchasing software. 

This issue takes on added significance given the initial estimates of how much 

revenue states are losing, and therefore would realize under SSUTA, may have relied on incorrect assumptions. 

Obviously these issues are very serious ones not only for online commerce, but 

also for states, like California, that have concluded that ‘‘conforming would require 

a major overhaul of the state’s sales and use tax system.’’ [California Board of 

Equalization.] 

Member states believe that they have many of these issues solved. The best way 

to test that claim would be to have the SSUTA operate as a voluntary multistate 

compact among member states for a few years before imposing it on every state in 

the nation. 

This would allow us to determine exactly how simplified and streamlined the 

SSUTA has become. 

Barring that approach, I think we must continue to examine the most significant 

obstacles to a genuinely simplified remote sales tax system and therefore appreciate 

the Chairwoman’s decision to hold this hearing. 

Thank you. 

Ms. LOFGREN. I would just note that I think this is an important 

hearing. I thank you and also especially Mr. Delahunt for his years 

of work on this issue. I am going to have to leave the hearing before it is concluded because I am chairing a hearing in another 

Subcommittee. But I do believe that the goal of simplification is a 

worthy one. However, as we all know, it is very complicated and 

with the over 7,500 distinct taxing jurisdictions in the United 

States with their own rates, exclusions, tax holidays, compliance 

could be tough. 

I note that the state of California has indicated to me that conforming would require a major overhaul of California’s sales and 

use tax system. California is not on board on this proposal yet, and 

as you know, I chair the California Democratic delegation. So we 

are concerned that maybe we are not there yet. But that the goal 

is a worthy one, and so we have many questions, and I am sure 

that we will have ample opportunity to review these issues. I appreciate, once again, Mr. Delahunt’s leadership. 

Ms. SA ́ NCHEZ. Thank you, Ms. Lofgren. 

Now, last but certainly not least, I would like to recognize the 

author of this bill for his opening statement, the distinguished gentleman from Massachusetts, Mr. Delahunt. 

Mr. DELAHUNT. Well, thank you, Madam Chair. And I appreciate 

the opportunity and your sincere efforts to see that Congress gives 

full consideration to the issue of taxation of remote sales. I want 

to thank you for scheduling this hearing and look forward to working with you and other Members of the Subcommittee to make it 

a productive exercise. 

12 

I also want to thank the Chair of the full Committee for his leadership on this issue, because I know it is of importance to him. And 

for a moment I was pleased to hear that my good friend from Utah 

had an epiphany, however brief. But I am sure that after listening 

to the testimony today he will give more consideration, more 

thoughtful consideration to the issue. 

Every year the first days of the holiday shopping season are examined as an indicator of economic health. I can’t say that I am 

one of those people in line at the retail stores at 5 a.m. after 

Thanksgiving, but so-called Black Friday has become a staple of 

measurement in the retail sector. In the last few years, the media 

coverage of those early shopping days has included a new term, 

Cyber Monday, when shoppers who didn’t get enough of Black Friday flood online stores in search of gifts for friends and loved ones. 

Well, this year Cyber Monday, which was November 26, online 

sales increased 21 percent over last year, 21 percent, $733 million, 

which was an excess of over—rather $733 million over the $610 

million figure in 2006. Each of the next 3 days also surpassed $700 

million in sales, resulting in more than $4 billion in online spending during the week. 

More than $13.4 billion has been spent online during this year’s 

holiday season to date, clocking an 18 percent gain versus the corresponding days of last year. Now, people will use these numbers 

to debate the health of the economy. But my point is simple. It is 

that with every passing year, the American people are fulfilling 

more of their retail needs online as opposed to so-called brick and 

mortar stores. 

Why is this important? Several reasons. States have relied on 

sales and use taxes since 1932 for roughly one-third of their revenue. Today our States are collectively losing tens of billions of dollars each year because the taxable transactions on which they rely 

on are increasingly taking place over the Internet. 

Adjusted retail e-commerce sales from the third quarter of 2007 

were an estimated $35 billion, an increase of 3.6 percent from the 

second quarter of 2007 and an increase of almost 20 percent from 

the third quarter, the corresponding quarter of 2006, almost 20 

percent. These increases far exceed overall brick and mortar retail 

growth. 

When the remote sellers in these e-commerce transactions do not 

collect sales tax, the obvious result is an erosion of the sales tax 

base of those States that rely on this revenue stream. This amounted to State and local governments losing between $17 to $20 billion 

in uncollected sales and use taxes for remote transactions in the 

year 2004. That number is likely to go up to $66 billion by 2011 

with the total loss, the aggregate coming to nearly half a trillion 

dollars by that date. 

Put these numbers together with recent reports about the health 

of State budgets, and, folks, we have a serious problem. Sixteen 

States are facing major budget shortfalls right now largely due to 

the rising health care costs and housing costs. In fiscal year 2007 

State budget balances are below 2006 fiscal year levels. And the 

downward trend is expected to carry over into fiscal year 2008, 

given the State of our economy. 

13 

Many of our State and local government officials are facing a 

stark choice between unpopular tax increases. Many will have to 

resort to the most aggressive of all taxes, the property tax and 

drastic cuts, more drastic cuts in services or maybe both. 

But this issue isn’t just simply about the devastating loss of revenue. It is about fairness and equity. By failing to ensure sales tax 

parity between remote sellers and Main Street merchants, we are 

putting at risk the thousands of small businesses that sustain our 

local economy as well as the fabric of our communities and our 

neighborhoods. 

For example, it is that small store, the independent book store, 

for example, that doesn’t just provide books. It sponsors the little 

league team, creates a venue for people to come together. It enhances, if you will, a sense of community. 

If there is any bill that is supportive of the small business owner 

in this country, it is this legislation that is before us today. And 

please note it is both local and remote businesses that benefit from 

local infrastructure, roads, fire, and safety services in our cities and 

towns. But right now most remote sellers have an unfair advantage 

over their brick and mortar competitors. 

States, cities, and towns must be empowered to level the playing 

field for their home town businesses. And I am not in any way opposed to the progress represented by e-commerce. I am amazed by 

it. But I strongly believe that fairness requires that remote sellers 

collect and pay the same taxes that our home town businesses on 

Main Street have to collect and pay. 

You know, States have gone to work. They have done their jobs. 

And it is time that Congress recognizes that. 

States went to work beginning with the creation of the streamlined sales and use tax agreement, which has served as a blueprint 

of States to streamline their taxation systems. In the 108th Congress, I stated back then that the States have made substantial 

progress and that once a sufficient number of States have implemented the agreement, Congress should move expeditiously to pass 

what was an earlier version of the bill that we are having this 

hearing on today. That bill, like the one before us, would simply 

bless, if you will, the agreement and authorize those member 

States to compel out-of-state sellers to collect and remit sales and 

use tax arising from sales out of the member’s jurisdiction. 

Our current bill also outlines minimum simplification requirements and exempts remote small businesses from any such requirement. Let me repeat. It is straightforward. It is narrowly tailored and responds directly to the Supreme Court’s conclusion in 

Quill. 

It is Congress’ authority and responsibility to enable the States 

to develop tax policy that reflects today’s economy, rather than 

buying into antiquated notions of what the marketplace wants. But 

we have yet to adopt what I believe to be common sense legislation. 

Well, since October 1, 2005, approximately 1,100 remote retailers 

have volunteered to collect an out-of-state sales tax for these 

States. To date, member States have collected almost $115 million 

in new sales tax revenues from those volunteer sellers which previously would have been uncollected. 

14 

You know, in the 7 years since this bill was first introduced the 

States have organized and lined up to address the issue. They have 

done everything that we have asked them to do. Now that the 

States are meeting their responsibilities, it is long past due that 

the Federal Government and the United States Congress stand up 

and do what is clearly our responsibility. 

Recognizing that the Ranking Member is from Utah, I thought 

it might be apropos that I conclude with a very brief quote from 

the former governor of Utah, the current secretary of health and 

human services, a good man, a man with great common sense and 

on this particular issue, a man of great insight and intellect. These 

are Secretary Leavitt’s words back in 1995. And I presume I have 

no doubt that he continues to embrace them. 

‘‘The current sales tax is a great system of taxation for the agricultural and industrial economy it was created for. But it is unworkable now. There is no new tax involved in a streamlined sales 

tax system, none. Every tax obligation talked about exists today.’’ 

‘‘Citizens know what the sales tax is and what it pays for, the 

schools their children attend, the roads they drive, and the fire and 

police departments that protect them. The new streamlined sales 

tax system when fully deployed treats every buyer and seller the 

same, no special privilege, no selected burden, just a level playing 

field.’’ 

‘‘The new system is voluntary. Whether you are a New Hampshire that has no sales tax or a Nevada where sales tax comprises 

80 percent of all State revenue, it is your choice. If you don’t like 

it or you don’t need it, don’t use it.’’ 

I yield back, and I—— 

Mr. CANNON. Would the gentleman yield briefly? 

Mr. DELAHUNT. Very briefly. 

Mr. CANNON. I noticed the clock wasn’t working as you spoke 

briefly. 

Ms. SA ́ NCHEZ. I want it noted for the record the Chair has been 

very generous with the time. 

Mr. DELAHUNT. I would note that. 

Mr. CANNON. My dear friend, Mr. Leavitt, former Governor 

Leavitt, now Secretary Leavitt made that statement in 1995, generations ago in Internet time. And I think that the State legislature, which is now back to the Utah State Legislature, which was, 

I think, the first legislature to back the SST, has now pulled out 

and is in that standby status, and I think wisely so because time 

has led them to understand the difficulties of SST and the burdens 

that it puts on the world probably don’t make sense. And that is 

why we are going to have this hearing. 

So we will examine that in a little more, but I wanted to validate 

the prescience of my former governor, but it is the transformation 

of society that has made him less relevant. Thank you, and I yield 

back. 

Ms. SA ́ NCHEZ. Well, I am glad everybody is happy about today’s 

hearing. I hope that it will provide us with the information that we 

are seeking in order to make a more informed decision on where 

we fall on this issue. 

I want to thank Mr. Delahunt for his opening statement. And 

without objection, other Members’ opening statements will be inVerDate Aug 31 2005 12:13 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6601 H:\WORK\COMM\120607\39479.000 HJUD1 PsN: 39479
15 

cluded for the record. Without objection, the Chair will be authorized to declare a recess of the hearing at any point. 

[The prepared statement of Mr. Cohen follows:] 

PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TENNESSEE, AND MEMBER, SUBCOMMITTEE ON

COMMERCIAL AND ADMINISTRATIVE LAW

Ms. SA ́ NCHEZ. And at this time, I am pleased to introduce the 

witnesses for today’s hearing. Our first witness is Joan Wagnon. 

Ms. Wagnon is currently serving as secretary of revenue for the 

state of Kansas and was appointed to her post on January 13, 2003 

by Governor Kathleen Sebelius. Is that a correct pronunciation? 

Prior to her appointment, she was president of Central National 

Bank, Topeka, elected mayor of Topeka on April 1, 1997. Ms. 

Wagnon was the first woman to serve as mayor since the city’s incorporation in 1867. Wow, what a breakthrough. 

She also served 12 years in the Kansas House of Representatives 

from 1983 to 1994. Ms. Wagnon currently serves as president of 

the Streamlined Sales Tax Governing Board and has been an officer since the organization’s inception in 2005. She also has served 

as chair of the Multi-State Tax Commission from 2005 to 2007 and 

is currently on the board of directors for the Federation of Tax Administrators. 

Our second witness is Wayne Zakrzewski. Mr. Zakrzewski is a 

vice president and associate general counsel for tax for JCPenney 

Company, Incorporated where he has responsibility for all legal 

matters related to tax, audit of sales, use and State income taxes, 

property tax compliance, and value appeals, and State tax research 


Cohen.eps
16 

and planning. From 1981 to 1988 he served as attorney deputy 

chief counsel of the Arkansas Revenue Division. 

He has been an active participant in the streamlined sales tax 

project since its beginning and currently serves as a member of the 

board of directors of the Business Advisory Council to the governing board of streamlined sales tax agreement. He also served as 

co-chair of the steering committee for the Joint Cost and Collection 

Study which was a joint business and State government project to 

provide data concerning the cost of the current sales tax business 

and to provide tools to compare that cost with those costs of a 

streamlined business. 

We welcome you to our panel. 

Our third witness is George Isaacson. Mr. Isaacson is a senior 

partner in the law firm of Brann & Isaacson in Lewiston, Maine, 

which represents over 70 direct marketers and electronic merchants throughout the United States in connection with State sales 

use and income tax matters. 

For over 15 years he has provided counsel to the Direct Marketing Association and has represented the DMA in the filing of 

amicus cure briefs in State and Federal court. In addition to tax 

advice, Mr. Isaacson also consults for direct marketers on a wide 

range of electronic commerce issues. 

We want to welcome you as well. 

Mr. Isaacson also serves as outside general counsel to L.L. Bean, 

Incorporated and frequently speaks before business groups and 

trade associations regarding legal issues affecting electronic commerce. 

Our final witness is Steve Rauschenberger. Mr. Rauschenberger 

is president of Rauschenberger Partners, a partnership with extensive experience in government affairs, strategic development, and 

business management. Prior to founding the firm, Mr. 

Rauschenberger served for 15 years in the Illinois State Senate 

holding various leadership positions, including assistant Republican leader and Chairman of the Senate Appropriations Committee. 

He is immediate past president of the National Conference of 

State Legislature where he also served as co-chair of the task force 

on telecommunications and electronic commerce. Prior to his tenure 

in government, Mr. Rauschenberger was president of Ackerman 

Brothers, Incorporated, which owned and operated three retail furniture stores. And before taking that position, he was a partner in 

the Rauschenberger Furniture Company, a third generation family 

furniture retail business. 

We want to welcome you to our panel this morning. 

We want to thank you all for your willingness to participate in 

today’s hearing. Without objection, your written statements will be 

placed in the record in their entirety. And we would ask that you 

please limit your oral remarks to 5 minutes. 

We have a lighting system when we remember to employ it, 

which gives you a green light at the beginning of your testimony. 

When you are 4 minutes into your testimony, it will turn yellow 

to warn you that you have a minute remaining. And when the yellow light turns red, you know that your time has expired. If we 

catch you mid-sentence when the light turns red, we would ask 

17 

that you please just summarize your final thoughts so that we can 

move on to the next witness. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions subject to 

the 5-minute limit. 

With that, I would now invite Ms. Wagnon to please proceed with 

her testimony. 

TESTIMONY OF JOAN WAGNON, SECRETARY OF REVENUE, 

STATE OF KANSAS, TOPEKA, KS, ON BEHALF OF THE 

STREAMLINED SALES TAX GOVERNING BOARD 

Ms. WAGNON. Well, good morning, Chairwoman Sa ́nchez and 

Chairman Conyers and Ranking Member Cannon, and all of the 

rest of you Members of the Committee. I do appreciate the opportunity to speak to you today. I am here representing the governing 

board of the streamlined sales tax. And I do refer to it as SST because it is shorter. 

And I want to encourage Congress to recognize that the simplifications that we have achieved in our member States sales 

taxes are sufficient to remove the burden on interstate commerce 

that the Supreme Court noted in Quill v. North Dakota and sufficiently simplified for Congress to allow the States to require remote 

retailers to collect our sales tax. That is our goal. That is our work 

on simplification, and that leads to mandatory collection. 

I wanted to make one point today about the nature of—— 

Ms. SA ́ NCHEZ. Ms. Wagnon, I am sorry. Can I interrupt you for 

a moment? 

Ms. WAGNON. Yes. 

Ms. SA ́ NCHEZ. We just want to check and make sure that your 

microphone is on. Otherwise your testimony isn’t recorded. 

Ms. WAGNON. It says that it is green. 

Ms. SA ́ NCHEZ. Okay. 

Ms. WAGNON. Am I not close enough? 

Ms. SA ́ NCHEZ. I suspected as much, I just wanted to verify. And 

I apologize for interrupting. 

Ms. WAGNON. Not a problem. I am just still looking to see my 

light. So—— 

Ms. SA ́ NCHEZ. We will give you additional time and make sure 

that you finish your statement. 

Ms. WAGNON. My first point was that the nature of retail is 

changing. And I think Congressman Delahunt’s statement and Ms. 

Sa ́nchez’s statement have eloquently spoken to that. And I won’t 

go into it again, except to say that our sales tax bases in States 

across this country are rising maybe at 2 percent a year. And we 

see the erosion at maybe 27 to 30 percent a year. So that point is 

so valid. 

So let me really give you an update on where we are with SST 

about our need for simplification. And I am, quite frankly, amazed 

at the phenomenon that is the streamlined sales tax because you 

for the first time have seen business stakeholders coming together 

with tax administrators, legislators, and members of the public to 

devise solutions to problems that have been huge. 

We have a myriad of sales tax laws. You asked why do we need 

to simplify. Just the number of forms that you fill out in order to 

18 

report in every State—they are all different. We now have 22 

States that are part of the agreement, and they all have a single 

reporting form done electronically. That in and of itself is simplification. 

There is a map in your packet that we have provided that shows 

you the number of States. Today we have 22. It is my hope that 

we have 10 more States that we are working with that over the 

course of the next year if we are able to maintain the progress that 

we have made so far will be able to join with us. 

Twenty-eight percent of the country’s population now lives in a 

streamlined state. The reason those States are not—those 10 are 

not with us now—we need to make a minor adjustment in our 

sourcing rules so that some of the barriers that currently exist can 

be overcome. We have a meeting scheduled in Dallas next week, 

and we will be discussing those changes. 

We made a number of changes in the agreement, as was noted 

in the opening remarks, because we had not completely finished 

the work when the agreement was first adopted. But what we have 

done so far is absolutely amazing. Since December of 2005, we have 

been able to bring those 22 States onboard, achieve the simplifications that are outlined in the bill. And section 6 of that bill is a 

wonderful framework for what simplification looks like. 

And our annual report does show that just in the last year we 

brought in almost $89 million for the 2007 fiscal year. So if you 

compare that to the number that is collected overall, it has been 

an explosion of collections by these 1,072 sellers that are currently 

registered. 

What does our simplification look like? We have certified service 

providers that provide services free of charge to remote sellers to 

collect and distribute these new taxes. So what could be simpler 

than that? 

The payments come from the new money that is being collected. 

We do have a simplified reporting form used by all States. 

In the past it was said there wasn’t sufficient software. But that 

is just not right. The software has been there. What has been missing is the rates and boundaries databases where States will certify 

these are the rates in all of these different jurisdictions, these are 

the boundaries. 

We do not allow them to change more than once a quarter. We 

give notice to retailers when it does change. We hold them harmless if we use these States’ boundaries and databases. And so, that 

makes it possible to do the collection. 

We have a central registration system that provided amnesty in 

the first 12 months. And it provides liability protection for people 

that are enrolling. 

We have managed to, I believe, accomplish everything that is in 

section 6 of the bill where there is a listing of simplification measures with one exception. We have not gotten around to the issues 

in the dispute resolution process. We have been pretty busy organizing the board. We have taken care of our governance issues. We 

have come up with a standard uniform product definitions. 

The most recent amendment to the agreement was an amendment about digital goods. We had a hard time figuring out what 

19 

digital goods are going to look like in the future. But we finally 

have come up with those descriptions. 

I think you are going to see fewer amendments in the future, 

more effort toward bringing in new States. I think you are going 

to see more effort to work with you in Congress to help you with 

having information that shows that we have indeed simplified the 

system and that our voluntary system is bringing in to the best of 

our ability. 

But the question is should it stay voluntary forever. I don’t think 

so. I think we are letting a lot of people off the hook who are operating, as Mr. Delahunt said, at a competitive advantage over the 

people in your home States because they don’t have to collect the 

sales tax. And that simply isn’t fair. So we would ask you to overturn the Quill decision, to work with us and give us the ability to 

collect this tax. 

[The prepared statement of Ms. Wagnon follows:] 

PREPARED STATEMENT OF JOAN WAGNON

Good Morning Chairwoman Sa ́nchez, Ranking Member Cannon, and Members of 

the Subcommittee: 

Thank you for giving me the opportunity to speak with you today. I am Joan 

Wagnon, President of the Streamlined Sales Tax Governing Board and Secretary of 

Revenue for the State of Kansas. I have also served as a state legislator for 12 

years, Mayor of Topeka for 4 years and president of Central National Bank in Topeka—all helpful experiences in my current capacity with the Streamlined Sales 

Tax Governing Board since SST brings together state legislators and state tax administrators with business interests and local governments. It’s quite a balancing 

act for the Board, but we recognize the importance of respecting the partnerships 

that have been created in this process and continuing to work together. 

I am here today representing the Governing Board and wish to urge Congress to 

recognize that the simplifications we have achieved in our Member State’s sales 

taxes are sufficient to remove the burden on interstate commerce as noted by the 

Supreme Court in Quill v. North Dakota, and sufficiently simplified for Congress to 

allow states to require remote retailers to collect our sales taxes. That’s our goal: 

simplification and mandatory collection. 

My remarks today will attempt to give you some background on Streamlined 

Sales Tax (SST), why it is important to states as well as the business community, 

and why the federal legislation is so important to all of us involved in the project. 

First, retailing is changing rapidly. So rapidly, that in fact, without the federal legislation allowing states to require remote retailers to collect the sales tax on 

interstate sales, whether catalog or internet, states will experience an ever-accelerating loss in their sales tax bases. I have attached an article to my testimony, ‘‘ETailers Launch Holiday Shopping Season’’ that talks about the ‘‘Cyber Monday’’ and 

the push for on-line sales. In the article internet retailers are reporting huge surges 

in sales. One retailer reported ‘‘. . . that traffic soared more than 70 percent and 

sales were up 82 percent as of Monday afternoon. Another reported, ‘‘. . . an almost 

49 percent increase in sales compared with a year ago, beating expectations for 20 

percent growth.’’ 

This continued explosion in growth of online sales is at the expense of the brick 

and mortar stores in our hometowns. The competitive advantage of shopping without sales tax collection is huge. Most consumers don’t remit the compensating use 

tax which their laws have imposed, so the loss to the states is quite real. And that 

loss is growing faster than our sales taxes grow. In Kansas, for example, our sales 

tax collections are flat, and the money coming in from the use tax collected under 

the voluntary SST program because we are a Streamlined state, is quite necessary 

to prevent having to raise our taxes which no one wants to do. 

Second, I’d like to talk a little about SST, how we got started, how many 

states are involved, the Agreement which all of us have adopted, and where we are 

going. 

The rise of the Streamlined Sales Tax Project is an amazing phenomenon—45 

states voluntarily coming together time after time over a period of several years to 

create a voluntary system to demonstrate to Congress and business that we can 

simplify sales taxes. The leadership exerted by the National Conferences of State 

20 

Legislatures, the National Governor’s Association, the Federation of Tax Administrators, and the Multistate Tax Commission was enormously helpful. The commitment and guidance from the business community was remarkable. They have now 

formed a Business Advisory Council that meets regularly to advise the Governing 

Board and have two ex officio members on the Governing Board. In my 20 plus 

years in government, I’ve never seen a coalition like this come together and work 

to solve problems. The result was the Streamlined Sales and Use Tax Agreement 

(SSUTA) which was adopted by the participating states in November, 2002. States 

then set about changing and simplifying their tax laws. 

WHO BELONGS TO THE STREAMLINED SALES TAX GOVERNING BOARD?

The Governing Board was formed pursuant to the Streamlined Sales and Use Tax 

Agreement (SSUTA) on October 1, 2005 by thirteen states which were in full compliance with the SSUTA, representing 20.3 percent of the population of all the sales 

tax states. This accomplishment is unparalled in government history. Certainly 

we’ve had compacts before, and model legislation, but nothing like SST. Five associate states joined with those thirteen full member states making a total of 18 states 

involved since the beginning. An additional four states have joined the Streamlined 

Sales Tax Governing Board since its founding bringing the number today to 22. 

I would encourage you to examine the attached map and listing that shows the 

status of states. On January 1, 2008 Associate Members Arkansas and Wyoming 

will become full members. Washington will become a full member on July 1, 2008. 

Nevada’s petition for full membership will be considered at our Governing Board 

meeting next week in Dallas. These states either had future effective dates in their 

legislation, or had to rework some part of their law to pass the stringent review by 

the Compliance and Interpretations Committee and the full Governing Board. The 

review is indeed, stringent, and some states didn’t make it the first time! It requires 

a 3/4 vote to be admitted and certified that your state’s laws are simplified in accordance with the Streamlined Sales and Use Tax Agreement. Once certified, each 

state has to recertify annually that it didn’t change its laws and come out of compliance. We take compliance seriously! 

Over 28 percent of the country’s population now lives in a Streamlined state. We 

are in constant communication with the other states that support Streamlined, but 

haven’t yet simplified all their laws. We call them Adviser states, and they participate substantively in the State and Local Advisory Council, and on the governing 

board in a limited way as they continue to try to amend their laws in order to join 

with us. I believe there are another 10 states that are likely to join in the next two 

years if we can continue the progress we have made so far. Some states are waiting 

to see if there is movement in Congress, so this hearing is particularly encouraging 

for them. Others need a modification in our sourcing rule which will be discussed 

at the meeting in Dallas next week. 

HOW MUCH MONEY HAS BEEN COLLECTED?

Our Annual Report which is attached notes several successes in this past fiscal 

year. One of the greatest is the amount of tax collected by the sellers who have registered on the Streamlined registration system. The sellers registered on the Governing Board’s registration system collect sales taxes for the member states. Member states report that those sellers who registered voluntarily to conduct business in their states collected $88,958,093 in sales tax for the 2007 fiscal year. 

This represents tax that was owed but would otherwise not have been collected or 

paid to those states. 

HAS THE SYSTEM BEEN SIMPLIFIED? ABSOLUTELY! 

These collections were made possible, in part, because the Governing Board contracted with three Certified Service Providers to provide services, free of charge, 

to remote sellers to collect and distribute these sales taxes. What could be simpler? 

The payments to these CSP’s come from the new money that is collected. A fourth 

company is in the process of being certified. All reporting is electronic on a simplified reporting form used by all states. The development of this single form and 

the ability to transmit electronically is a huge accomplishment and simplification. 

A Rates and Boundaries data base, provided by each member state, ensures 

that the monies collected go to the appropriate jurisdiction, and CSP’s and retailer 

are held harmless if they use these state tools and they inaccurately distribute the 

funds. In the past, concerns have been raised to this Subcommittee about the existence of software to handle this tax collection function. While software has been 

available for a number of years, what was missing was the accurate information 

21 

about tax rates and district boundaries. These Rates and Boundaries data bases 

make it possible to collect taxes at the destination of the goods and services. 

The Governing Board maintains a web site with a central registration system, 

making it easy for these remote retailers to register, and also provided amnesty during the first 12 months in order to encourage retailers to register. Every effort is 

made to balance the burden, relieve sellers of responsibility when the state doesn’t 

function or makes an error, and to work electronically. 

As of November 28, 2007 there were 1,072 companies registered on the Governing 

Board’s centralized registration system. The system asks sellers to choose a ‘‘model’’ 

which indicates whether the seller will utilize the services of a certified service provider or a certified automated system (CAS) or will file and pay their sales tax using 

their own system. One hundred nine of the registered sellers stated they were using 

a CSP, 53 said they would use a CAS, and 910 said they would use their own system to collect and report sales tax to the member states. These sellers range in size 

from the very large to the very small pure internet sellers. 

The Agreement, itself, has been modified regularly since it was first signed, largely to embrace issues, such as the handling of digital products, which were not included in the original agreement. The basic simplification requirements remain unchanged; however some issues just simply needed more discussion and those have 

been the subject of the amendments. It is envisioned that changes in the future will 

be fewer and much further between since the large number of unresolved issues has 

now been addressed. Although a few contentions issues are still on the Dallas meeting agenda, it is expected that the Governing Board will turn its attention to trying 

to recruit more states, and become more active with the federal legislation. 

Other simplification has been achieved in the form of a single, simplified report 

form, electronic registration and reporting, uniform product definitions, 

availability of a certified service provider for collecting and reporting to 

the states, uniform sourcing and rounding rules, elimination of caps and 

thresholds, state administration, consistency between local and state tax 

bases, and a host of other things, most of which are included in your legislation, 

H.R. 3396, section 6. Although the Governing Board has not formally compared the 

Agreement to this particular piece of legislation, Mr. Scott Peterson, our Executive 

Director and I agree that all the requirement of that section are in place now, with 

the exception of the rules and regulations for dispute resolution, which fortunately, 

we have not needed to date. Those are on our list to accomplish in the near future. 

WHAT’S NEXT?

There are still a few issues to resolve and they are being worked on in the State 

and Local Advisory Committee and will reach the Governing Board this year, some 

as early as December 11, 2007 in Dallas. 

• A review of the direct mail and delivery definitions and rules. 

• A review of the replacement taxes definition. 

• A review of the rule on software maintenance contracts. 

• A review of the florist sourcing issue paper. 

• A review of the Energy Star products definition for sales tax holidays. 

• A review of the sales price/sale for resale definitions. 

The biggest issue is to expand the sourcing rule, while retaining uniformity, to 

allow for origin sourcing in-state for those states that have been unable to convert 

totally to destination sourcing. (The current rule says that the source of a sale, i.e., 

where the tax is applied, is where the goods are delivered, not where the sale originated. About half of the states use origin sourcing—where the sale was made—as 

the place where the tax is applied. This is quite a change for certain businesses, 

such as furniture stores, pizza delivery places, etc.) Texas, Ohio, Tennessee, Utah, 

Virginia, Illinois, New Mexico, Missouri have all been participating in the refinement of the current rule as well as members of the Business Advisory Council. Several alternatives are on the table for discussion in Dallas next week. 

The SST Executive Committee, officers and I will be approaching other states that 

are interested in becoming member states to see if we can assist them. Scott Peterson and I have visited with the tax reform commissions in Massachusetts, and Connecticut. There is interest in both states. Several southern states are also interested 

and we plan to visit them in the coming months to assess their interest and potential participation. 

Finally, with regard to H.R. 3396, the Governing Board stands ready to work with 

this Subcommittee as you mark up the bill and try to resolve the remaining outstanding issues. The important thing to remember, however, is that the basic frameVerDate Aug 31 2005 12:13 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 H:\WORK\COMM\120607\39479.000 HJUD1 PsN: 39479
22 

work of the bill mirrors the current Streamlined Sales and Use Tax Agreement. The 

provisions in Section 6 are included in the Agreement as it exists today. We have 

met and exceeded the threshold provisions for numbers of states, and percent of 

population. The Governing Board is operating smoothly, has excellent staff, and can 

continue to expand as required. We are in the process now of analyzing what 

changes we might have to make to conform to the legislation as written, or any suggested changes when you mark up the bill. 

On behalf of the Governing Board, I urge you give states the ability to require 

remote sellers to collect our sales tax and use the authority to overturn Quill that 

the Supreme Court acknowledged Congress has. Please pass H.R. 3396. 

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Ms. SA ́ NCHEZ. Thank you, Ms. Wagnon. Your time has expired. 

And I am told that the lights are actually not working. 

Ms. WAGNON. They are not working. I had no idea where I was. 

Ms. SA ́ NCHEZ. We are employing them, they just aren’t working. 

So we are resorting to good, old fashioned ingenuity. We will let 

you know when you have 3 minutes remaining and when you have 

1 minute remaining. We do have the timer up here. So thank you 

for bearing with us. 

Okay, we just roll with the punches. What can I say? 

I want to thank you for your testimony. 

And I want to invite Mr. Zakrzewski to please proceed with his 

testimony. 

TESTIMONY OF WAYNE ZAKRZEWSKI, ESQUIRE, VICE PRESIDENT, ASSOCIATE GENERAL COUNSEL—TAX, J.C. PENNEY 

CORPORATION, INC., DALLAS, TX, ON BEHALF OF THE NATIONAL RETAIL FEDERATION 

Mr. ZAKRZEWSKI. Thank you, Chairwoman Sa ́nchez, Chairman 

Conyers, Ranking Member Cannon, and Members of the Committee. We appreciate the opportunity to talk with you this morning. 

I am Wayne Zakrzewski. I am vice president and associate general counsel for tax for JCPenney. I am here to talk to you on behalf of JCPenney and our trade association, the National Retail 

Federation to speak in support of Mr. Delahunt’s bill, 3396. And 

both on behalf of Penney and the National Retail Federation we 

urge your support for this important piece of business legislation. 

As a representative of JCPenney, I have been involved with the 

streamlined sales tax project since its beginning. I currently serve 

as a member of the board of directors of the business advisory 

council to the governing board and as co-chair to the steering committee for the joint cost and collection study. JCPenney is a multi-state retailer. We have got $20 billion in 

sales. And those sales occur through both our stores, catalogue, and 

an Internet business. Our Internet site is one of the top largest 

Internet sites for selling apparel and home furnishings. 

And to give you a picture of how that business is growing, in 

2002, we had $400 million in sales through our Internet business. 

This year we should hit $1.4 billion. In that short period of time, 

that business has grown by three-fold. True, some of that business 

is moving customers from the catalogue to the Internet, but this 

represents a remarkable growth in the Internet marketplace, which 

has got to be paid attention to. 

So we are here to ask you today to level the playing field between sellers like JCPenney who are required to collect tax because 

we have physical stores and those people who exploit the marketplace in your States virtually rather than through physical presence. We remit $1.2 billion in sales tax each year. And that $1.2 

billion that we collect and our competitors don’t give them a competitive advantage, not because they provide innovation or value to 

the customer, but because they are not required to collect sales tax. 

We believe there are compelling reasons that you should act now 

to allow the streamlined States to require collection. Primary 

among those is the simplification and uniformity the streamlined 

38 

agreement has provided and Chairman Wagnon has just described 

to you. We believe, though, that—we commend them for this effort, 

but we believe a lot more States would participate if they were rewarded for this difficult effort by having the ability to require remote sellers to collect the tax that is due from their customers. 

We support this bill because we believe it would strengthen the 

streamlined agreement by mandating, by mandating that certain 

levels of uniformity and sophistication and simplification be maintained and providing an enforcement mechanism to ensure compliance. In the past there has been a major stumbling block to you 

all acting on this proposal. And that is the concern that collection 

places on businesses, particularly small businesses. 

That burden is illustrated by the results of the cost of collection 

study that I chaired. That study was conducted by a group of businesses and government organizations interested in streamlining 

who wanted to measure the cost that collecting would place on 

business. The result of this study showed that over all businesses 

the cost of collection under the current system was 3.09 percent of 

the sales tax collected. 

If you break that down by business size, for major—for large 

businesses with sales over $10 billion, that cost was 2.17 percent. 

For mid-sized businesses, it was 5.2. And for small businesses, it 

was 13.4 percent. 

This demonstrates that there is a significant burden on all businesses and that it is significantly more for small businesses. We believe, though, that the right way to relieve that burden is not necessarily through a small business exception, but to provide for reimbursement for all businesses based on this cost of collection 

study. 

Rather than having to draw a single line between all business, 

if you provide for reimbursement, it is a fair system. It also eliminates the burden generally on interstate commerce by providing for 

reimbursement to all sellers. And it takes care of that burden by 

removing it through compensation. So again, we would like to urge 

you to support this and think about this as an alternative. 

[The prepared statement of Mr. Zakrzewski follows:] 

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PREPARED STATEMENT OF WAYNE ZAKRZEWSKI


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Ms. SA ́ NCHEZ. Thank you, Mr. Zakrzewski. We appreciate your 

testimony. You came in right under the 5-minute mark. 

We have been summoned across the street for votes, the bells 

that you have heard. So we are going to take a recess to allow 

Members to cross the street to vote. And hopefully in that time we 

will also get a page in here to look at the lighting system. And we 

will reconvene immediately after the last vote. 

[Recess.] 

Ms. SA ́ NCHEZ. I am going to call the Subcommittee back to order. 

And I want to thank the witnesses for their patience. I believe we 

are now to Mr. Isaacson. 

So, Mr. Isaacson, I would invite you to begin your testimony. 

TESTIMONY OF GEORGE ISAACSON, BRANN & ISAACSON, 

LEWISTON, ME, ON BEHALF OF THE DIRECT MARKETING ASSOCIATION 

Mr. ISAACSON. Thank you, Madam Chair and Members of the 

Committee. On behalf of the Direct Marketing Association and its 

more than 4,700 member companies, I want to thank you for the 

opportunity of testifying today and to discuss with you serious concerns that I have, both as an attorney who has practiced in the 

field of sales and use tax law for more than 20 years and also as 

a teacher of constitutional law at Bowdoin College. 

I have serious concerns that the bill which this Committee is considering would undermine core constitutional principles that have 

served this Nation well for more than two centuries and would also 

erect a tax compliance barricade across the electronic highway to 

the detriment of the very small businesses and medium-sized businesses that have had the opportunity to access the unified national 

market that the commerce clause has created. 

Advocates of the STA have stated that they believe that it is 

worth abandoning these constitutional principles because of the 

lost sales tax revenue that they believe that they are suffering. The 

real problem is that the numbers that are used are totally illusory. 

And Mr. Cannon referred to the discrepant numbers that exist 

between the University of Tennessee study and the recent study 

that was undertaken by the Direct Marketing Association. And the 

question then becomes why are these figures so different. And I 

think that there are three basic reasons. 

The first reason is that the growth of electronic commerce just 

has not been the rocket sled that was predicted in the University 

of Tennessee study. Growth rates have been much more modest 

than those predictions anticipated. And that fact has been admitted 

by the authors of the study. 

The second reason and one which is oftentimes missed in this 

discussion is that 90 percent of electronic commerce, these huge 

numbers that you hear, are business-to-business sales. And in the 

business-to-business sales community, there is very little loss of 

sales tax revenue. And that is because most of those sales are either exempt sales that are made as sales for resales or sales in connection with the manufacturing process or businesses self-report 

their tax liability to State revenue departments. 

A recent study undertaken by the Washington State Revenue Department reported that for Internet sales that are made between 

45 

businesses, 85 percent of the sales tax is, in fact, collected. So the 

notion that there is this sieve of lost revenues is not accurate, even 

when you look at what the overall volume of Internet sales may be. 

And perhaps the most significant reason why the University of 

Tennessee study is inaccurate is because of the fact of multi-channel merchandising, which has really become the predominant clicks 

and bricks phenomena that, again, Mr. Cannon, described. Most 

companies that use the Internet to expand their market, develop 

brand equity, provide customer service find that it is to their advantage to open retail stores or other customer service facilities, 

create nexus in States, and then commence use tax collection. 

In effect, the problem that has been described is largely a selfcorrecting one. And certainly, much of these figures that we described from Cyber Monday are by companies that are clicks and 

mortar retailers, are collecting the tax. In that regard, the issue is 

simply not one that reflects the kinds of numbers that are frequently bandied. And I think we need to be very cautious before 

surrendering long-established constitutional standards based upon 

illusory figures. 

In my opinion, the streamlined sales tax project has been the 

wrong approach to this issue. Unlike most uniform laws which are 

submitted to the Uniform Law Commission that consists of distinguished jurists, law school professors, practicing attorneys, and has 

produced such works as the uniform commercial code, the Uniform 

Division of Income for Tax Purposes Act, the famous UDITPA law 

that State practitioners are very familiar with. That process wasn’t 

followed in this instance. 

Instead, this was essentially a government-only exercise. And I 

think in being a government-only exercise, an agreement negotiated by tax administrators for tax administrators, the project 

failed to take on some of the key areas of needed tax reform that 

had been recommended to it by the previously congressionally authorized advisory commission on electronic commerce and by the 

National Tax Association Project that looked into this same issue. 

So, for example, the project early on abandoned the idea of reducing the more than 7,600 different tax jurisdictions in the United 

States. It failed to address the issue of one rate per State. It failed 

to address the issue of having a single audit for companies that 

were registered under the agreement. It failed to come up with 

even a uniform definition for selling price, which is the core concept 

that underlies the application of a sales tax rate. 

The fact that these issues were simply not addressed because 

State laws were already too discrepant to reach conformity on 

those issues shows that there was a low bar that was established 

at the beginning of the project. Perhaps even more problematically, 

however, is that the STA has been a moving target. 

It has had more than 70 different amendments since it was 

adopted in 2002. And most of those amendments have been for the 

purpose of diluting or simply eliminating conformity provisions 

that were previously in the original agreement that was adopted. 

That is not the right direction for sales and use tax reform. And 

there are 20 more amendments that are going to be considered by 

the governing board at the meeting next week in Dallas. 

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Ms. SA ́ NCHEZ. Mr. Isaacson, your time has expired. But hopefully 

we will be able to follow up with your testimony during the round 

of questions. 

Mr. ISAACSON. Thank you. 

[The prepared statement of Mr. Isaacson follows:] 

PREPARED STATEMENT OF GEORGE S. ISAACSON


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Ms. SA ́ NCHEZ. Thank you so much. 

At this time, I would invite Mr. Rauschenberger to begin. 

TESTIMONY OF STEVEN J. RAUSCHENBERGER, RAUSCHENBERGER PARTNERS, LLC, ELGIN, IL, ON BEHALF OF THE NATIONAL CONFERENCE OF STATE LEGISLATURES 

Mr. RAUSCHENBERGER. Good afternoon—or good morning still, I 

guess. I appreciate the opportunity to be here. 

I am Steve Rauschenberger, past president of NCSL, a former assistant Republican leader in the Illinois State Senate, third generation retailer and an accountant by education. The National Conference of State Legislatures is a bipartisan national organization 

representing every State legislature from all 50 States and our Nation’s commonwealths, territories, and possessions and the District 

of Columbia. 

I am pleased to have the opportunity to appear before you today 

in support of H.R. 3396. But I have to tell you this. My spending 

15 years in the Illinois Senate, much of it in hearing rooms and 

chairing the appropriation committee for 10 years of testifying in 

Congress on four separate occasions in the past, I am nervous 

today because today’s it is not just a good idea I am representing. 

I am representing the work of hundreds of people who have devoted literally thousands of hours and effort and compromise to try 

to figure out a way to bring the States together. 

I am representing the active involvement of 35 States through 

their legislative leaders and the executive branches. More than 37 

States have taken action in both chambers or through executive 

order to participate in this process. I am commenting in favor of 

what I think is the most important piece of legislation to sustain, 

to reform, and stabilize our world-admired system of federalism 

that 50 sovereign States and an indivisible union that I have ever 

been involved with. 

So I am a little nervous. It is because I care a great deal about 

this issue. And it is much more important than I think people realize. 

You have heard a lot about the substance and the structure. 

Maybe, you know, I can touch on some of the soft balls that need 

to be added out of the ballpark a little bit. 

What this bill in combination with the streamlined sales tax 

agreement does is it levels the playing field so businesses that play 

by the rules that have been traditional retailers are treated equally 

with everybody using cyber to a sort. I am in favor of Internet retail. I think it is a wonderful thing. It expands the assortment. It 

strengthens the American economy. 

But we should have a tax system that treats all transactions of 

like transactions in similar ways from a tax point of view. The 

streamlined sales tax together with this bill provides stability for 

State and local revenues. So whether there is a treasure hidden 

somewhere under the sand or not, equity doesn’t require justification. I mean, that is what our tax laws should be pursuing. 

This provides both administrative and liability relief for businesses that adopt the modernized sales tax. States accept the responsibility to compensate retailers for the cost of collection. The 

bill includes protections for small retailers who have sales of less 

98 

than $5 million over the Internet so they don’t have to come into 

compliance with this. 

It retains and protects State sovereignty and tax competition between the jurisdictions, which is something we all believe in. It retains local governments’ rights its States’ granted to impose sales 

taxes on their own. And it recognizes in a way other things don’t 

the political realities of adopting reform in a complex economy, in 

a complex country under our laws. 

Taxes are never popular. However, if State and local governments are to have the necessary resources to provide education and 

homeland security and public safety, then we need to maintain 

their ability to levy taxes. In surveys across the Nation, the tax 

that is least disliked is, surprisingly, the sales tax. 

When you think about it, sales taxes when they were first imposed in the 1930’s customers bought goods from local merchants. 

There were very few remote sellers. 

In the 1970’s and the 1980’s we saw more goods being sold by 

remote mail order sellers and without collection of tax. This was 

adjudicated in the court cases of Bellis, Hess in 1967 and reaffirmed by the Quill decision. What we have tried to do rationally 

since 1999 is to pull together legislative leaders and business leaders, executive branch, tax commissioners and try to come up with 

a solution to the change in commerce that adopts State laws. 

This is not replacement of sales tax law in the 50 States with 

some new model act, which maybe the UCC would be. It is a convergence of State policy. It is complicated necessarily because it is 

designed to protect and to defend State sovereignty at the same 

time it provides local options and local resources. 

I am going to wind up real quick because I can tell you lots. I 

could do this for about 45 minutes and probably bore you to death. 

But, you know, let me end by reminding you. You know, it is wonderful that the uniform commercial code went to the uniform group 

on laws. I think it took about 40 years from the beginning of the 

adoption of that to its last adoption. 

We are in an Internet age. And the challenge is are States going 

to be able to conform and to change and adapt to the changing environment, whether it is our taxes, whether it is a regulation of 

professions, whether it is a regulation of insurance. 

This is a fragile flower of reform that has been brought along by 

people working very hard. I hope you treat it delicately. I hope you 

treat it thoughtfully. I couldn’t disagree more with some of the representations from the previous distinguished speaker. And if we get 

to him in questions, I would be happy to try to knock some more 

out of the park. 

[The prepared statement of Mr. Rauschenberger follows:] 

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PREPARED STATEMENT OF STEVE RAUSCHENBERGER


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Ms. SA ́ NCHEZ. Great. Thank you, Mr. Rauschenberger. 

We will now begin our round of questioning. And I will begin by 

recognizing myself for 5 minutes. 

My first question is for Ms. Wagnon. In establishing a uniform 

set of rules, one of the heated discussions that a uniform rule—for 

a uniform rule is the issue of sourcing for sales taxes and whether 

the taxing should be based on the destination of the goods or the 

origin of the goods. As the secretary for revenue of Kansas and 

knowing that Kansas has altered its sales tax system, what insight 

can you provide about the change from destination to origin 

sourcing? 

Ms. WAGNON. It was painful. I think the concept of using destination sourcing makes sense. But it does require an adaptation 

on the part of, in Kansas, about 25 percent of our retailers. And 

we had to provide the rates and boundaries database. We had to 

provide consistent assistance. And I am still sending some of our 

technical staff from revenue out to companies that deal in many jurisdictions. We have 750 jurisdictions. 

We made the conversion because all of us believe from the governor to the Republican and Democratic leadership that this was 

an appropriate thing to do. But the political reality is that there 

are 10 States or more that some of which are associate member 

States now that have tried and simply cannot get that done. The 

state of Texas is very interested in being part of this. 

They were involved from the very beginning. But they don’t see 

this as politically possible. So we are now considering on the governing board next week an option to allow for origin sourcing instate and uniform among any State that would adopt that. So it 

would be an addition to our sourcing rule. 

It would still be uniform so you won’t have all origin States doing 

everything differently, but one rule. And then for the remote sales, 

either destination sourced. Or the other proposal that is being considered is a single rate. And we will be debating that and making 

a decision. I think the political reality is it simply is not going to 

accommodate all the States that need to be there with the rule that 

we have in place. 

The state of Washington has its deadline for making its conversion on July 1 of 2008. Arkansas has made a conversion. Iowa 

made some changes. But Ohio has been unable to do it. Utah has 

been unable to do it. Tennessee has been unable to do it. 

And we are trying to adjust so that we can bring in these other 

groups. I hope that is sufficient. 

Ms. SA ́ NCHEZ. Thank you. 

Mr. Zakrzewski, some opponents of the SSUTA and the legislation Mr. Delahunt has introduced argue that the collection and remittance of sales tax by remote sellers would impede electronic 

commerce. And I know that you are a representative of a company 

that conducts business online. So in your experience, would the requirement of collecting and remitting sales tax impede electronic 

commerce? 

Mr. ZAKRZEWSKI. It shouldn’t impede electronic commerce. Today 

you have to have a system that takes your order and records it and 

tells the customers what the price is. 

119 

With the streamlined sales tax project, the project provides software and certified service providers that will come in and attach 

to your system and collect the tax and tell your customers how 

much that tax is. So to me it is really not a legitimate concern that 

that would impede commerce because not only can you do it, you 

are doing it at least in the State where you are located today and 

software to do it for a multi-state is free. 

Ms. SA ́ NCHEZ. So with the emerging technology you have found 

a solution to that particular problem? 

Mr. ZAKRZEWSKI. That provides a solution to these sellers. 

Ms. SA ́ NCHEZ. Thank you. 

Mr. Isaacson, is there any policy reasons why the medium to 

which a particular good is sold to the consumer should dictate 

whether it is subject to sales tax? The question specifically is is 

there anything about the Internet that suggests sales of goods ordered over that medium should not be taxed? 

Mr. ISAACSON. The issue is not whether goods should be taxed 

if they are sold over the Internet or not. As I pointed out before, 

multi-channel merchants who are selling over the Internet such as 

JCPenney are collecting. And a large number of the largest companies are, in fact, doing so. So that is not the issue. 

The issue is whether a company that has no presence within a 

State does not benefit in any way from any services being provided 

by that State, does not get tax increment financing for building 

new facilities or getting bypasses and access roads built to its 

stores, who has no political role in that State whose employees are 

not voting in that State, whether it is appropriate for a 7,600 tax 

jurisdictions to be able to export their unique and non-unifying tax 

systems across their State borders to 49 other States. That is the 

issue the Supreme Court has repeatedly addressed and has said 

that the commerce clause protects commerce from that type of approach. 

It also happens to be the reason the commerce clause was adopted in the first place. What was happening in 1878 and the reason 

why the convention was called in Philadelphia was because States 

were imposing tariffs, duties and taxes on each other’s trade and 

the country was going into a depression. And the commerce clause 

is what created the unified market to prevent them. 

Ms. SA ́ NCHEZ. Thank you. I see my time has expired. 

So I will recognize Mr. Cannon for 5 minutes. 

Mr. CANNON. Madam Chair, would you mind if I deferred my 

time? 

Ms. SA ́ NCHEZ. Not at all. 

We may do a second round, depending on the interest of questions. 

Mr. CANNON. I shall do everything in my power to help us get 

done in one round. 

Ms. SA ́ NCHEZ. Okay, Mr. Delahunt, you are recognized for 5 minutes. 

Mr. DELAHUNT. Thank you, Madam Chair. I was going to direct 

my question to the three panelists other than Mr. Isaacson. Mr. 

Isaacson made the statement that this was a government exercise. 

The implication being that we are a bunch of bureaucrats stuck in 

120 

a corner someplace. At least this is the way I interpret. And maybe 

I am mischaracterizing. 

But would you explain to me—maybe there was some packet of 

missions that weren’t allowed in or maybe even a professor of constitutional law at a fine institution, a fine ivy college up in Maine 

didn’t participate. But the point is I think it was misleading because—and why don’t I address it to Secretary Wagnon. 

How did this come about? 

Ms. WAGNON. Well, I think—— 

Mr. DELAHUNT. What was the process? I know you have had numerous amendments. And I congratulate you, by the way, on having numerous amendments. I think what that reflects, at least 

from my vantage point, is an effort to get it right and to do it well 

and to attempt to look at a very complex problem and to achieve 

a balanced resolution. 

Ms. WAGNON. And I think that is exactly correct. It started out 

with governors, State legislators, and business representatives as 

well as tax administrators. The members of the governing board 

are selected by the State. Some of them are business representatives. 

Mr. DELAHUNT. If I may, Madam Secretary. The National Governors Association, I know, in the past has taken a position on earlier versions of the bill that is before us. Are you aware of their 

position on this particular legislation? 

Ms. WAGNON. Yes, I am. We work very closely with NGA, NCSL, 

the Federation of Tax Administrators, all of the organizations that 

they support. 

Mr. DELAHUNT. What is their position on this bill? 

Ms. WAGNON. They are supportive of this. 

Mr. DELAHUNT. Do you know how many of the governors have 

indicated their support for this particular or earlier versions of this 

legislation? 

Ms. WAGNON. It is a little difficult for me to answer that because 

governors keep going in and out of office. 

Mr. DELAHUNT. I know. They keep coming and going. 

Ms. WAGNON. And Governor Leavitt was a good example of a 

leader early on who is now no longer in that position. But the fact 

that 22 States have embraced this legislation and governors have 

signed it—there is a minimum of 22 and probably 10 more that 

were involved earlier. The NGA has consistently had a position on 

this legislation in support of it. And that is true also for the National Conference of State Legislatures. 

Mr. DELAHUNT. Let me go to Mr. Rauschenberger and ask him 

to respond to both of those questions. 

Mr. RAUSCHENBERGER. I am happy to have the opportunity because I don’t think it is the only thing Mr. Isaacson got wrong. I 

have been involved since—— 

Mr. DELAHUNT. Well, don’t—— 

Mr. RAUSCHENBERGER. You know State legislators. You shouldn’t 

let us near microphones anyway. Since 1999 I had been a co-chair 

of a task force that NCSL has had to work on this issue. I have 

never participated in a meeting that wasn’t a public meeting. We 

spend more time with members of the business community. It is 

why we have so much broad-based business support. 

121 

There is only a single association I am aware of that they looked 

hard to find that was in opposition. So to say that this was done 

by bureaucrats—this was done by elected officials and people representing the business community together with people who understood the tax system, which makes sense to me. 

To the question of support, NCSL has supported this effort since 

1999, which requires a majority, I think 70 percent, of the 50 

States to be in support at all times for us to have stayed in continuous support of this. We have had a lot to do with drafting it. 

And I think the number I recall is—I think it was Franklin who 

presented more than 50 changes to the Constitution before it was 

finally ratified. The amendment process is about seeking perfection, not about confusion about goals. 

Mr. DELAHUNT. And let me just make a comment, too. I think 

you said something here that is very significant. We do have a 

unique system of federalism. And I think it is very important for 

this Congress to respect federalism. 

I happen to embrace the concept of devolution and States’ rights. 

Sometimes I am surprised at my colleagues of your party that seem 

to believe that Washington knows best in terms of what the States 

ought to do or ought not to do. 

But out of respect for the States I think it is important that we 

understand that this is about sustaining that system of federalism 

and conferring to the States the power to raise revenue which is 

justifiably there. I want to commend you all for really a tremendous effort and for the significant progress that you have achieved. 

I wish we could do the same here in the United States Congress. 

And with that, I will yield back. 

Ms. SA ́ NCHEZ. The gentleman yields back. 

Mr. Cohen is recognized for 5 minutes of questions. 

Mr. COHEN. Thank you, Madam Chair. 

First, I would like to say hello to my former colleague and good 

friend, Mr. Rauschenberger. 

It is good to see you. 

Mr. RAUSCHENBERGER. Good to see you. You look taller and better now. 

Mr. COHEN. It is Congress. We have a great basketball team. 

Tennessee is a State that is heavily sales tax reliant and yet has 

been somewhat reticent, maybe, to become a full-fledged member. 

And I probably should know the answer to this. But can you tell 

me why Tennessee, a State so starved for revenue, is an associate 

member and hasn’t joined in? 

Mr. RAUSCHENBERGER. The sourcing complications of the local jurisdictions have been a hard bite for both chambers in Tennessee 

to embrace. Most of the States that are having trouble coming into 

compliance it is around the changes required and the risks that are 

assumed by the local jurisdictions in the sourcing change and its 

effect on local revenues. States that have kind of bridged that gap 

have done it. 

And I think Washington is one of them which actually set aside, 

directed the set-aside of a major portion of the new increment revenue and used that as a hold harmless to kind of solve the local 

jurisdictional problems. But that is my best understanding right 

now. 

122 

Mr. COHEN. And I have thought about this issue. And, of course, 

Mr. Isaacson, I read your statement. There is a lot of revenue 

that—your brief or the brief that is attached to it questions how 

much revenue the Tennessee study suggested we might be losing 

in Tennessee. But there is considerable revenue, and there is the 

years to come of revenue. When you have a State like Tennessee 

and there are only a handful that don’t have an income tax and 

that are relying on the sales tax. It really does deprive people of 

basic services because you have got a progressive tax system. 

And if you have a State, Mr. Isaacson, with a progressive tax 

system like Tennessee has and others without any major source 

like oil or gambling, Nevada, Texas, and those other States that 

don’t have any income tax, how would you suggest that they survive in the future years to provide the services to people that need 

education and health care and help with the utility bills? Should 

they just kind of let e-commerce grow and grow and grow and their 

sales base just decline? 

Mr. ISAACSON. It is a fair question. And I think that there is a 

clear answer to your question. I think the starting point has to be 

understanding what are the numbers that we are dealing with. 

If you look at the United States Commerce Department figures 

in regard to those States that are currently full members and 

based on that commerce department data, the lost tax revenue is 

$145 million. So dealing with what is the scale of the issue, I think, 

is significant. 

One of the reasons why Tennessee has not wanted to participate 

in this process is that Tennessee has had different tax rates or different kinds of products, agricultural products, heavy equipment, 

for example, different tax rates, and not wanting to conform to the 

tax regime or protocol that the SSUAT has called for. That is part 

of their sovereignty. That makes sense. 

The real reality is that this problem is largely self-correcting because companies do start collecting as they expand their businesses. The incubator is electronic commerce. The long-term business plan is to leverage grand equity, establish retail stores, provide after-sale customer services and by doing so, establish a 

nexus. That is what we are seeing in all of the major large retailers. And I think it is a development that says that we don’t need 

to be concerned about the future in the manner that has been described by my co-panelists. 

Mr. COHEN. I hope you are right. We have been waiting for Saks 

to come to Memphis for a long time. 

Mr. Rauschenberger says that they searched long and hard to 

find you. Are there other business groups that are against this proposal that you are familiar with? 

Mr. ISAACSON. I don’t know what he means by long and hard. 

When the project began in 2000, the Direct Marketing Association 

submitted 30 suggested reform proposals. And I met with the leaders of the organization at that time. 

Of 30 proposals that were recommended by the Direct Marketing 

Association, only one was adopted. 

Mr. COHEN. I don’t think that—other than the Direct Marketing 

Association, other business or commercial groups that are in opposition to this. He said that you were kind of a singular—— 

123 

Mr. ISAACSON. There are. And I don’t speak for them. Some of 

them are in the room today. 

Mr. COHEN. They are in the room? 

Mr. ISAACSON. I believe so. I have been talking to them. I haven’t 

looked behind me while I have been questioned, but they were here 

earlier today. 

Mr. COHEN. Some of them are nodding their heads. We will figure out who they are later. 

I appreciate you on that. And I really appreciate the work of the 

NCSL. It is well-represented here. And there are two of your predecessors, I guess, were Claybough and—Bill Claybough and Matt 

Kisworth. They were great State legislators—— 

Ms. SA ́ NCHEZ. The gentleman yields back? 

Mr. COHEN. I do. 

Ms. SA ́ NCHEZ. The gentleman yields back his time. There is sufficient interest on the part of Members of the Committee and a second round of questions. 

Mr. CANNON. I think actually this is still the first round. But, I 

mean, I understand there is a second round. 

Ms. SA ́ NCHEZ. I apologize. You are correct, Mr. Cannon. You are 

recognized for 5 minutes. 

Mr. CANNON. Thank you, Madam Chair. 

I appreciate you all being here. 

We appreciate, Ms. Wagnon, the update. I think that is the only 

new thing that is on the table today. And that is appreciated. 

And, Mr. Isaacson, you know, you said it all very well. And then 

frankly now, Mr. Rauschenberger and I probably need to go back 

and punt a little bit because we have had this same discussion 

many, many, many times. And to suggest that there is error in 

your thinking, I think, is appropriate. Personally we have looked 

at all the data, I think, and we have not seen errors in your presentation. That was very concise. I think this is probably the fourth 

time you have made a presentation like this to this Committee. 

And that was by far the most elegant, not new particularly, but 

well-done. 

Let me see if we can get some basic consensus on issues here. 

And I do this in the context of many other hearings. But do we 

have a basic consensus among the panelists, for instance, that the 

Internet is one of the major drivers for economic growth in America? 

Ms. Wagnon? 

Ms. WAGNON. I would agree with that. 

Mr. CANNON. Well, we have unanimous view on that, which is 

good because that means we are all in America, we are all recognizing what is going on. 

Is there unanimity on the idea that there is a tendency for ideas 

on the Internet—remember, we have these hierarchies. You have 

got business-to-business as far as you getting taxes paid. And I 

think Mr. Isaacson laid those out. And I don’t think there is much 

disagreement with that. 

But in the environment where you are getting new ideas on the 

Internet, is there any disagreement by anybody on the panel that 

the tendency of those new ideas as they succeed is to become multiVerDate Aug 31 2005 12:13 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00127 Fmt 6633 Sfmt 6601 H:\WORK\COMM\120607\39479.000 HJUD1 PsN: 39479
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channel, which means they tend to become not just clicks, but 

clicks and bricks? 

Ms. Wagnon? 

Ms. WAGNON. I think there are going to continue to be a rise in 

the number of pure Internet retailers. The figures that I saw in the 

New York Times last week—— 

Mr. CANNON. Pardon me. I agree with you on that. But the question is as you get this increase in retailers, is there a tendency for 

those to—as they become successful, is there a tendency to move 

into bricks so that you have nexus. 

Ms. WAGNON. And I would not agree with that. I think we have 

seen a number who have registered that are in that situation 

where they are multi-channel clicks and bricks. But there are 

many out there that are going to never adopt that model. So I 

would dispute that. 

Mr. CANNON. Can you tell me what is it about those that means 

they won’t adopt the model? 

Ms. WAGNON. They don’t want a brick and mortar store. They 

like to remain pure Internet sellers. 

Mr. CANNON. But if they succeed and they brand themselves, 

won’t they tend to want to become multi-channel? 

Ms. WAGNON. I don’t think you can State that universally, no, 

sir. 

Mr. CANNON. No, no, no, this is not universal. I am suggesting 

there is a tendency. I think I used the word trend or tendency for 

successful stores to go multi-channel. 

Ms. WAGNON. I think the trend is that the stores that are successful—the most recent one that was announced in the paper was 

like Cabella’s, which have separated everything. They are going to 

multi-channeling so that you can return the goods in the stores. 

Mr. CANNON. Right. 

Ms. WAGNON. So if you have a store there, the tendency is to 

adopt that. But you also have to understand that that is not going 

to solve your tax problem if you haven’t broken in yet. 

Mr. CANNON. Okay. But we are just looking for broad consensus 

on trends here. And Cabella’s, of course, is a great example because 

the fact is—and I think Wal-Mart was probably the first that tried 

to have separate channels and then went back to a merging because people want to return their items to a store. It is easier to 

return to a store than it is to put it back in a box. 

But that would argue for the underlying trend. Now, you may 

have boutique operations forever, but an operation that has less 

than $5 million in revenue is exempted, so you don’t care about 

those little guys. 

Ms. WAGNON. Well, Amazon doesn’t have a store that I am aware 

of. 

Mr. CANNON. Amazon is one of the uniques, I grant you that. 

Ms. WAGNON. And they are huge. So I think there are two 

trends, sir. That is my point. 

Mr. CANNON. No, no, the point is not that all stores will become 

multi-channel. And clearly, Amazon is one of those very interesting 

cases where they are struggling and trying to figure out where they 

are going. They are competing with companies that have advantages because they have clicks and bricks. 

125 

And so, Barnes and Noble is where somebody can go and drink 

coffee and read a book and then decide to buy it. Barnes and Noble 

is a place where you can just stop on your way to work and pick 

up a book if there is something you wanted to read. So there are 

advantages to both places. 

Mr. Zakrzewski? 

Ms. SA ́ NCHEZ. Zakrzewski. 

Mr. ZAKRZEWSKI. Zakrzewski. 

Mr. CANNON. Do you pronounce the second z? 

Mr. ZAKRZEWSKI. Zakrzewski. 

Mr. CANNON. Zakrzewski, okay. Mr. Zakrzewski, do you agree 

that there is a broad trend to go multi-channel and therefore, if you 

are successful on the Internet to create bricks as well as clicks? 

Mr. ZAKRZEWSKI. What you have described is stores like Barnes 

and Noble, stores like L.L. Bean, Eddie Bauer and stores that 

began as bricks going to clicks. I am trying to sit here and think 

of an example of a pure Internet retailer, though, that—— 

Mr. CANNON. Well, actually, Eddie Bauer was a catalogue that 

went to Internet and then went to bricks, I think, after they went 

to the Internet. 

Mr. ZAKRZEWSKI. They had a store—— 

Mr. CANNON. Okay, I can see we don’t have broad consensus on 

this. 

Mr. ZAKRZEWSKI. I don’t think you do. 

Mr. CANNON. So let me just say that it is my view of the world 

that success in American markets—this debate could go on eternally. I see that my time is expired. 

I will reserve the right to participate in the second round if new 

issues would arise, Madam Chair. And I yield back. 

Ms. SA ́ NCHEZ. I thank you, Mr. Cannon, for being so cognizant 

of your time. 

Mr. CANNON. The Chair could have poked the Ranking Member 

and I would have recognized sooner that my time had expired. 

Ms. SA ́ NCHEZ. You were just over the 5-minute mark. We are not 

going to hold it against you. 

There is sufficient interest in a second round of questions. 

And I will recognize Mr. Delahunt. 

Mr. DELAHUNT. Yes, I would like to follow up on the respect that 

was implied in a question by my friend from Utah, Mr. Cannon. 

And we are talking about Eddie Bauer. We are talking about L.L. 

Bean. You know, I have a concern. 

The small, independent business that I think adds something to 

the community—I am not saying that Eddie Bauer does not. I am 

not saying that Barnes and Noble doesn’t. But there is something 

more than just the economic factor in this particular equation. 

As I said in my opening remarks, I think this is, you know, Norman Rockwell home town small business protection act. I really do. 

If we are going to have a space for the continued existence of that 

kind of entity that, I think, is a significant piece of what we know 

in terms of the American experience, how are they going to compete when they are put at a competitive disadvantage ranging from 

3, 4, 5, 6, I think it is 8 percent in Florida? 

Mr. Rauschenberger? 

126 

Mr. RAUSCHENBERGER. I think your point is well taken. This bill, 

your bill levels the playing field and makes the amazon.coms of the 

world play by the same set of rules that the open hearth bookstore 

in a little town plays by. What is more, it also for the first time 

obligates States to pay reasonable reimbursement, reasonable compensation to businesses for collecting their sales taxes. 

I mean, those are two important strides forward. You know, we 

don’t know what the products that are going to be in the marketplace 3 years from now, let alone 30 years from now. So this is exactly the right thing to do. 

Mr. DELAHUNT. I mean, one only has to look at the economy in 

terms of mergers, acquisitions, consolidations, et cetera. I think we 

lose something as a society when, you know, I can’t go into the 

local drug store anymore like I did when I was a child and go to 

the soda fountain and sit down and communicate with Mr. Johnson 

and have him ask about, you know, how is mom and dad. That is 

not happening today in this country. And I think we miss something as a result of it. 

You know, Mr. Isaacson spoke about, you know, core constitutional—or erosion, if you will, of core constitutional safeguards. 

I mean, Secretary Wagnon, I read the Quill decision. And it said 

to me, ‘‘Congress, do something about it.’’ Can you explain to me— 

do you have an understanding of the constitutional erosion of core 

values? 

Ms. WAGNON. I think the Supreme Court was very clear in the 

Quill decision saying that when simplification and the burden is removed, Congress can require that. In fact, the Supreme Court 

threw this back in your lap. And I think we have come to you today 

to say we have achieved those simplifications. We can certainly 

achieve more. 

But we have a functioning board. We have a functioning process. 

We have gone a long way. And it is time to recognize that you 

make a burden across all businesses equal, large to small. So, yes, 

you are right. 

Mr. DELAHUNT. Again, Secretary Wagnon and any panelist, I 

mean, I keep hearing about how complicated it is. Seventy-five 

hundred taxing jurisdictions. You know, to be perfectly candid, I 

think that is fooforall. 

I mean, I am hearing from—what you are saying is one simple 

form, one simple reporting form. I mean, don’t give me that when 

somehow you have done it and people are voluntarily complying. 

Mr. RAUSCHENBERGER. But every one of those sellers uniquely 

has a zip code, which is the source of the taxing. The States have 

agreed to match every zip code to a tax rate. So the question of one 

rate or complications or allowing States to sovereignly decide to 

allow governments, municipalities to impose sales taxes is over. It 

is no more complicating than saying do you realize Members of 

Congress vary by height by more than seven inches. 

Mr. DELAHUNT. But at the same time—and you make a point— 

you are taking the burden or the cost of collection away from the 

remote seller. Am I accurate? 

Ms. WAGNON. Yes. 

127 

Mr. DELAHUNT. I mean, I guess I am frustrated. I have been involved in this particular issue for 7 years. To me it just—well, I 

don’t know. 

Does anyone have an opinion on the small business exemption? 

Because this is a small business bill. 

And, you know, Mr. Isaacson, I presume that Mr. Cannon is 

going to give you some time. But I don’t know. 

Ms. SA ́ NCHEZ. And, Mr. Delahunt, your time has expired. But I 

will allow the panelists to answer. 

Mr. DELAHUNT. Well, thank you so much. The question is we do 

have the small business exemption, which would require businesses in excess of $5 million nationwide and gross taxable sales 

in excess of $100,000. Would you alter that? Would you tweak that? 

You know, we are open. I mean, I am trying to protect small 

businesses in this country. I want them to continue to exist and be 

able to flourish and grow and to prosper. Can we help. 

Secretary Wagnon? 

Ms. WAGNON. I think the small business exemption is important 

to have. Whether it needs to be stated in the congressional act as 

to exactly what the limit is, it could perhaps be decided by the governing board. You could put that in section 6 of the bill and then 

let the governing board adjust that exemption as economic times 

change. But I believe you need to protect those small businesses. 

And there are several ways to get around it. 

We have had proposals come before the governing board about 

what ought to be that deminimus rule. I believe the governing 

board is the best place to have that debated. 

Mr. DELAHUNT. Thank you. 

Thank you, Madam Chair. 

Ms. SA ́ NCHEZ. Thank you. The gentleman’s time has expired. 

Mr. Cohen is recognized for 5 minutes. 

Mr. COHEN. Thank you, Madam Chair. I am going to go back to 

Mr. Rauschenberger and ask him. This whole thing with origin and 

destination—that is a Tennessee issue, too. That hasn’t been resolved, has it? 

Mr. RAUSCHENBERGER. Unfortunately, it is the nexus, it is the 

point of most of the problems. If a State chooses to source the sale 

at the location of the seller, there is no way to avoid the seller moving his presence or his official office to a non-tax jurisdiction. 

So every State that has a traditional or historical origin, you 

know, retailer-based sale origination is going to have to adjust that 

if you are going to solve the problem of remote sellers because sales 

taxes, unlike what some people may think, are not imposed on the 

seller. They are imposed on the purchaser and collected by the seller. 

So States should have to go through some measure of political 

pain and reform. You can’t have reform without change. But 

sourcing is going to be tough for all States. It is California’s challenge. It is Illinois’ challenge and part of Tennessee’s challenge. 

But if you don’t move the sourcing of the sale to the address of the 

buyer, you can’t get at the fundamental inequities because the seller simply moves his Web site, his mailing address to the Cayman 

Islands. 

128 

Mr. COHEN. What my memo says is that Tennessee wants to 

have an origin rule or a portion origin rule. How would that differ 

from the destination? 

Mr. RAUSCHENBERGER. Well, the streamline sales tax in one of 

those 170 or 140 amendments that they are considering, which are 

good because they are about—that is how we debate in the process—are considering what might be a bifurcated rule where the 

sourcing for sales that occur both from an in-state seller and an instate buyer would be sourced on an origin basis but sales originating from outside of the State’s jurisdiction would use a destination source or a bifurcated rule. 

The fundamental problem of that are two things. Number one, 

there is a question of equal protection under the U.S. Constitution. 

Can you treat different sellers in a different way under your law? 

You know, there is a question there, which probably Secretary 

Wagnon probably is better expert at that than I am what our 

chances are there as well as there is some question of in States 

which have multiple rates, whether they will have to adopt a 

blended rate or one rate for all incoming sales. 

Mr. COHEN. So are we talking about more of an intrastate sales 

issue? 

Mr. RAUSCHENBERGER. Yes. 

Mr. COHEN. I can see where Tennessee would have a problem 

with that. 

Mr. RAUSCHENBERGER. And the solution is elegantly simple but 

really politically difficult. So it is normal. It is right that States are 

struggling with this. But—— 

Mr. COHEN. The other issue—apparently there are 19 simplification requirements in this bill. And my notes inform me that so far 

six have been met. Is that accurate? No? How many have been 

met? 

Ms. WAGNON. All but one. 

Mr. COHEN. All but one? 

Ms. WAGNON. And the issues and resolution, dispute resolution 

is the only one we have not addressed. 

Mr. COHEN. Okay, well, that is good. For a minute I was concerned you all weren’t doing any better than the Shia and the 

Sunni. But that is good. Thank you. 

Madam, I yield. 

Ms. SA ́ NCHEZ. The gentleman yields back his time. 

Mr. Cannon is recognized for 5 minutes. 

Mr. CANNON. Thank you. Let me just make one point for the 

record. The political problem in a State for adjusting between the 

source of the sale and the destination of the sale is that often cities 

have created incentives for big box companies and instead of the 

sales receipts coming to the city that gave those incentives, they go 

to the city where the person came to buy. So rich cities end up buying more stuff from big boxes and getting more money. And the 

other cities end up tending toward bankruptcy, which is one of, I 

think, the fundamental problems. 

I suspect, by the way, that the current governor of Utah, Governor Huntsman, opposes the SST. I am not sure he has been on 

record with that. But we certainly have moved in the other direction in Utah. 

129 

We have talked a lot about the leveling of the playing field. The 

fact is the playing field is level unless you disagree with me. And 

raise your hand or something if you do. The cost of delivery pretty 

much—wait a minute. Let me get the statement out, you know, the 

particular. Let us get the particular out so you can particularly disagree. 

I know that there are some interests here. I am astonished at the 

idea that this would be called a small business bill when we have 

JCPenney’s here and we have Staples pushing this and other companies around the country. People that want this done are people 

that are working hard to create a rigid system where they can continue to succeed. 

But the cost of doing business on the Internet is greater because 

it is on the Internet. So you have a delivery cost, which is roughly 

equal to the cost of sales. That is not 5 minutes, was it, Madam 

Chair? 

Ms. SA ́ NCHEZ. No. 

Mr. CANNON. Is that not true that the cost of doing business is 

relatively equal because the cost of delivery is more or less the 

same as the cost of tax for an Internet company? 

Mr. ZAKRZEWSKI. That is not necessarily true. 

Mr. CANNON. Well, how far off true is it? 

Mr. ZAKRZEWSKI. Well, I mean, it is going to depend on what the 

individual business model is. But you have still got to get delivered 

goods to the customer through a store or through—— 

Mr. CANNON. Well, that is right because the customer walks into 

the store. That is the point. 

Mr. ZAKRZEWSKI. But you have got—there is still a delivery cost 

built into the cost of goods that you can sell in your store. 

Mr. CANNON. Sure, but when you deliver a truckload of goods to 

a store that is not the same as delivering an item to a buyer across 

the country. 

Mr. ZAKRZEWSKI. But it is not true that there is a pure additional 

incremental cost for that delivery charge. 

Mr. CANNON. Wait, wait, wait. You are saying it is not true that 

there is—you are saying that there is not a clear delivery cost for 

an item that is sold online and shipped across the country? 

Mr. ZAKRZEWSKI. No, I am saying that it is not true that there 

is a pure difference that is equal dollar for dollar to that delivery 

cost. 

Mr. CANNON. But we are talking about more or less here. But we 

are not talking more or less. We are just talking about the cost of 

delivery. You would not disagree that there is a significant cost to 

deliver something that has been ordered on the Internet. 

Mr. ZAKRZEWSKI. That is true. 

Mr. CANNON. Well, thank heavens. We got some consensus here. 

Amazing. 

Is there any disagreement that if we did an SST interstate compact that that would create the second biggest tax collection agency 

in the history of mankind, the Federal Government being the first, 

Steve? Yes. No? 

Mr. RAUSCHENBERGER. It isn’t comtemplated at all. 

Mr. CANNON. Who is going to collect the taxes? 

Ms. WAGNON. The States. 

130 

Mr. RAUSCHENBERGER. The 50 States, the same ones—— 

Mr. CANNON. No, no, no, the SST is going to collect and distribute the taxes. 

Ms. WAGNON. No. 

Mr. RAUSCHENBERGER. No. 

Mr. CANNON. No. Explain to me how this works. 

In fact, Mr. Isaacson, you have been very clear on these points. 

Would you mind explaining how it works? You think he would 

learn something in the process. 

Mr. ISAACSON. What, you are going to have 7,600 different tax 

jurisdictions that are now going to be allowed to administer their 

tax systems in 49 other States. And so, you are, in fact, going to 

create one of the largest and most complex tax systems in the 

world. And perhaps it will be one that challenges the Federal Government’s. 

Mr. CANNON. Well, Mr. Rauschenberger, please do respond, but 

briefly. 

Mr. RAUSCHENBERGER. I don’t know where he has been because 

that is not what it does. The city of Elgin in Illinois is not a book 

on its way out to Lands End or to L.L. Bean to tell them how to 

manage their store. 

Mr. CANNON. But part of—— 

Mr. RAUSCHENBERGER. If you source the sale to my zip code, all 

it is going to tell you is 6.75 percent is my sales tax rate, collect 

it, and remit it. I mean—— 

Mr. CANNON. Where does he remit it? 

Mr. RAUSCHENBERGER. Well, it depends whether he chooses—— 

Mr. CANNON. Where does the dealer remit? 

Mr. RAUSCHENBERGER. If L.L. Bean chooses to hire a certified 

service provider, the service provider assumes the liability and does 

all the collection and the remittance and the tax forms for them at 

no cost. If he chooses to adopt a certified software, he would collect 

the seller’s discount, the reward, the compensation for doing it. 

And he would collect and remit. 

Mr. CANNON. Thank you. I suspect that what would really happen in this context is that we would tend to homogenize sales 

taxes. And I find that disconcerting in the least. 

Governor Spitzer called taxing Internet sales a tax increase. 

What we are dealing with here is, in fact, taxes that are taking 

more taxes out of the pockets of consumers. You know, one of the 

things I just don’t understand—let me put this on the record. 

I have talked to many individual State tax commissioners. And 

we have had, I think, pretty broad consensus. It seems to me that 

the interest of the States is to encourage an environment which 

has made them flushed, by the way. Virtually all the States are 

flushed with cash. It has created an environment of economic 

growth. The Internet does that. 

Why would you want to poke the baby in the eye as it is beginning to grow? That is one of the facts I can’t understand. Or I understand how as a group States would have wanted to tend to do 

this. But individually if they thought about it, there ought to be a 

tendency to say we have a great economy that is growing, let us 

encourage innovation online and—— 

Ms. SA ́ NCHEZ. Mr. Cannon? 

131 

Mr. CANNON. Now it actually has expired, hasn’t it? 

Ms. SA ́ NCHEZ. Your time has expired. 

Mr. CANNON. Thank you. What remains I yield back. 

Ms. SA ́ NCHEZ. No time, so we will put that in the negative account, and we will charge you for that later. 

We are being summoned across the street to vote. But I do have 

one quick question that I think will clarify a statement that Mr. 

Cannon just made. So I recognize myself for 5 minutes, but won’t 

take that entire time. 

Mr. Rauschenberger, I am particularly concerned about the statements similar to the ones Mr. Cannon just made about people 

thinking that this is a new tax on consumers. And can you please 

clarify exactly what the SST does? 

Mr. RAUSCHENBERGER. The enemies of this reform in States 

across the country—and you will hear, I think, in Congress that 

this is a tax increase. But nothing, in my opinion, could be further 

from the truth. 

These are taxes that the Supreme Court says States legally have 

the right to levy. And they have the right to collect as long as there 

is reasonable notice to the seller. 

We have cured the rise, the increased bar that Bellis Hess and 

the Quill decision raised of simplifying our system so that it is not 

a burden on interstate commerce and crossing that threshold to be, 

hopefully, to be blessed by Congress. So this is about—I mean, the 

same argument could be used of abolishing the IRS and not requiring people to mail in their tax returns. 

Ms. SA ́ NCHEZ. Mr. Rauschenberger, I wouldn’t go there because 

there are Members who would be in favor of that. 

Mr. RAUSCHENBERGER. Well—— 

Mr. CANNON. If I could figure it out. 

Mr. RAUSCHENBERGER. These are legally levied taxes that are 

due from the customers. Sales taxes are not taxes that are unpopular. They win referendum time after time. When local governments—the state of Michigan when they chose to change the way 

they funded education by referendum, they selected the sales tax. 

People perceive the sales tax as relatively fair. It is less regressive 

than property taxes because at least it has indexed the amount of 

income because you spend more as you earn more. So it is not a 

tax increase in any way that I can agree to. 

Ms. SA ́ NCHEZ. Thank you. I appreciate that. I will yield back my 

time. 

And I want to thank—— 

Mr. CANNON. Madam Chair, may I ask unanimous consent to introduce two articles into the record? One, an A.P. article entitled, 

‘‘Spiked Clarification and Tax Law Aimed to Collect from Web 

Sales’’ and one from Forbes, ‘‘Point, Click, Pay Tax’’? 

Ms. SA ́ NCHEZ. Without objection, so ordered. I want to thank all 

of the witnesses for their testimony today and for being patient 

during the interruption to go vote. 

[The information referred to follows:] 

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Ms. SA ́ NCHEZ. Without objection, Members will have 5 legislative 

days to submit any additional written questions, which we will forward to the witnesses and ask that you answer as promptly as possible so that they can be made a part of the record. Without objection, the record will remain open for 5 legislative days for the submission of any additional material. 

And because this is the last planned hearing of the Subcommittee before the winter recess, I want to take this time to 

thank my Ranking Member, the Members on the dais, and their 

staff for all of the hard work. And I want to wish everybody a safe 

and happy holiday season. And with that, this hearing on the Subcommittee of Commercial and Administrative Law is adjourned. 

[Whereupon, at 12:29 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED TO JOAN WAGNON BY THE HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF

CALIFORNIA, AND CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED TO WAYNE ZAKRZEWSKI BY THE

HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE

OF CALIFORNIA, AND CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED TO GEORGE ISAACSON BY THE

HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE

OF CALIFORNIA, AND CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED TO THE HONORABLE STEVEN J. 

RAUSCHENBERGER BY THE HONORABLE LINDA T. SA ́ NCHEZ, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRWOMAN, SUBCOMMITTEE ON

COMMERCIAL AND ADMINISTRATIVE LAW


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PREPARED STATEMENT OF PAUL MISENER, VICE PRESIDENT, GLOBAL PUBLIC POLICY, 

AMAZON.COM


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LETTER FROM STEVE DELBIANCO, EXECUTIVE DIRECTOR, THE NETCHOICE COALITION


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PREPARED STATEMENT OF BRIAN BIERON, SENIOR DIRECTOR OF FEDERAL

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LETTER FROM THE UNITED STATES TELECOM ASSOCIATION AND

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