II 

108TH CONGRESS 

1ST SESSION S. 1736

To promote simplification and fairness in the administration and collection 

of sales and use taxes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 15, 2003

Mr. ENZI (for himself, Mr. DORGAN, Mr. CHAFEE, Mr. HAGEL, Mrs. 

HUTCHISON, Mr. VOINOVICH, Mr. THOMAS, Mr. BREAUX, Mr. BINGAMAN, Mr. GRAHAM of Florida, Mr. JOHNSON, Mr. NELSON of Nebraska, 

and Mr. ROCKEFELLER) 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 ‘‘Streamlined Sales and 

5 Use Tax Act’’. 

6 SEC. 2. CONSENT OF CONGRESS. 

7 The Congress consents to the November 12, 2002, 

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

2 It is the sense of the Congress that the sales and use 

3 tax system established by the Streamlined Sales and Use 

4 Tax Agreement, to the extent that it meets the minimum 

5 simplification requirements of section 6, provides suffi6 cient simplification and uniformity to warrant Federal au7 thorization to States that are parties to the Agreement 

8 to require remote sellers, subject to the conditions pro9 vided in this Act, to collect and remit the sales and use 

10 taxes of such States and of local taxing jurisdictions of 

11 such States. The purpose of this Act is to effectuate that 

12 limited authority, and not to grant additional authority 

13 unrelated to the accomplishment of that purpose. 

14 SEC. 4. AUTHORIZATION TO REQUIRE COLLECTION OF 

15 SALES AND USE TAXES. 

16 (a) GRANT OF AUTHORITY.—Once 10 States com17 prising at least 20 percent of the total population of all 

18 States imposing a sales tax, as determined by the 2000 

19 Federal census, have petitioned for membership under the 

20 Streamlined Sales and Use Tax Agreement in the manner 

21 required by the Agreement, have been found to be in com22 pliance with the Agreement pursuant to the terms of the 

23 Agreement, have become Member States under the Agree24 ment, and the necessary operational aspects of the Agree25 ment have been implemented, any Member State under 

26 the Agreement is authorized, notwithstanding any other 
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•S 1736 IS 

1 provision of law, to require all sellers not qualifying for 

2 the small business exception provided under subsection (b) 

3 to collect and remit sales and use taxes with respect to 

4 remote sales to purchasers located in such State. Such au5 thorization shall terminate for all States if the require6 ments of the preceding sentence cease to be met or if the 

7 Agreement, as amended, no longer meets the minimum 

8 simplification requirements of section 6. Such authoriza9 tion shall also terminate for any Member State if such 

10 Member State no longer complies with the requirements 

11 for Member State status under the terms of the Agree12 ment. Determinations regarding compliance with the re13 quirements of this subsection shall be made by the Gov14 erning Board (or, prior to the establishment of the Gov15 erning Board, by the States petitioning for membership 

16 under the Agreement) subject to section 5. 

17 (b) SMALL BUSINESS EXCEPTION.—No seller shall 

18 be subject to a requirement of any State to collect and 

19 remit sales and use taxes with respect to a remote sale 

20 where the seller and its affiliates collectively had gross re21 mote taxable sales nationwide of less than $5,000,000 in 

22 the calendar year preceding the date of such sale. No seller 

23 shall be subject to a requirement of any State to collect 

24 and remit sales and use taxes with respect to a remote 

25 sale where the seller and its affiliates collectively meet the 
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•S 1736 IS 

1 $5,000,000 threshold of this subsection but the seller has 

2 less than $100,000 in gross remote taxable sales nation3 wide. 

4 (c) REASONABLE SELLER COMPENSATION.—The au5 thority provided in subsection (a) is conditioned on accept6 ance and implementation by each Member State of a re7 quirement that the State provide reasonable compensation 

8 for expenses incurred by sellers related to the administra9 tion, collection and remittance of sales and use taxes. Fur10 thermore, the State shall provide compensation that covers 

11 all tax processing costs of remote sellers. The additional 

12 compensation provided to remote sellers shall remain in 

13 effect for a period of 4 years from the date that a State 

14 is granted the authority under this Act to require remote 

15 sellers to collect and remit sales taxes with respect to re16 mote purchasers located in such State. 

17 SEC. 5. DETERMINATION BY GOVERNING BOARD AND JUDI18 CIAL REVIEW OF THAT DETERMINATION. 

19 (a) PETITION.—Any person who may be affected by 

20 the Agreement may petition the Governing Board for a 

21 determination on any issue relating to the implementation 

22 of the Agreement. 

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

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

25 bring an action against the Governing Board in the United
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•S 1736 IS 

1 States Court of Federal Claims for judicial review of the 

2 action of the Governing Board on that petition if—

3 (1) the petition relates to an issue of whether—

4 (A) a State has met or continues to meet 

5 the requirements for Member State status 

6 under the Agreement; 

7 (B) the Governing Board has performed a 

8 nondiscretionary duty of the Governing Board 

9 under the Agreement; 

10 (C) the Agreement continues to meet the 

11 minimum simplification requirements set forth 

12 in section 6; or 

13 (D) any other requirement of section 4 has 

14 been met; and 

15 (2) the petition is denied by the Governing 

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

17 or the Governing Board fails to act on the petition 

18 with respect to that issue not later than six months 

19 after the date on which the petition is submitted. 

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

21 review under this section shall be initiated not later than 

22 60 days after the Governing Board’s denial of the petition, 

23 or, if the Governing Board failed to act on the petition, 

24 within 60 days after the end of the six-month period be-
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1 ginning on the day after the date on which the petition 

2 was submitted. 

3 (d) STANDARD OF REVIEW.—In any action for review 

4 under this section, the court shall set aside the actions, 

5 findings, and conclusions of the Governing Board found 

6 to be arbitrary, capricious, an abuse of discretion, or oth7 erwise not in accordance with law. 

8 (e) JURISDICTION.—

9 (1) GENERALLY.—Chapter 91 of title 28 of the 

10 United States Code is amended by adding at the end 

11 thereof: 

12 ‘‘§ 1510. Jurisdiction regarding the streamlined sales 

13 and use tax agreement 

14 ‘‘The United States Court of Federal Claims shall 

15 have exclusive jurisdiction over actions for judicial review 

16 of determinations of the Governing Board of the Stream17 lined Sales and Use Tax Agreement under the terms and 

18 conditions provided in section 5 of the Simplified Sales 

19 and Use Tax Act.’’. 

20 (2) CONFORMING AMENDMENT TO TABLE OF

21 SECTIONS.—The table of sections at the beginning 

22 of chapter 91 of title 28, United States Code, is 

23 amended by adding at the end the following new 

24 item:

‘‘1510. Jurisdiction regarding the streamlined sales and use tax agreement.’’.
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1 SEC. 6. MINIMUM SIMPLIFICATION REQUIREMENTS. 

2 The following criteria are the minimum simplification 

3 requirements for the Agreement: 

4 (1) A centralized, one-stop, multistate registra5 tion system that sellers may elect to use to register 

6 with the Member States; provided the seller may 

7 also elect to register directly with a Member State; 

8 and further provided that privacy and confidentiality 

9 controls shall be placed on the multistate registra10 tion system so that it may not be used for any pur11 pose other than the administration of sales and use 

12 taxes. 

13 (2) Uniform definitions of products and prod14 uct-based exemptions from which the Member States 

15 may choose their individual tax bases; Member 

16 States may enact other product-based exemptions 

17 without restriction if the Agreement does not have 

18 a definition for the product or for a term that in19 cludes the product. 

20 (3) Uniform rules for sourcing and attributing 

21 transactions to particular taxing jurisdictions. 

22 (4) Uniform procedures for the certification of 

23 service providers and software on which a seller may 

24 elect to rely in order to determine State sales and 

25 use tax rates and taxability. 

26 (5) Uniform rules for bad debts. 
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1 (6) Uniform requirements for tax returns and 

2 remittances. 

3 (7) Consistent electronic filing and remittance 

4 methods. 

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

6 State and local sales and use taxes, and a single fil7 ing for each State. 

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

9 jurisdiction for items other than those listed in sec10 tion 308 C of the Agreement as adopted on Novem11 ber 12, 2002, except that a State may impose a sec12 ond sales and use tax rate for items satisfying the 

13 Agreement’s definition for food, food ingredients, or 

14 drugs. 

15 (10) A provision that relieves a seller or service 

16 provider from liability for collection of the incorrect 

17 amount of sales or use tax, provided such seller has 

18 relied on information provided by the Member States 

19 regarding tax rates, boundaries, or taxing jurisdic20 tion assignments. 

21 (11) Uniform audit procedures for sellers, in22 cluding an option under which a seller may elect, by 

23 notifying the Governing Board, to be subject to a 

24 single audit on behalf of all the Member States or 

25 a single audit on behalf of each Member State.
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1 (12) Reasonable compensation for all sellers 

2 that administer, collect and remit sales and use tax, 

3 with requirements for remote seller compensation as 

4 provided in section 4(d) of this Act. 

5 (13) Appropriate protections for consumer pri6 vacy. 

7 (14) Governance procedures and mechanisms to 

8 ensure timely, consistent, and uniform implementa9 tion and adherence to the principles of the stream10 lined system and the terms of the Agreement. 

11 (15) The Member States apply the minimum 

12 simplification requirements under this subsection to 

13 transaction taxes on communications by January 1, 

14 2006, except that the requirement for one uniform 

15 return shall not apply and the requirements for rate 

16 simplification are modified to require one rate for 

17 each type of transaction tax per jurisdiction. 

18 ‘‘Transaction tax’’ as used in this provision shall 

19 have the same meaning as in section 116 of title 4, 

20 United States Code, except that ‘‘communications 

21 services’’ shall replace ‘‘mobile telecommunications 

22 services’’ whenever such term appears. 

23 (16) Uniform rules for ‘‘sales tax holidays’’ that 

24 provide alternative mechanisms for remote sellers to 

25 participate. 
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1 (17) 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 and sourcing rules that 

7 contain provisions to prevent double taxation in situ8 ations where a foreign country has imposed a trans9 action tax on a digital good or service. 

10 (18) Each amendment hereafter adopted to the 

11 Agreement is within the scope of the subject matter 

12 currently covered by the agreement. 

13 SEC. 7. LIMITATION. 

14 (a) IN GENERAL.—Nothing in this Act shall be con15 strued as subjecting sellers to franchise taxes, income 

16 taxes, or licensing requirements of a State or political sub17 division thereof, nor shall anything in this Act be con18 strued as affecting the application of such taxes or re19 quirements or enlarging or reducing the authority of any 

20 State to impose such taxes or requirements. 

21 (b) NO EFFECT ON NEXUS, ETC.—No obligation im22 posed by virtue of the authority granted by section 4 shall 

23 be considered in determining whether a seller has a nexus 

24 with any State for any other tax purpose. Except as pro-
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1 vided in subsection (a), and in section 4, nothing in this 

2 Act permits or prohibits a State’s—

3 (1) licensing or regulating any person; 

4 (2) requiring any person to qualify to transact 

5 intrastate business; 

6 (3) subjecting any person to State taxes not re7 lated to the sale of goods or services; or 

8 (4) exercising authority over matters of inter9 state commerce. 

10 SEC. 8. EXPEDITED JUDICIAL REVIEW. 

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

12 Notwithstanding any other provision of law, any civil ac13 tion challenging the constitutionality, on its face, of this 

14 Act, or any provision thereof, shall be heard by a district 

15 court of three judges convened pursuant to the provisions 

16 of section 2284 of title 28, United States Code. 

17 (b) APPELLATE REVIEW.—Notwithstanding any 

18 other provision of law, an interlocutory or final judgment, 

19 decree, or order of the court of three judges in an action 

20 under subsection (a) holding this Act, or any provision 

21 thereof, unconstitutional shall be reviewable as a matter 

22 of right by direct appeal to the Supreme Court. Any such 

23 appeal shall be filed not more than 20 days after entry 

24 of such judgment, decree, or 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’’ means a member state under the Streamlined 

12 Sales and Use Tax Agreement. 

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

14 means throughout the territory of the United States, 

15 including any of its territories and possessions. 

16 (5) PERSON.—The term ‘‘person’’ means an in17 dividual, trust, estate, fiduciary, partnership, cor18 poration, or any other legal entity, and includes a 

19 State or local government. 

20 (6) REMOTE SALE AND REMOTE SELLER.—The 

21 terms ‘‘remote sale’’ and ‘‘remote seller’’ refer to a 

22 sale of goods or services attributed to a particular 

23 taxing jurisdiction with respect to which the seller 

24 did not have adequate physical presence to establish 

25 nexus under the law existing on the day before the 

26 date of enactment of this Act so as to allow such ju-
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1 risdiction to require the seller to collect and remit 

2 sales or use taxes with respect to such sale. 

3 (7) STATE.—The term ‘‘State’’ means any 

4 State of the United States of America and includes 

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

6 territory or possession of the United States. 

7 (8) STREAMLINED SALES AND USE TAX AGREE8 MENT.—The term ‘‘Streamlined Sales and Use Tax 

9 Agreement’’ (or ‘‘the Agreement’’) means the 

10 multistate agreement with that title adopted on No11 vember 12, 2002, and as amended from time to 

12 time.

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