II 

109TH CONGRESS 

1ST SESSION S. 2152 

To promote simplification and fairness in the administration and collection 

of sales and use taxes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 20, 2005 

Mr. ENZI introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To promote simplification and fairness in the administration 

and collection of sales and use taxes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Sales Tax Fairness 

5 and Simplification Act’’. 

6 SEC. 2. CONSENT OF CONGRESS. 

7 The Congress consents to the Streamlined Sales and 

8 Use Tax Agreement. 
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1 SEC. 3. SENSE OF THE CONGRESS. 

2 (a) SALES AND USE TAX SYSTEM.—It is the sense 

3 of the Congress that the sales and use tax system estab4 lished by the Streamlined Sales and Use Tax Agreement, 

5 to the extent that it meets the minimum simplification re6 quirements of section 6, provides sufficient simplification 

7 and uniformity to warrant Federal authorization to Mem8 ber States that are parties to the Agreement to require 

9 remote sellers, subject to the conditions provided in this 

10 Act, to collect and remit the sales and use taxes of such 

11 Member States and of local taxing jurisdictions of such 

12 Member States. 

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

14 (1) effectuate the limited authority granted to 

15 Member States under the Streamlined Sales and 

16 Use Tax Agreement; and 

17 (2) not grant additional authority unrelated to 

18 the accomplishment of the purpose described in 

19 paragraph (1). 

20 SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF 

21 SALES AND USE TAXES. 

22 (a) GRANT OF AUTHORITY.— 

23 (1) IN GENERAL.—Each Member State under 

24 the Streamlined Sales and Use Tax Agreement is 

25 authorized, subject to the requirements of this sec26 tion, to require all sellers not qualifying for the 
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1 small business exception provided under subsection 

2 (d) to collect and remit sales and use taxes with re3 spect to remote sales sourced to that Member State 

4 under the Agreement. 

5 (2) REQUIREMENTS FOR AUTHORITY.—The au6 thorization provided under paragraph (1) shall be 

7 granted once all of the following have occurred: 

8 (A) 10 States comprising at least 20 per9 cent of the total population of all States impos10 ing a sales tax, as determined by the 2000 Fed11 eral census, have petitioned for membership and 

12 have become Member States under the Agree13 ment. 

14 (B) The following necessary operational as15 pects of the Agreement have been implemented 

16 by the Governing Board: 

17 (i) Provider and system certification. 

18 (ii) Setting of monetary allowance by 

19 contract with providers. 

20 (iii) Implementation of an on-line 

21 multistate registration system. 

22 (iv) Adoption of a standard form for 

23 claiming exemptions electronically. 

24 (v) Establishment of advisory coun25 cils. 
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1 (vi) Promulgation of rules and proce2 dures for dispute resolution. 

3 (vii) Promulgation of rules and proce4 dures for audits. 

5 (viii) Provisions for funding and staff6 ing the Governing Board. 

7 (C) Each Member State has met the re8 quirements to provide and maintain the data9 bases and the taxability matrix described in the 

10 Agreement, pursuant to requirements of the 

11 Governing Board. 

12 (3) LIMITATION OF AUTHORITY.—The author13 ization provided under paragraph (1)— 

14 (A) shall be granted notwithstanding any 

15 other provision of law; and 

16 (B) is dependent upon the Agreement, as 

17 amended, meeting the minimum simplification 

18 requirements of section 6. 

19 (b) TERMINATION OF AUTHORITY.— 

20 (1) IN GENERAL.—The authorization provided 

21 under subsection (a) shall terminate for all States 

22 if— 

23 (A) the requirements contained in sub24 section (a) cease to be satisfied; or 
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1 (B) any amendment adopted to the Agree2 ment after the date of enactment of this Act is 

3 not within the scope of the administration of 

4 sales and use taxes or taxes on telecommuni5 cations services by the Member States. 

6 (2) LOSS OF MEMBER STATE STATUS.—The au7 thorization provided under subsection (a) shall ter8 minate for a Member State, if such Member State 

9 no longer meets the requirements for Member State 

10 status under the terms of the Agreement. 

11 (c) DETERMINATION OF STATUS.— 

12 (1) IN GENERAL.—The Governing Board shall 

13 determine if Member States are in compliance with 

14 the requirements of subsections (a) and (b). 

15 (2) COMPLIANCE DETERMINATION.—Upon the 

16 determination of the Governing Board that all the 

17 requirements of subsection (a) have been satisfied, 

18 the authority of each Member State to require a sell19 er to collect and remit sales and use taxes shall com20 mence on the first day of a calendar quarter at least 

21 6 months after the date the Governing Board makes 

22 its determination. 

23 (d) SMALL BUSINESS EXCEPTION.—No seller shall 

24 be subject to a requirement of any State to collect and 
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1 remit sales and use taxes with respect to a remote sale 

2 if— 

3 (1) the seller and its affiliates collectively had 

4 gross remote taxable sales nationwide of less than 

5 $5,000,000 in the calendar year preceding the date 

6 of such sale; or 

7 (2) the seller and its affiliates collectively meet 

8 the $5,000,000 threshold of this subsection but the 

9 seller has less than $100,000 in gross remote tax10 able sales nationwide. 

11 SEC. 5. DETERMINATIONS BY GOVERNING BOARD AND JU12 DICIAL REVIEW OF SUCH DETERMINATIONS. 

13 (a) PETITION.—At any time after the Governing 

14 Board has made the determination required under section 

15 4(c)(2), any person who may be affected by the Agreement 

16 may petition the Governing Board for a determination on 

17 any issue relating to the implementation of the Agreement. 

18 (b) REVIEW IN COURT OF FEDERAL CLAIMS.—Any 

19 person who submits a petition under subsection (a) may 

20 bring an action against the Governing Board in the United 

21 States Court of Federal Claims for judicial review of the 

22 action of the Governing Board on that petition if— 

23 (1) the petition relates to an issue of whether— 
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1 (A) a Member State has satisfied or con2 tinues to satisfy the requirements for Member 

3 State status under the Agreement; 

4 (B) the Governing Board has performed a 

5 nondiscretionary duty of the Governing Board 

6 under the Agreement; 

7 (C) the Agreement continues to satisfy the 

8 minimum simplification requirements set forth 

9 in section 6; or 

10 (D) any other requirement of section 4 has 

11 been satisfied; and 

12 (2) the petition is denied by the Governing 

13 Board in whole or in part with respect to that issue, 

14 or the Governing Board fails to act on the petition 

15 with respect to that issue not later than 6 months 

16 after the date on which the petition is submitted. 

17 (c) TIMING OF ACTION FOR REVIEW.—An action for 

18 review under this section shall be initiated not later than 

19 60 days after the denial of the petition by the Governing 

20 Board, or, if the Governing Board failed to act on the peti21 tion, not later than 60 days after the end of the 6-month 

22 period beginning on the day after the date on which the 

23 petition was submitted. 

24 (d) STANDARD OF REVIEW.— 
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1 (1) IN GENERAL.—In any action for review 

2 under this section, the court shall set aside the ac3 tions, findings, and conclusions of the Governing 

4 Board found to be arbitrary, capricious, an abuse of 

5 discretion, or otherwise not in accordance with law. 

6 (2) REMAND.—If the court sets aside any ac7 tion, finding, or conclusion of the Governing Board 

8 under paragraph (1), the court shall remand the 

9 case to the Governing Board for further action con10 sistent with the decision of the court. 

11 (e) JURISDICTION.— 

12 (1) GENERALLY.—Chapter 91 of title 28, 

13 United States Code, is amended by adding at the 

14 end the following: 

15 ‘‘§ 1510. Jurisdiction regarding the Streamlined Sales 

16 and Use Tax Agreement 

17 ‘‘The United States Court of Federal Claims shall 

18 have exclusive jurisdiction over actions for judicial review 

19 of determinations of the Governing Board of the Stream20 lined Sales and Use Tax Agreement under the terms and 

21 conditions provided in section 5 of the Sales Tax Fairness 

22 and Simplification Act.’’. 

23 (2) CONFORMING AMENDMENT TO TABLE OF

24 SECTIONS.—The table of sections at the beginning 

25 of chapter 91 of title 28, United States Code, is 
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1 amended by adding at the end the following new 

2 item: 

‘‘1510. Jurisdiction regarding the streamlined sales and use tax agreement.’’. 

3 SEC. 6. MINIMUM SIMPLIFICATION REQUIREMENTS. 

4 (a) IN GENERAL.—The minimum simplification re5 quirements for the Agreement, which shall relate to the 

6 conduct of Member States under the Agreement and to 

7 the administration and supervision of such conduct, are 

8 as follows: 

9 (1) A centralized, one-stop, multistate registra10 tion system that a seller may elect to use to register 

11 with the Member States, provided a seller may also 

12 elect to register directly with a Member State, and 

13 further provided that privacy and confidentiality 

14 controls shall be placed on the multistate registra15 tion system so that it may not be used for any pur16 pose other than the administration of sales and use 

17 taxes. Furthermore, no taxing authority within a 

18 Member State or a Member State that has with19 drawn or been expelled from the Agreement may use 

20 registration with the centralized registration system 

21 for the purpose of, or as a factor in determining, 

22 whether a seller has a nexus with that Member State 

23 for any tax at any time. 

24 (2) Uniform definitions of products and prod25 uct-based exemptions from which a Member State 
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1 may choose its individual tax base, provided, how2 ever, that all local jurisdictions in that Member 

3 State shall have a common tax base identical to the 

4 State tax base of that Member State. A Member 

5 State may enact other product-based exemptions 

6 without restriction if the Agreement does not have 

7 a definition for the product or for a term that in8 cludes the product. A Member State shall relax the 

9 good faith requirement for acceptance of exemption 

10 certificates in accordance with section 317 of the 

11 Agreement, as amended through the date of enact12 ment of this Act. 

13 (3) Uniform rules for sourcing and attributing 

14 transactions to particular taxing jurisdictions. 

15 (4) Uniform procedures for the certification of 

16 service providers and software on which a seller may 

17 elect to rely in order to determine Member State 

18 sales and use tax rates and taxability. 

19 (5) Uniform rules for bad debts and rounding. 

20 (6) Uniform requirements for tax returns and 

21 remittances. 

22 (7) Consistent electronic filing and remittance 

23 methods. 

24 (8) Single, State-level administration of all 

25 Member State and local sales and use taxes, includ-
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1 ing a requirement for a State-level filing of tax re2 turns in each Member State. 

3 (9) A single sales and use tax rate per taxing 

4 jurisdiction, except that a State may impose a single 

5 additional rate, which may be zero, on food, food in6 gredients, and drugs, provided that this limitation 

7 does not apply to the items identified in section 308 

8 C of the Agreement, as amended through the date 

9 of enactment of this Act. 

10 (10) A Member State shall eliminate caps and 

11 thresholds on the application of sales and use tax 

12 rates and exemptions based on value, provided that 

13 this limitation does not apply to the items identified 

14 in section 308 C of the Agreement, as amended 

15 through the date of enactment of this Act. 

16 (11) A provision requiring each Member State 

17 to complete a taxability matrix, as adopted by the 

18 Governing Board. The matrix shall include informa19 tion regarding terms defined by the Agreement in 

20 the Library of Definitions. The matrix shall also in21 clude, pursuant to the requirements of the Gov22 erning Board, information on use, entity, and prod23 uct based exemptions. 

24 (12) A provision requiring that each Member 

25 State relieves a seller or service provider from liabil-
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1 ity to that Member State and local jurisdiction for 

2 collection of the incorrect amount of sales or use tax, 

3 and relieves the purchaser from penalties stemming 

4 from such liability, provided that collection of the 

5 improper amount is the result of relying on informa6 tion provided by that Member State regarding tax 

7 rates, boundaries, or taxing jurisdiction assignments, 

8 or in the taxability matrix regarding terms defined 

9 by the Agreement in the Library of Definitions. 

10 (13) Audit procedures for sellers, including an 

11 option under which a seller not qualifying for the 

12 small business exception in section 4(d) may request, 

13 by notifying the Governing Board, to be subject to 

14 a single audit on behalf of all Member States for 

15 sales and use taxes (other than use taxes on goods 

16 and services purchased for the consumption of the 

17 seller). The Governing Board, in its discretion, shall 

18 authorize such a single audit. 

19 (14) As of the day that authority to require col20 lection commences under section 4, each Member 

21 State shall provide reasonable compensation for ex22 penses incurred by a seller directly in administering, 

23 collecting, and remitting sales and use taxes (other 

24 than use taxes on goods and services purchased for 

25 the consumption of the seller) to that Member State. 
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1 Such compensation may vary in each Member State 

2 depending on the complexity of the sales and use tax 

3 laws in that Member State and may vary by the 

4 characteristics of sellers in order to reflect dif5 ferences in collection costs. Such compensation may 

6 be provided to a seller or a third party service pro7 vider whom a seller has contracted with to perform 

8 all the sales and use tax responsibilities of a seller. 

9 (15) Appropriate protections for consumer pri10 vacy. 

11 (16) Governance procedures and mechanisms to 

12 ensure timely, consistent, and uniform implementa13 tion and adherence to the principles of the stream14 lined system and the terms of the Agreement. 

15 (17) Each Member State shall apply the sim16 plification requirements of the Agreement to taxes 

17 on telecommunications services, except as provided 

18 herein. This requirement is applicable to Member 

19 States as of July 1, 2008, except that sales and use 

20 taxes on telecommunications services shall be subject 

21 to the Agreement and the authority granted to the 

22 Member States when the requirements of section 

23 4(a) are met. On or after July 1, 2008, for those 

24 Member States which meet the requirements of this 

25 paragraph, the authority granted such Member 
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1 States under section 4 may be exercised by such 

2 Member States, pursuant to the terms of section 4 

3 and section 5, with respect to taxes on telecommuni4 cations services other than sales and use taxes on 

5 such services. The following are exceptions to the re6 quirement established under this paragraph: 

7 (A) The requirement for one uniform re8 turn shall not apply, provided, however, there 

9 shall be one uniform return for each type of tax 

10 on telecommunications services within a State. 

11 (B) The requirements for rate simplifica12 tion are modified to require that each taxing ju13 risdiction shall have only one rate for each type 

14 of tax on telecommunications services. 

15 (C) The requirements for tax base uni16 formity in section 302 of the Agreement shall 

17 apply to each type of tax on telecommunications 

18 services within a State, but shall not be con19 strued to require that the tax base for different 

20 types of taxes on telecommunications services 

21 must be identical to the tax base for sales and 

22 use taxes imposed on telecommunications serv23 ices. 

24 (18) Uniform rules and procedures for ‘‘sales 

25 tax holidays’’. 
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1 (19) Uniform rules and procedures to address 

2 refunds and credits for sales taxes relating to cus3 tomer returns, restocking fees, discounts and cou4 pons, and rules to address allocations of shipping 

5 and handling and discounts applied to multiple item 

6 and multiple seller orders. 

7 (b) REQUIREMENT TO PROVIDE SIMPLIFIED TAX

8 SYSTEMS.— 

9 (1) IN GENERAL.—The requirements of this 

10 section are intended to ensure that each Member 

11 State provides and maintains the necessary sim12 plifications to its sales and use tax system to war13 rant the collection authority granted to it in section 

14 4. 

15 (2) REDUCTION OF ADMINISTRATIVE BUR16 DENS.—The requirements of this section should be 

17 construed— 

18 (A) to require each Member State to sub19 stantially reduce the administrative burdens as20 sociated with sales and use taxes; and 

21 (B) as allowing each Member State to ex22 ercise flexibility in how these requirements are 

23 satisfied. 

24 (3) EXCEPTION.—In instances where exceptions 

25 to the requirements of this section can be exercised 
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1 in a manner that does not materially increase the 

2 administrative burden on a seller obligated to collect 

3 or pay the taxes, such exceptions are permissible. 

4 SEC. 7. LIMITATION. 

5 (a) IN GENERAL.—Nothing in this Act shall be con6 strued as— 

7 (1) subjecting a seller to franchise taxes, in8 come taxes, or licensing requirements of a Member 

9 State or political subdivision thereof; or 

10 (2) affecting the application of such taxes or re11 quirements or enlarging or reducing the authority of 

12 any Member State to impose such taxes or require13 ments. 

14 (b) NO EFFECT ON NEXUS, ETC.— 

15 (1) IN GENERAL.—No obligation imposed by 

16 virtue of the authority granted by section 4 shall be 

17 considered in determining whether a seller has a 

18 nexus with any Member State for any other tax pur19 pose. 

20 (2) PERMISSIBLE MEMBER STATE AUTHOR21 ITY.—Except as provided in subsection (a), and in 

22 section 4, nothing in this Act permits or prohibits a 

23 Member State from— 

24 (A) licensing or regulating any person; 
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1 (B) requiring any person to qualify to 

2 transact intrastate business; 

3 (C) subjecting any person to State taxes 

4 not related to the sale of goods or services; or 

5 (D) exercising authority over matters of 

6 interstate commerce. 

7 SEC. 8. EXPEDITED JUDICIAL REVIEW. 

8 (a) THREE-JUDGE DISTRICT COURT HEARING.— 

9 Notwithstanding any other provision of law, any civil ac10 tion challenging the constitutionality of this Act, or any 

11 provision thereof, shall be heard by a district court of 

12 three judges convened pursuant to the provisions of sec13 tion 2284 of title 28, United States Code. 

14 (b) APPELLATE REVIEW.— 

15 (1) IN GENERAL.—Notwithstanding any other 

16 provision of law, an interlocutory or final judgment, 

17 decree, or order of the court of three judges in an 

18 action under subsection (a) holding this Act, or any 

19 provision thereof, unconstitutional shall be review20 able as a matter of right by direct appeal to the Su21 preme Court. 

22 (2) 30-DAY TIME LIMIT.—Any appeal under 

23 paragraph (1) shall be filed not more than 30 days 

24 after the date of entry of such judgment, decree, or 

25 order. 
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1 SEC. 9. DEFINITIONS. 

2 For the purposes of this Act the following definitions 

3 apply: 

4 (1) AFFILIATE.—The term ‘‘affiliate’’ means 

5 any entity that controls, is controlled by, or is under 

6 common control with a seller. 

7 (2) GOVERNING BOARD.—The term ‘‘Governing 

8 Board’’ means the governing board established by 

9 the Streamlined Sales and Use Tax Agreement. 

10 (3) MEMBER STATE.—The term ‘‘Member 

11 State’’— 

12 (A) means a Member State as that term is 

13 used under the Streamlined Sales and Use Tax 

14 Agreement as of the date of enactment of this 

15 Act; and 

16 (B) does not include associate members 

17 under the Agreement. 

18 (4) NATIONWIDE.—The term ‘‘nationwide’’ 

19 means throughout each of the several States and the 

20 District of Columbia, the Commonwealth of Puerto 

21 Rico, Guam, American Samoa, the Virgin Islands, 

22 the Northern Mariana Islands, and any other terri23 tory or possession of the United States. 

24 (5) NONDISCRETIONARY DUTY OF THE GOV25 ERNING BOARD.—The phrase ‘‘nondiscretionary 

26 duty of the Governing Board’’ means any duty of 
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1 the Governing Board specified in the Agreement as 

2 a requirement for action by use of the term ‘‘shall’’, 

3 ‘‘will’’, or ‘‘is required to’’. 

4 (6) PERSON.—The term ‘‘person’’ means an in5 dividual, trust, estate, fiduciary, partnership, cor6 poration, or any other legal entity, and includes a 

7 State or local government. 

8 (7) REMOTE SALE.—The term ‘‘remote sale’’ 

9 refers to a sale of goods or services attributed to a 

10 particular Member State with respect to which a 

11 seller does not have adequate physical presence to 

12 establish nexus under the law existing on the day be13 fore the date of enactment of this Act so as to allow 

14 such Member State to require, without regard to the 

15 authority granted by this Act, the seller to collect 

16 and remit sales or use taxes with respect to such 

17 sale. 

18 (8) REMOTE SELLER.—The term ‘‘remote sell19 er’’ means any seller who makes a remote sale. 

20 (9) STATE.—The term ‘‘State’’ means any 

21 State of the United States of America and includes 

22 the District of Columbia, Puerto Rico, and any other 

23 territory or possession of the United States. 

24 (10) STREAMLINED SALES AND USE TAX

25 AGREEMENT.—The term ‘‘Streamlined Sales and 
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1 Use Tax Agreement’’ (or ‘‘the Agreement’’) means 

2 the multistate agreement with that title adopted on 

3 November 12, 2002, as amended through the date of 

4 enactment of this Act and unless the context other5 wise indicates as further amended from time to time. 

6 (11) TAX ON TELECOMMUNICATIONS SERV7 ICES.—The term ‘‘tax on telecommunications serv8 ices’’ or ‘‘taxes on telecommunication services’’ shall 

9 encompass the same taxes, charges, or fees as are 

10 included in section 116 of title 4, United States 

11 Code, except that ‘‘telecommunication services’’ shall 

12 replace ‘‘mobile telecommunications services’’ when13 ever such term appears. 

14 (12) TELECOMMUNICATIONS SERVICE.— 

15 (A) IN GENERAL.—The term ‘‘tele16 communications service’’ means the electronic 

17 transmission, conveyance, or routing of voice, 

18 data, audio, video, or any other information or 

19 signals to a point, or between or among points. 

20 (B) INCLUSION.—The term ‘‘telecommuni21 cation service’’— 

22 (i) includes transmission services in 

23 which computer processing applications are 

24 used to act on the form, code, or protocol 

25 of the content for purposes of trans-
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1 mission, conveyance, or routing without re2 gard to whether such services are referred 

3 to as voice over Internet protocol services 

4 or are classified by the Federal Commu5 nications Commission as enhanced or value 

6 added services; and 

7 (ii) does not include the data proc8 essing and information services that allow 

9 data to be generated, acquired, stored, 

10 processed, or retrieved and delivered by an 

11 electronic transmission to a purchaser 

12 where the primary purpose of such pur13 chaser for the underlying transaction is the 

14 processed data or information. 

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

16 SERVICES. 

17 It is the sense of the Congress that each State that 

18 is a party to the Agreement should work with other States 

19 that are also party to the Agreement to prevent double 

20 taxation in situations where a foreign country has imposed 

21 a transaction tax on a digital good or service. 

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