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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 25 Introduced in House (IH)]

<DOC>

118th CONGRESS
  1st Session
                                 H. R. 25

To promote freedom, fairness, and economic opportunity by repealing the 
 income tax and other taxes, abolishing the Internal Revenue Service, 
 and enacting a national sales tax to be administered primarily by the 
                                States.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2023

    Mr. Carter of Georgia (for himself, Mr. Clyde, Mr. Duncan, Mrs. 
 Cammack, Mr. Perry, Mr. Good of Virginia, Mr. Massie, Mr. Norman, Mr. 
   Posey, Mr. Palmer, Mr. Banks, and Mr. Loudermilk) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
To promote freedom, fairness, and economic opportunity by repealing the 
 income tax and other taxes, abolishing the Internal Revenue Service, 
 and enacting a national sales tax to be administered primarily by the 
                                States.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``FairTax Act of 
2023''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.
 TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT 
                                 TAXES

Sec. 101. Income taxes repealed.
Sec. 102. Payroll taxes repealed.
Sec. 103. Estate and gift taxes repealed.
Sec. 104. Conforming amendments; effective date.
                      TITLE II--SALES TAX ENACTED

Sec. 201. Sales tax.
Sec. 202. Conforming and technical amendments.
                        TITLE III--OTHER MATTERS

Sec. 301. Phase-out of administration of repealed Federal taxes.
Sec. 302. Administration of other Federal taxes.
Sec. 303. Sales tax inclusive Social Security benefits indexation.
   TITLE IV--SUNSET OF SALES TAX IF SIXTEENTH AMENDMENT NOT REPEALED

Sec. 401. Elimination of sales tax if Sixteenth Amendment not repealed.

SEC. 2. CONGRESSIONAL FINDINGS.

    (a) Findings Relating to Federal Income Tax.--Congress finds the 
Federal income tax--
            (1) retards economic growth and has reduced the standard of 
        living of the American public;
            (2) impedes the international competitiveness of United 
        States industry;
            (3) reduces savings and investment in the United States by 
        taxing income multiple times;
            (4) slows the capital formation necessary for real wages to 
        steadily increase;
            (5) lowers productivity;
            (6) imposes unacceptable and unnecessary administrative and 
        compliance costs on individual and business taxpayers;
            (7) is unfair and inequitable;
            (8) unnecessarily intrudes upon the privacy and civil 
        rights of United States citizens;
            (9) hides the true cost of government by embedding taxes in 
        the costs of everything Americans buy;
            (10) is not being complied with at satisfactory levels and 
        therefore raises the tax burden on law abiding citizens; and
            (11) impedes upward social mobility.
    (b) Findings Relating to Federal Payroll Taxes.--Congress finds 
further that the Social Security and Medicare payroll taxes and self-
employment taxes--
            (1) raise the cost of employment;
            (2) destroy jobs and cause unemployment; and
            (3) have a disproportionately adverse impact on lower 
        income Americans.
    (c) Findings Relating to Federal Estate and Gift Taxes.--Congress 
finds further that the Federal estate and gift taxes--
            (1) force family businesses and farms to be sold by the 
        family to pay such taxes;
            (2) discourage capital formation and entrepreneurship;
            (3) foster the continued dominance of large enterprises 
        over small family-owned companies and farms; and
            (4) impose unacceptably high tax planning costs on small 
        businesses and farms.
    (d) Findings Relating to National Sales Tax.--Congress finds 
further that a broad-based national sales tax on goods and services 
purchased for final consumption--
            (1) is similar in many respects to the sales and use taxes 
        in place in 45 of the 50 States;
            (2) will promote savings and investment;
            (3) will promote fairness;
            (4) will promote economic growth;
            (5) will raise the standard of living;
            (6) will increase investment;
            (7) will enhance productivity and international 
        competitiveness;
            (8) will reduce administrative burdens on the American 
        taxpayer;
            (9) will improve upward social mobility; and
            (10) will respect the privacy interests and civil rights of 
        taxpayers.
    (e) Findings Relating to Administration of National Sales Tax.--
Congress further finds that--
            (1) most of the practical experience administering sales 
        taxes is found at the State governmental level;
            (2) it is desirable to harmonize Federal and State 
        collection and enforcement efforts to the maximum extent 
        possible;
            (3) it is sound tax administration policy to foster 
        administration and collection of the Federal sales tax at the 
        State level in return for a reasonable administration fee to 
        the States; and
            (4) businesses that must collect and remit taxes should 
        receive reasonable compensation for the cost of doing so.
    (f) Findings Relating to Repeal of Present Federal Tax System.--
Congress further finds that the 16th Amendment to the United States 
Constitution should be repealed.

 TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT 
                                 TAXES

SEC. 101. INCOME TAXES REPEALED.

    Subtitle A of the Internal Revenue Code of 1986 (relating to income 
taxes and self-employment taxes) is repealed.

SEC. 102. PAYROLL TAXES REPEALED.

    (a) In General.--Subtitle C of the Internal Revenue Code of 1986 
(relating to payroll taxes and withholding of income taxes) is 
repealed.
    (b) Funding of Social Security.--For funding of the Social Security 
Trust Funds from general revenue, see section 201 of the Social 
Security Act (42 U.S.C. 401).

SEC. 103. ESTATE AND GIFT TAXES REPEALED.

    Subtitle B of the Internal Revenue Code of 1986 (relating to estate 
and gift taxes) is repealed.

SEC. 104. CONFORMING AMENDMENTS; EFFECTIVE DATE.

    (a) Conforming Amendments.--The Internal Revenue Code of 1986 is 
amended--
            (1) by striking subtitle H (relating to financing of 
        Presidential election campaigns); and
            (2) by redesignating--
                    (A) subtitle D (relating to miscellaneous excise 
                taxes) as subtitle B;
                    (B) subtitle E (relating to alcohol, tobacco, and 
                certain other excise taxes) as subtitle C;
                    (C) subtitle F (relating to procedure and 
                administration) as subtitle D;
                    (D) subtitle G (relating to the Joint Committee on 
                Taxation) as subtitle E;
                    (E) subtitle I (relating to the Trust Fund Code) as 
                subtitle F;
                    (F) subtitle J (relating to coal industry health 
                benefits) as subtitle G; and
                    (G) subtitle K (relating to group health plan 
                portability, access, and renewability requirements) as 
                subtitle H.
    (b) Redesignation of 1986 Code.--
            (1) In general.--The Internal Revenue Code of 1986 enacted 
        on October 22, 1986, as heretofore, hereby, or hereafter 
        amended, may be cited as the Internal Revenue Code of 2023.
            (2) References in laws, etc.--Except when inappropriate, 
        any reference in any law, Executive order, or other document--
                    (A) to the Internal Revenue Code of 1986 shall 
                include a reference to the Internal Revenue Code of 
                2023; and
                    (B) to the Internal Revenue Code of 2023 shall 
                include a reference to the provisions of law formerly 
                known as the Internal Revenue Code of 1986.
    (c) Additional Amendments.--For additional conforming amendments, 
see section 202 of this Act.
    (d) Effective Date.--Except as otherwise provided in this Act, the 
amendments made by this Act shall take effect on January 1, 2023.

                      TITLE II--SALES TAX ENACTED

SEC. 201. SALES TAX.

    (a) In General.--The Internal Revenue Code of 2023 is amended by 
inserting before subtitle B (as redesignated by section 104(a)(2)(A)) 
the following new subtitle:

                        ``Subtitle A--Sales Tax

``Sec. 1. Principles of interpretation.
``Sec. 2. Definitions.
   ``Chapter 1. Interpretation; Definitions; Imposition of Tax; etc.

                     ``Chapter 2. Credits; Refunds

               ``Chapter 3. Family Consumption Allowance

     ``Chapter 4. Federal and State Cooperative Tax Administration

              ``Chapter 5. Other Administrative Provisions

           ``Chapter 6. Collections; Appeals; Taxpayer Rights

                       ``Chapter 7. Special Rules

             ``Chapter 8. Financial Intermediation Services

                    ``Chapter 9. Additional Matters

``SEC. 1. PRINCIPLES OF INTERPRETATION.

    ``(a) In General.--Any court, the Secretary, and any sales tax 
administering authority shall consider the purposes of this subtitle 
(as set forth in subsection (b)) as the primary aid in statutory 
construction.
    ``(b) Purposes.--The purposes of this subtitle are as follows:
            ``(1) To raise revenue needed by the Federal Government in 
        a manner consistent with the other purposes of this subtitle.
            ``(2) To tax all consumption of goods and services in the 
        United States once, without exception, but only once.
            ``(3) To prevent double, multiple, or cascading taxation.
            ``(4) To simplify the tax law and reduce the administration 
        costs of, and the costs of compliance with, the tax law.
            ``(5) To provide for the administration of the tax law in a 
        manner that respects privacy, due process, individual rights 
        when interacting with the government, the presumption of 
        innocence in criminal proceedings, and the presumption of 
        lawful behavior in civil proceedings.
            ``(6) To increase the role of State governments in Federal 
        tax administration because of State government expertise in 
        sales tax administration.
            ``(7) To enhance generally cooperation and coordination 
        among State tax administrators; and to enhance cooperation and 
        coordination among Federal and State tax administrators, 
        consistent with the principle of intergovernmental tax 
        immunity.
    ``(c) Secondary Aids to Statutory Construction.--As a secondary aid 
in statutory construction, any court, the Secretary, and any sales tax 
administering authority shall consider--
            ``(1) the common law canons of statutory construction,
            ``(2) the meaning and construction of concepts and terms 
        used in the Internal Revenue Code of 1986 as in effect before 
        the effective date of this subtitle, and
            ``(3) construe any ambiguities in this Act in favor of 
        reserving powers to the States respectively, or to the people.

``SEC. 2. DEFINITIONS.

    ``(a) In General.--For purposes of this subtitle--
            ``(1) Affiliated firms.--A firm is affiliated with another 
        if 1 firm owns 50 percent or more of--
                    ``(A) the voting shares in a corporation, or
                    ``(B) the capital interests of a business firm that 
                is not a corporation.
            ``(2) Conforming state sales tax.--The term `conforming 
        State sales tax' means a sales tax imposed by a State that 
        adopts the same definition of taxable property and services as 
        adopted by this subtitle.
            ``(3) Designated commercial private courier service.--The 
        term `designated commercial private courier service' means a 
        firm designated as such by the Secretary or any sales tax 
        administering authority, upon application of the firm, if the 
        firm--
                    ``(A) provides its services to the general public,
                    ``(B) records electronically to its data base kept 
                in the regular course of its business the date on which 
                an item was given to such firm for delivery, and
                    ``(C) has been operating for at least 1 year.
            ``(4) Education and training.--The term `education and 
        training' means tuition for primary, secondary, or 
        postsecondary level education, and job-related training 
        courses. Such term does not include room, board, sports 
        activities, recreational activities, hobbies, games, arts or 
        crafts or cultural activities.
            ``(5) Gross payments.--The term `gross payments' means 
        payments for taxable property or services, including Federal 
        taxes imposed by this title.
            ``(6) Intangible property.--
                    ``(A) In general.--The term `intangible property' 
                includes copyrights, trademarks, patents, goodwill, 
                financial instruments, securities, commercial paper, 
                debts, notes and bonds, and other property deemed 
                intangible at common law. The Secretary shall, by 
                regulation resolve differences among the provisions of 
                common law of the several States.
                    ``(B) Certain types of property.--Such term does 
                not include tangible personal property (or rents or 
                leaseholds of any term thereon), real property (or 
                rents or leaseholds of any term thereon) and computer 
                software.
            ``(7) Person.--The term `person' means any natural person, 
        and unless the context clearly does not allow it, any 
        corporation, partnership, limited liability company, trust, 
        estate, government, agency, administration, organization, 
        association, or other legal entity (foreign or domestic).
            ``(8) Produce, provide, render, or sell taxable property or 
        services.--
                    ``(A) In general.--A taxable property or service is 
                used to produce, provide, render, or sell a taxable 
                property or service if such property or service is 
                purchased by a person engaged in a trade or business 
                for the purpose of employing or using such taxable 
                property or service in the production, provision, 
                rendering, or sale of other taxable property or 
                services in the ordinary course of that trade or 
                business.
                    ``(B) Research, experimentation, testing, and 
                development.--Taxable property or services used in a 
                trade or business for the purpose of research, 
                experimentation, testing, and development shall be 
                treated as used to produce, provide, render, or sell 
                taxable property or services.
                    ``(C) Insurance payments.--Taxable property or 
                services purchased by an insurer on behalf of an 
                insured shall be treated as used to produce, provide, 
                render, or sell taxable property or services if the 
                premium for the insurance contract giving rise to the 
                insurer's obligation was subject to tax pursuant to 
                section 801 (relating to financial intermediation 
                services).
                    ``(D) Education and training.--Education and 
                training shall be treated as services used to produce, 
                provide, render, or sell taxable property or services.
            ``(9) Registered seller.--The term `registered seller' 
        means a person registered pursuant to section 502.
            ``(10) Sales tax administering authority.--The term `sales 
        tax administering authority' means--
                    ``(A) the State agency designated to collect and 
                administer the sales tax imposed by this subtitle, in 
                an administering State, or
                    ``(B) the Secretary, in a State that is neither--
                            ``(i) an administering State, nor
                            ``(ii) a State that has elected to have its 
                        sales tax administered by an administering 
                        State.
            ``(11) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(12) Taxable employer.--
                    ``(A) In general.--The term `taxable employer' 
                includes--
                            ``(i) any household employing domestic 
                        servants, and
                            ``(ii) any government except for government 
                        enterprises (as defined in section 704).
                    ``(B) Exceptions.--The term `taxable employer' does 
                not include any employer which is--
                            ``(i) engaged in a trade or business,
                            ``(ii) a not-for-profit organization (as 
                        defined in section 706), or
                            ``(iii) a government enterprise (as defined 
                        in section 704).
                    ``(C) Cross reference.--For rules relating to 
                collection and remittance of tax on wages by taxable 
                employers, see section 103(b)(2).
            ``(13) Tax inclusive fair market value.--The term `tax 
        inclusive fair market value' means the fair market value of 
        taxable property or services plus the tax imposed by this 
        subtitle.
            ``(14) Taxable property or service.--
                    ``(A) General rule.--The term `taxable property or 
                service' means--
                            ``(i) any property (including leaseholds of 
                        any term or rents with respect to such 
                        property) but excluding--
                                    ``(I) intangible property, and
                                    ``(II) used property, and
                            ``(ii) any service (including any financial 
                        intermediation services as determined by 
                        section 801).
                    ``(B) Service.--For purposes of subparagraph (A), 
                the term `service'--
                            ``(i) shall include any service performed 
                        by an employee for which the employee is paid 
                        wages or a salary by a taxable employer, and
                            ``(ii) shall not include any service 
                        performed by an employee for which the employee 
                        is paid wages or a salary--
                                    ``(I) by an employer in the regular 
                                course of the employer's trade or 
                                business,
                                    ``(II) by an employer that is a 
                                not-for-profit organization (as defined 
                                in section 706),
                                    ``(III) by an employer that is a 
                                government enterprise (as defined in 
                                section 704), and
                                    ``(IV) by taxable employers to 
                                employees directly providing education 
                                and training.
            ``(15) United states.--The term `United States', when used 
        in the geographical sense, means each of the 50 States, the 
        District of Columbia, and any commonwealth, territory, or 
        possession of the United States.
            ``(16) Used property.--The term `used property' means--
                    ``(A) property on which the tax imposed by section 
                101 has been collected and for which no credit has been 
                allowed under section 202, 203, or 205, or
                    ``(B) property that was held other than for a 
                business purpose (as defined in section 102(b)) on 
                December 31, 2024.
            ``(17) Wages and salary.--The terms `wage' and `salary' 
        mean all compensation paid for employment service including 
        cash compensation, employee benefits, disability insurance, or 
        wage replacement insurance payments, unemployment compensation 
        insurance, workers' compensation insurance, and the fair market 
        value of any other consideration paid by an employer to an 
        employee in consideration for employment services rendered.
    ``(b) Cross References.--
            ``(1) For the definition of business purposes, see section 
        102(b).
            ``(2) For the definition of insurance contract, see section 
        206(e).
            ``(3) For the definition of qualified family, see section 
        302.
            ``(4) For the definition of monthly poverty level, see 
        section 303.
            ``(5) For the definition of large seller, see section 
        501(e)(3).
            ``(6) For the definition of hobby activities, see section 
        701.
            ``(7) For the definition of gaming sponsor, see section 
        701(a).
            ``(8) For the definition of a chance, see section 701(b).
            ``(9) For the definition of government enterprise, see 
        section 704(b).
            ``(10) For the definition of mixed use property, see 
        section 705.
            ``(11) For the definition of qualified not-for-profit 
        organization, see section 706.
            ``(12) For the definition of financial intermediation 
        services, see section 801.

   ``CHAPTER 1--INTERPRETATION; DEFINITIONS; IMPOSITION OF TAX; ETC.

``Sec. 101. Imposition of sales tax.
``Sec. 102. Intermediate and export sales.
``Sec. 103. Rules relating to collection and remittance of tax.

``SEC. 101. IMPOSITION OF SALES TAX.

    ``(a) In General.--There is hereby imposed a tax on the use or 
consumption in the United States of taxable property or services.
    ``(b) Rate.--
            ``(1) For 2025.--In the calendar year 2025, the rate of tax 
        is 23 percent of the gross payments for the taxable property or 
        service.
            ``(2) For years after 2025.--For years after the calendar 
        year 2025, the rate of tax is the combined Federal tax rate 
        percentage (as defined in paragraph (3)) of the gross payments 
        for the taxable property or service.
            ``(3) Combined federal tax rate percentage.--The combined 
        Federal tax rate percentage is the sum of--
                    ``(A) the general revenue rate (as defined in 
                paragraph (4)),
                    ``(B) the old-age, survivors and disability 
                insurance rate, and
                    ``(C) the hospital insurance rate.
            ``(4) General revenue rate.--The general revenue rate shall 
        be 14.91 percent.
    ``(c) Coordination With Import Duties.--The tax imposed by this 
section is in addition to any import duties imposed by chapter 4 of 
title 19, United States Code. The Secretary shall provide by regulation 
that, to the maximum extent practicable, the tax imposed by this 
section on imported taxable property and services is collected and 
administered in conjunction with any applicable import duties imposed 
by the United States.
    ``(d) Liability for Tax.--
            ``(1) In general.--The person using or consuming taxable 
        property or services in the United States is liable for the tax 
        imposed by this section, except as provided in paragraph (2) of 
        this subsection.
            ``(2) Exception where tax paid to seller.--A person using 
        or consuming a taxable property or service in the United States 
        is not liable for the tax imposed by this section if the person 
        pays the tax to a person selling the taxable property or 
        service and receives from such person a purchaser's receipt 
        within the meaning of section 509.

``SEC. 102. INTERMEDIATE AND EXPORT SALES.

    ``(a) In General.--For purposes of this subtitle--
            ``(1) Business and export purposes.--No tax shall be 
        imposed under section 101 on any taxable property or service 
        purchased for a business purpose in a trade or business.
            ``(2) Investment purpose.--No tax shall be imposed under 
        section 101 on any taxable property or service purchased for an 
        investment purpose and held exclusively for an investment 
        purpose.
            ``(3) State government functions.--No tax shall be imposed 
        under section 101 on State government functions that do not 
        constitute the final consumption of property or services.
    ``(b) Business Purposes.--For purposes of this section, the term 
`purchased for a business purpose in a trade or business' means 
purchased by a person engaged in a trade or business and used in that 
trade or business--
            ``(1) for resale,
            ``(2) to produce, provide, render, or sell taxable property 
        or services, or
            ``(3) in furtherance of other bona fide business purposes.
    ``(c) Investment Purposes.--For purposes of this section, the term 
`purchased for an investment purpose' means property purchased 
exclusively for purposes of appreciation or the production of income 
but not entailing more than minor personal efforts.

``SEC. 103. RULES RELATING TO COLLECTION AND REMITTANCE OF TAX.

    ``(a) Liability for Collection and Remittance of the Tax.--Except 
as provided otherwise by this section, any tax imposed by this subtitle 
shall be collected and remitted by the seller of taxable property or 
services (including financial intermediation services).
    ``(b) Tax To Be Remitted by Purchaser in Certain Circumstances.--
            ``(1) In general.--In the case of taxable property or 
        services purchased outside of the United States and imported 
        into the United States for use or consumption in the United 
        States, the purchaser shall remit the tax imposed by section 
        101.
            ``(2) Certain wages or salary.--In the case of wages or 
        salary paid by a taxable employer which are taxable services, 
        the employer shall remit the tax imposed by section 101.
    ``(c) Conversion of Business or Export Property or Services.--
Property or services purchased for a business purpose in a trade or 
business or for export (sold untaxed pursuant to section 102(a)) that 
is subsequently converted to personal use shall be deemed purchased at 
the time of conversion and shall be subject to the tax imposed by 
section 101 at the fair market value of the converted property as of 
the date of conversion. The tax shall be due as if the property had 
been sold at the fair market value during the month of conversion. The 
person using or consuming the converted property is liable for and 
shall remit the tax.
    ``(d) Barter Transactions.--If gross payment for taxable property 
or services is made in other than money, then the person responsible 
for collecting and remitting the tax shall remit the tax to the sales 
tax administering authority in money as if gross payment had been made 
in money at the tax inclusive fair market value of the taxable property 
or services purchased.

                     ``CHAPTER 2--CREDITS; REFUNDS

``Sec. 201. Credits and refunds.
``Sec. 202. Business use conversion credit.
``Sec. 203. Intermediate and export sales credit.
``Sec. 204. Administration credit.
``Sec. 205. Bad debt credit.
``Sec. 206. Insurance proceeds credit.
``Sec. 207. Refunds.

``SEC. 201. CREDITS AND REFUNDS.

    ``(a) In General.--Each person shall be allowed a credit with 
respect to the taxes imposed by section 101 for each month in an amount 
equal to the sum of--
            ``(1) such person's business use conversion credit pursuant 
        to section 202 for such month,
            ``(2) such person's intermediate and export sales credit 
        pursuant to section 203 for such month,
            ``(3) the administration credit pursuant to section 204 for 
        such month,
            ``(4) the bad debt credit pursuant to section 205 for such 
        month,
            ``(5) the insurance proceeds credit pursuant to section 206 
        for such month,
            ``(6) the transitional inventory credit pursuant to section 
        902, and
            ``(7) any amount paid in excess of the amount due.
    ``(b) Credits Not Additive.--Only one credit allowed by chapter 2 
may be taken with respect to any particular gross payment.

``SEC. 202. BUSINESS USE CONVERSION CREDIT.

    ``(a) In General.--For purposes of section 201, a person's business 
use conversion credit for any month is the aggregate of the amounts 
determined under subsection (b) with respect to taxable property and 
services--
            ``(1) on which tax was imposed by section 101 (and actually 
        paid), and
            ``(2) which commenced to be 95 percent or more used during 
        such month for business purposes (within the meaning of section 
        102(b)).
    ``(b) Amount of Credit.--The amount determined under this paragraph 
with respect to any taxable property or service is the lesser of--
            ``(1) the product of--
                    ``(A) the rate imposed by section 101, and
                    ``(B) the quotient that is--
                            ``(i) the fair market value of the property 
                        or service when its use is converted, divided 
                        by
                            ``(ii) the quantity that is one minus the 
                        tax rate imposed by section 101, or
            ``(2) the amount of tax paid with respect to such taxable 
        property or service, including the amount, if any, determined 
        in accordance with section 705 (relating to mixed use 
        property).

``SEC. 203. INTERMEDIATE AND EXPORT SALES CREDIT.

    ``For purposes of section 201, a person's intermediate and export 
sales credit is the amount of sales tax paid on the purchase of any 
taxable property or service purchased for--
            ``(1) a business purpose in a trade or business (as defined 
        in section 102(b)), or
            ``(2) export from the United States for use or consumption 
        outside the United States.

``SEC. 204. ADMINISTRATION CREDIT.

    ``(a) In General.--Every person filing a timely monthly report 
(with regard to extensions) in compliance with section 501 shall be 
entitled to a taxpayer administrative credit equal to the greater of--
            ``(1) $200, or
            ``(2) one-quarter of 1 percent of the tax remitted.
    ``(b) Limitation.--The credit allowed under this section shall not 
exceed 20 percent of the tax due to be remitted prior to the 
application of any credit or credits permitted by section 201.

``SEC. 205. BAD DEBT CREDIT.

    ``(a) Financial Intermediation Services.--Any person who has 
experienced a bad debt (other than unpaid invoices within the meaning 
of subsection (b)) shall be entitled to a credit equal to the product 
of--
            ``(1) the rate imposed by section 101, and
            ``(2) the quotient that is--
                    ``(A) the amount of the bad debt (as defined in 
                section 802), divided by
                    ``(B) the quantity that is one minus the rate 
                imposed by section 101.
    ``(b) Unpaid Invoices.--Any person electing the accrual method 
pursuant to section 503 that has with respect to a transaction--
            ``(1) invoiced the tax imposed by section 101,
            ``(2) remitted the invoiced tax,
            ``(3) actually delivered the taxable property or performed 
        the taxable services invoiced, and
            ``(4) not been paid 180 days after date the invoice was due 
        to be paid,
shall be entitled to a credit equal to the amount of tax remitted and 
unpaid by the purchaser.
    ``(c) Subsequent Payment.--Any payment made with respect to a 
transaction subsequent to a section 205 credit being taken with respect 
to that transaction shall be subject to tax in the month the payment 
was received as if a tax inclusive sale of taxable property and 
services in the amount of the payment had been made.
    ``(d) Partial Payments.--Partial payments shall be treated as pro 
rata payments of the underlying obligation and shall be allocated 
proportionately--
            ``(1) for fully taxable payments, between payment for the 
        taxable property and service and tax, and
            ``(2) for partially taxable payments, among payment for the 
        taxable property and service, tax and other payment.
    ``(e) Related Parties.--The credit provided by this section shall 
not be available with respect to sales made to related parties. For 
purposes of this section, related party means affiliated firms and 
family members (as defined in section 302(b)).

``SEC. 206. INSURANCE PROCEEDS CREDIT.

    ``(a) In General.--A person receiving a payment from an insurer by 
virtue of an insurance contract shall be entitled to a credit in an 
amount determined by subsection (b), less any amount paid to the 
insured by the insurer pursuant to subsection (c), if the entire 
premium (except that portion allocable to the investment account of the 
underlying policy) for the insurance contract giving rise to the 
insurer's obligation to make a payment to the insured was subject to 
the tax imposed by section 101 and said tax was paid.
    ``(b) Credit Amount.--The amount of the credit shall be the product 
of--
            ``(1) the rate imposed by section 101, and
            ``(2) the quotient that is--
                    ``(A) the amount of the payment made by the insurer 
                to the insured, divided by
                    ``(B) the quantity that is one minus the rate 
                imposed by section 101.
    ``(c) Administrative Option.--The credit determined in accordance 
with subsection (b) shall be paid by the insurer to the insured and the 
insurer shall be entitled to the credit in lieu of the insured, except 
that the insurer may elect, in a form prescribed by the Secretary, to 
not pay the credit and require the insured to make application for the 
credit. In the event of such election, the insurer shall provide to the 
Secretary and the insured the name and tax identification number of the 
insurer and of the insured and indicate the proper amount of the 
credit.
    ``(d) Coordination With Respect to Exemption.--If taxable property 
or services purchased by an insurer on behalf of an insured are 
purchased free of tax by virtue of section 2(a)(8)(C), then the credit 
provided by this section shall not be available with respect to that 
purchase.
    ``(e) Insurance Contract.--For purposes of subsection (a), the term 
`insurance contract' shall include a life insurance contract, a health 
insurance contract, a property and casualty loss insurance contract, a 
general liability insurance contract, a marine insurance contract, a 
fire insurance contract, an accident insurance contract, a disability 
insurance contract, a long-term care insurance contract, and an 
insurance contract that provides a combination of these types of 
insurance.

``SEC. 207. REFUNDS.

    ``(a) Registered Sellers.--If a registered seller files a monthly 
tax report with an overpayment, then, upon application by the 
registered seller in a form prescribed by the sales tax administering 
authority, the overpayment shown on the report shall be refunded to the 
registered seller within 60 days of receipt of said application. In the 
absence of such application, the overpayment may be carried forward, 
without interest, by the person entitled to the credit.
    ``(b) Other Persons.--If a person other than a registered seller 
has an overpayment for any month, then, upon application by the person 
in a form prescribed by the sales tax administering authority, the 
credit balance due shall be refunded to the person within 60 days of 
receipt of said application.
    ``(c) Interest.--No interest shall be paid on any balance due from 
the sales tax administering authority under this subsection for any 
month if such balance due is paid within 60 days after the application 
for refund is received. Balances due not paid within 60 days after the 
application for refund is received shall bear interest from the date of 
application. Interest shall be paid at the Federal short-term rate (as 
defined in section 511).
    ``(d) Suspension of Period To Pay Refund Only if Federal or State 
Court Ruling.--The 60-day periods under subsections (a) and (b) shall 
be suspended with respect to a purported overpayment (or portion 
thereof) only during any period that there is in effect a preliminary, 
temporary, or final ruling from a Federal or State court that there is 
reasonable cause to believe that such overpayment may not actually be 
due.

               ``CHAPTER 3--FAMILY CONSUMPTION ALLOWANCE

``Sec. 301. Family consumption allowance.
``Sec. 302. Qualified family.
``Sec. 303. Monthly poverty level.
``Sec. 304. Rebate mechanism.
``Sec. 305. Change in family circumstances.

``SEC. 301. FAMILY CONSUMPTION ALLOWANCE.

    ``Each qualified family shall be eligible to receive a sales tax 
rebate each month. The sales tax rebate shall be in an amount equal to 
the product of--
            ``(1) the rate of tax imposed by section 101, and
            ``(2) the monthly poverty level.

``SEC. 302. QUALIFIED FAMILY.

    ``(a) General Rule.--For purposes of this chapter, the term 
`qualified family' shall mean one or more family members sharing a 
common residence. All family members sharing a common residence shall 
be considered as part of one qualified family.
    ``(b) Family Size Determination.--
            ``(1) In general.--To determine the size of a qualified 
        family for purposes of this chapter, family members shall 
        mean--
                    ``(A) an individual,
                    ``(B) the individual's spouse,
                    ``(C) all lineal ancestors and descendants of said 
                individual (and such individual's spouse),
                    ``(D) all legally adopted children of such 
                individual (and such individual's spouse), and
                    ``(E) all children under legal guardianship of such 
                individual (or such individual's spouse).
            ``(2) Identification requirements.--In order for a person 
        to be counted as a member of the family for purposes of 
        determining the size of the qualified family, such person 
        must--
                    ``(A) have a bona fide Social Security number, and
                    ``(B) be a lawful resident of the United States.
    ``(c) Children Living Away From Home.--
            ``(1) Students living away from home.--Any person who was a 
        registered student during not fewer than 5 months in a calendar 
        year while living away from the common residence of a qualified 
        family but who receives over 50 percent of such person's 
        support during a calendar year from members of the qualified 
        family shall be included as part of the family unit whose 
        members provided said support for purposes of this chapter.
            ``(2) Children of divorced or separated parents.--If a 
        child's parents are divorced or legally separated, a child for 
        purposes of this chapter shall be treated as part of the 
        qualified family of the custodial parent. In cases of joint 
        custody, the custodial parent for purposes of this chapter 
        shall be the parent that has custody of the child for more than 
        one-half of the time during a given calendar year. A parent 
        entitled to be treated as the custodial parent pursuant to this 
        paragraph may release this claim to the other parent if said 
        release is in writing.
    ``(d) Annual Registration.--In order to receive the family 
consumption allowance provided by section 301, a qualified family must 
register with the sales tax administering authority in a form 
prescribed by the Secretary. The annual registration form shall 
provide--
            ``(1) the name of each family member who shared the 
        qualified family's residence on the family determination date,
            ``(2) the Social Security number of each family member on 
        the family determination date who shared the qualified family's 
        residence on the family determination date,
            ``(3) the family member or family members to whom the 
        family consumption allowance should be paid,
            ``(4) a certification that all listed family members are 
        lawful residents of the United States,
            ``(5) a certification that all family members sharing the 
        common residence are listed,
            ``(6) a certification that no family members were 
        incarcerated on the family determination date (within the 
        meaning of subsection (l)), and
            ``(7) the address of the qualified family.
Said registration shall be signed by all members of the qualified 
family that have attained the age of 21 years as of the date of filing.
    ``(e) Registration Not Mandatory.--Registration is not mandatory 
for any qualified family.
    ``(f) Effect of Failure To Provide Annual Registration.--Any 
qualified family that fails to register in accordance with this section 
within 30 days of the family determination date, shall cease receiving 
the monthly family consumption allowance in the month beginning 90 days 
after the family determination date.
    ``(g) Effect of Curing Failure To Provide Annual Registration.--Any 
qualified family that failed to timely make its annual registration in 
accordance with this section but subsequently cures its failure to 
register, shall be entitled to up to 6 months of lapsed sales tax 
rebate payments. No interest on lapsed payment amount shall be paid.
    ``(h) Effective Date of Annual Registrations.--Annual registrations 
shall take effect for the month beginning 90 days after the family 
registration date.
    ``(i) Effective Date of Revised Registrations.--A revised 
registration made pursuant to section 305 shall take effect for the 
first month beginning 60 days after the revised registration was filed. 
The existing registration shall remain in effect until the effective 
date of the revised registration.
    ``(j) Determination of Registration Filing Date.--An annual or 
revised registration shall be deemed filed when--
            ``(1) deposited in the United States mail, postage prepaid, 
        to the address of the sales tax administering authority,
            ``(2) delivered and accepted at the offices of the sales 
        tax administering authority, or
            ``(3) provided to a designated commercial private courier 
        service for delivery within 2 days to the sales tax 
        administering authority at the address of the sales tax 
        administering authority.
    ``(k) Proposed Registration To Be Provided.--Thirty or more days 
before the family registration date, the sales tax administering 
authority shall mail to the address shown on the most recent rebate 
registration or change of address notice filed pursuant to section 
305(d) a proposed registration that may be simply signed by the 
appropriate family members if family circumstances have not changed.
    ``(l) Incarcerated Individuals.--An individual shall not be 
eligible under this chapter to be included as a member of any qualified 
family if that individual--
            ``(1) is incarcerated in a local, State, or Federal jail, 
        prison, mental hospital, or other institution on the family 
        determination date, and
            ``(2) is scheduled to be incarcerated for 6 months or more 
        in the 12-month period following the effective date of the 
        annual registration or the revised registration of said 
        qualified family.
    ``(m) Family Determination Date.--The family determination date is 
a date assigned to each family by the Secretary for purposes of 
determining qualified family size and other information necessary for 
the administration of this chapter. The Secretary shall promulgate 
regulations regarding the issuance of family determination dates. In 
the absence of any regulations, the family determination date for all 
families shall be October 1. The Secretary may assign family 
determination dates for administrative convenience. Permissible means 
of assigning family determination dates include a method based on the 
birth dates of family members.
    ``(n) Cross Reference.--For penalty for filing false rebate claim, 
see section 504(i).

``SEC. 303. MONTHLY POVERTY LEVEL.

    ``(a) In General.--The monthly poverty level for any particular 
month shall be one-twelfth of the `annual poverty level'. For purposes 
of this section the `annual poverty level' shall be the sum of--
            ``(1) the annual level determined by the Department of 
        Health and Human Services poverty guidelines required by 
        sections 652 and 673(2) of the Omnibus Reconciliation Act of 
        1981 for a particular family size, and
            ``(2) in case of families that include a married couple, 
        the `annual marriage penalty elimination amount'.
    ``(b) Annual Marriage Penalty Elimination Amount.--The annual 
marriage penalty elimination amount shall be the amount that is--
            ``(1) the amount that is two times the annual level 
        determined by the Department of Health and Human Services 
        poverty guidelines required by sections 652 and 673(2) of the 
        Omnibus Reconciliation Act of 1981 for a family of one, less
            ``(2) the annual level determined by the Department of 
        Health and Human Services poverty guidelines required by 
        sections 652 and 673(2) of the Omnibus Reconciliation Act of 
        1981 for a family of two.

``SEC. 304. REBATE MECHANISM.

    ``(a) General Rule.--The Social Security Administration shall 
provide a monthly sales tax rebate to duly registered qualified 
families in an amount determined in accordance with section 301.
    ``(b) Persons Receiving Rebate.--The payments shall be made to the 
persons designated by the qualifying family in the annual or revised 
registration for each qualified family in effect with respect to the 
month for which payment is being made. Payments may only be made to 
persons 18 years or older. If more than 1 person is designated in a 
registration to receive the rebate, then the rebate payment shall be 
divided evenly between or among those persons designated.
    ``(c) When Rebates Mailed.--Rebates shall be mailed on or before 
the first business day of the month for which the rebate is being 
provided.
    ``(d) Smart Cards and Direct Electronic Deposit Permissible.--The 
Social Security Administration may provide rebates in the form of smart 
cards that carry cash balances in their memory for use in making 
purchases at retail establishments or by direct electronic deposit.

``SEC. 305. CHANGE IN FAMILY CIRCUMSTANCES.

    ``(a) General Rule.--In the absence of the filing of a revised 
registration in accordance with this chapter, the common residence of 
the qualified family, marital status and number of persons in a 
qualified family on the family registration date shall govern 
determinations required to be made under this chapter for purposes of 
the following calendar year.
    ``(b) No Double Counting.--In no event shall any person be 
considered part of more than one qualified family.
    ``(c) Revised Registration Permissible.--A qualified family may 
file a revised registration for purposes of section 302(d) to reflect a 
change in family circumstances. A revised registration form shall 
provide--
            ``(1) the name of each family member who shared the 
        qualified family's residence on the filing date of the revised 
        registration,
            ``(2) the Social Security number of each family member who 
        shared the qualified family's residence on the filing date of 
        the revised registration,
            ``(3) the family member or family members to whom the 
        family consumption allowance should be paid,
            ``(4) a certification that all listed family members are 
        lawful residents of the United States,
            ``(5) a certification that all family members sharing the 
        commoner residence are listed,
            ``(6) a certification that no family members were 
        incarcerated on the family determination date (within the 
        meaning of section 302(1)), and
            ``(7) the address of the qualified family.
Said revised registration shall be signed by all members of the 
qualified family that have attained the age of 21 years as of the 
filing date of the revised registration.
    ``(d) Change of Address.--A change of address for a qualified 
family may be filed with the sales tax administering authority at any 
time and shall not constitute a revised registration.
    ``(e) Revised Registration Not Mandatory.--Revised registrations 
reflecting changes in family status are not mandatory.

     ``CHAPTER 4--FEDERAL AND STATE COOPERATIVE TAX ADMINISTRATION

``Sec. 401. Authority for States to collect tax.
``Sec. 402. Federal administrative support for States.
``Sec. 403. Federal-State tax conferences.
``Sec. 404. Federal administration in certain States.
``Sec. 405. Interstate allocation and destination determination.
``Sec. 406. General administrative matters.
``Sec. 407. Jurisdiction.

``SEC. 401. AUTHORITY FOR STATES TO COLLECT TAX.

    ``(a) In General.--The tax imposed by section 101 on gross payments 
for the use or consumption of taxable property or services within a 
State shall be administered, collected, and remitted to the United 
States Treasury by such State if the State is an administering State.
    ``(b) Administering State.--For purposes of this section, the term 
`administering State' means any State--
            ``(1) which maintains a sales tax, and
            ``(2) which enters into a cooperative agreement with the 
        Secretary containing reasonable provisions governing the 
        administration by such State of the taxes imposed by the 
        subtitle and the remittance to the United States in a timely 
        manner of taxes collected under this chapter.
    ``(c) Cooperative Agreements.--The agreement under subsection 
(b)(2) shall include provisions for the expeditious transfer of funds, 
contact officers, dispute resolution, information exchange, 
confidentiality, taxpayer rights, and other matters of importance. The 
agreement shall not contain extraneous matters.
    ``(d) Timely Remittance of Tax.--
            ``(1) In general.--Administering States shall remit and pay 
        over taxes collected under this subtitle on behalf of the 
        United States (less the administration fee allowable under 
        paragraph (2)) not later than 5 days after receipt. Interest at 
        150 percent of the Federal short-term rate shall be paid with 
        respect to amounts remitted after the due date.
            ``(2) Administration fee.--An administering State may 
        retain an administration fee equal to one-quarter of 1 percent 
        of the amounts otherwise required to be remitted to the United 
        States under this chapter by the administering State.
    ``(e) Limitation on Administration of Tax by United States.--The 
Secretary may administer the tax imposed by this subtitle in an 
administering State only if--
            ``(1)(A) such State has failed on a regular basis to timely 
        remit to the United States taxes collected under this chapter 
        on behalf of the United States, or
            ``(B) such State has on a regular basis otherwise 
        materially breached the agreement referred to in subsection 
        (b)(2),
            ``(2) the State has failed to cure such alleged failures 
        and breaches within a reasonable time,
            ``(3) the Secretary provides such State with written notice 
        of such alleged failures and breaches, and
            ``(4) a District Court of the United States within such 
        State, upon application of the Secretary, has rendered a 
        decision--
                    ``(A) making findings of fact that--
                            ``(i) such State has failed on a regular 
                        basis to timely remit to the United States 
                        taxes collected under this chapter on behalf of 
                        the United States, or such State has on a 
                        regular basis otherwise materially breached the 
                        agreement referred to in subsection (b)(2),
                            ``(ii) the Secretary has provided such 
                        State with written notice of such alleged 
                        failures and breaches, and
                            ``(iii) the State has failed to cure such 
                        alleged failures and breaches within a 
                        reasonable time, and
                    ``(B) making a determination that it is in the best 
                interest of the citizens of the United States that the 
                administering State's authority to administer the tax 
                imposed by this subtitle be revoked and said tax be 
                administered directly by the Secretary.
        The order of the District Court revoking the authority of an 
        Administering State shall contain provisions governing the 
        orderly transfer of authority to the Secretary.
    ``(f) Reinstitution.--A State that has had its authority revoked 
pursuant to subsection (e) shall not be an administering State for a 
period of not less than 5 years after the date of the order of 
revocation. For the first calendar year commencing 8 years after the 
date of the order of revocation, the State shall be regarded without 
prejudice as eligible to become an administering State.
    ``(g) Third State Administration Permissible.--It shall be 
permissible for a State to contract with an administering State to 
administer the State's sales tax for an agreed fee. In this case, the 
agreement contemplated by subsection (c) shall have both the State and 
the Federal Government as parties.
    ``(h) Investigations and Audits.--Administering States shall not 
conduct investigations or audits at facilities in other administering 
States in connection with the tax imposed by section 101 or conforming 
State sales tax but shall instead cooperate with other administering 
States using the mechanisms established by section 402, by compact or 
by other agreement.

``SEC. 402. FEDERAL ADMINISTRATIVE SUPPORT FOR STATES.

    ``(a) In General.--The Secretary shall administer a program to 
facilitate information sharing among States.
    ``(b) State Compacts.--The Secretary shall facilitate, and may be a 
party to a compact among States for purposes of facilitating the 
taxation of interstate purchases and for other purposes that may 
facilitate implementation of this subtitle.
    ``(c) Agreement With Conforming States.--The Secretary is 
authorized to enter into and shall enter into an agreement among 
conforming States enabling conforming States to collect conforming 
State sales tax on sales made by sellers without a particular 
conforming State to a destination within that particular conforming 
State.
    ``(d) Secretary's Authority.--The Secretary shall have the 
authority to promulgate regulations, to provide guidelines, to assist 
States in administering the national sales tax, to provide for 
uniformity in the administration of the tax and to provide guidance to 
the public.

``SEC. 403. FEDERAL-STATE TAX CONFERENCES.

    ``Not less than once annually, the Secretary shall host a 
conference with the sales tax administrators from the various 
administering States to evaluate the state of the national sales tax 
system, to address issues of mutual concern and to develop and consider 
legislative, regulatory, and administrative proposals to improve the 
tax system.

``SEC. 404. FEDERAL ADMINISTRATION IN CERTAIN STATES.

    ``The Secretary shall administer the tax imposed by this subtitle 
in any State or other United States jurisdiction that--
            ``(1) is not an administering State, or
            ``(2) elected to have another State administer its tax in 
        accordance with section 401(g).

``SEC. 405. INTERSTATE ALLOCATION AND DESTINATION DETERMINATION.

    ``(a) Destination Generally.--The tax imposed by this subtitle is a 
destination principle tax. This section shall govern for purposes of 
determining--
            ``(1) whether the destination of taxable property and 
        services is within or without the United States, and
            ``(2) which State or territory within the United States is 
        the destination of taxable property and services.
    ``(b) Tangible Personal Property.--Except as provided in subsection 
(g) (relating to certain leases), the destination of tangible personal 
property shall be the State or territory in which the property was 
first delivered to the purchaser (including agents and authorized 
representatives).
    ``(c) Real Property.--The destination of real property, or rents or 
leaseholds on real property, shall be the State or territory in which 
the real property is located.
    ``(d) Other Property.--The destination of any other taxable 
property shall be the residence of the purchaser.
    ``(e) Services.--
            ``(1) General rule.--The destination of services shall be 
        the State or territory in which the use or consumption of the 
        services occurred. Allocation of service invoices relating to 
        more than 1 jurisdiction shall be on the basis of time or 
        another method determined by regulation.
            ``(2) Telecommunications services.--The destination of 
        telecommunications services shall be the residence of the 
        purchaser. Telecommunications services include telephone, 
        telegraph, beeper, radio, cable television, satellite, and 
        computer on-line or network services.
            ``(3) Domestic transportation services.--For transportation 
        services where all of the final destinations are within the 
        United States, the destination of transportation services shall 
        be the final destination of the trip (in the case of round or 
        multiple trip fares, the services amount shall be equally 
        allocated among each final destination).
            ``(4) International transportation services.--For 
        transportation services where the final destination or origin 
        of the trip is without the United States, the service amount 
        shall be deemed 50 percent attributable to the United States 
        destination or origin.
            ``(5) Electrical service.--The destination of electrical 
        services shall be the residence of the purchaser.
    ``(f) Financial Intermediation Services.--The destination of 
financial intermediation services shall be the residence of the 
purchaser.
    ``(g) Rents Paid for the Lease of Tangible Property.--
            ``(1) General rule.--Except as provided in paragraph (2), 
        the destination of rents paid for the lease of tangible 
        property and leaseholds on such property shall be where the 
        property is located while in use.
            ``(2) Land vehicles; aircraft, water craft.--The 
        destination of rental and lease payments on land vehicles, 
        aircraft and water craft shall be--
                    ``(A) in the case of rentals and leases of a term 
                of 1 month or less, the location where the land 
                vehicle, aircraft, or water craft was originally 
                delivered to the renter or lessee, and
                    ``(B) in the case of rentals and leases of a term 
                greater than 1 month, the residence of the renter or 
                lessee.
    ``(h) Allocation Rules.--For purposes of allocating revenue--
            ``(1) between or among administering States from taxes 
        imposed by this subtitle or from State sales taxes administered 
        by third-party administering States, or
            ``(2) between or among States imposing conforming State 
        sales taxes,
the revenue shall be allocated to those States that are the destination 
of the taxable property or service.
    ``(i) Federal Office of Revenue Allocation.--The Secretary shall 
establish an Office of Revenue Allocation to arbitrate any claims or 
disputes among administering States as to the destination of taxable 
property and services for purposes of allocating revenue between or 
among the States from taxes imposed by this subtitle. The determination 
of the Administrator of the Office of Revenue Allocation shall be 
subject to judicial review in any Federal court with competent 
jurisdiction. The standard of review shall be abuse of discretion.

``SEC. 406. GENERAL ADMINISTRATIVE MATTERS.

    ``(a) In General.--The Secretary and each sales tax administering 
authority may employ such persons as may be necessary for the 
administration of this subtitle and may delegate to employees the 
authority to conduct interviews, hearings, prescribe rules, promulgate 
regulations, and perform such other duties as are required by this 
subtitle.
    ``(b) Resolution of Any Inconsistent Rules and Regulations.--In the 
event that the Secretary and any sales tax administering authority have 
issued inconsistent rules or regulations, any lawful rule or regulation 
issued by the Secretary shall govern.
    ``(c) Adequate Notice To Be Provided.--Except in the case of an 
emergency declared by the Secretary (and not his designee), no rule or 
regulation issued by the Secretary with respect to any internal revenue 
law shall take effect before 90 days have elapsed after its publication 
in the Federal Register. Upon issuance, the Secretary shall provide 
copies of all rules or regulations issued under this title to each 
sales tax administering authority.
    ``(d) No Rules, Rulings, or Regulations With Retroactive Effect.--
No rule, ruling, or regulation issued or promulgated by the Secretary 
relating to any internal revenue law or by a sales tax administering 
authority shall apply to a period prior to its publication in the 
Federal Register (or State equivalent) except that a regulation may 
take retroactive effect to prevent abuse.
    ``(e) Review of Impact of Regulations, Rules, and Rulings on Small 
Business.--
            ``(1) Submission to small business administration.--After 
        publication of any proposed or temporary regulation by the 
        Secretary relating to internal revenue laws, the Secretary 
        shall submit such regulation to the Chief Counsel for Advocacy 
        of the Small Business Administration for comment on the impact 
        of such regulation on small businesses. Not later than the date 
        30 days after the date of such submission, the Chief Counsel 
        for Advocacy of the Small Business Administration shall submit 
        comments on such regulation to the Secretary.
            ``(2) Consideration of comments.--In prescribing any final 
        regulation which supersedes a proposed or temporary regulation 
        which had been submitted under this subsection to the Chief 
        Counsel for Advocacy of the Small Business Administration, the 
        Secretary shall--
                    ``(A) consider the comments of the Chief Counsel 
                for Advocacy of the Small Business Administration on 
                such proposed or temporary regulation, and
                    ``(B) in promulgating such final regulation, 
                include a narrative that describes the response to such 
                comments.
            ``(3) Submission of certain final regulation.--In the case 
        of promulgation by the Secretary of any final regulations 
        (other than a temporary regulation) which do not supersede a 
        proposed regulation, the requirements of paragraphs (1) and (2) 
        shall apply, except that the submission under paragraph (1) 
        shall be made at least 30 days before the date of such 
        promulgation, and the consideration and discussion required 
        under paragraph (2) shall be made in connection with the 
        promulgation of such final regulation.
    ``(f) Small Business Regulatory Safeguards.--The Small Business 
Regulatory Enforcement Fairness Act (Public Law 104-121; 110 Stat. 857 
(`SBREFA')) and the Regulatory Flexibility Act (5 U.S.C. 601-612 
(`RFA')) shall apply to regulations promulgated under this subtitle.

``SEC. 407. JURISDICTION.

    ``(a) State Jurisdiction.--A sales tax administering authority 
shall have jurisdiction over any gross payments made which have a 
destination (as determined in accordance with section 405) within the 
State of said sales tax administering authority. This grant of 
jurisdiction is not exclusive of any other jurisdiction that such sales 
tax administering authority may have.
    ``(b) Federal Jurisdiction.--The grant of jurisdiction in 
subsection (a) shall not be in derogation of Federal jurisdiction over 
the same matter. The Federal Government shall have the right to 
exercise preemptive jurisdiction over matters relating to the taxes 
imposed by this subtitle.

              ``CHAPTER 5--OTHER ADMINISTRATIVE PROVISIONS

``Sec. 501. Monthly reports and payments.
``Sec. 502. Registration.
``Sec. 503. Accounting.
``Sec. 504. Penalties.
``Sec. 505. Burden of persuasion and burden of production.
``Sec. 506. Attorneys' and accountancy fees.
``Sec. 507. Summons, examinations, audits, etc.
``Sec. 508. Records.
``Sec. 509. Tax to be separately stated and charged.
``Sec. 510. Coordination with title 11.
``Sec. 511. Applicable interest rate.

``SEC. 501. MONTHLY REPORTS AND PAYMENTS.

    ``(a) Tax Reports and Filing Dates.--
            ``(1) In general.--On or before the 15th day of each month, 
        each person who is--
                    ``(A) liable to collect and remit the tax imposed 
                by this subtitle by reason of section 103(a), or
                    ``(B) liable to pay tax imposed by this subtitle 
                which is not collected pursuant to section 103(a),
        shall submit to the appropriate sales tax administering 
        authority (in a form prescribed by the Secretary) a report 
        relating to the previous calendar month.
            ``(2) Contents of report.--The report required under 
        paragraph (1) shall set forth--
                    ``(A) the gross payments referred to in section 
                101,
                    ``(B) the tax collected under chapter 4 in 
                connection with such payments,
                    ``(C) the amount and type of any credit claimed, 
                and
                    ``(D) other information reasonably required by the 
                Secretary or the sales tax administering authority for 
                the administration, collection, and remittance of the 
                tax imposed by this subtitle.
    ``(b) Tax Payments Date.--
            ``(1) General rule.--The tax imposed by this subtitle 
        during any calendar month is due and shall be paid to the 
        appropriate sales tax administering authority on or before the 
        15th day of the succeeding month. Both Federal tax imposed by 
        this subtitle and conforming State sales tax (if any) shall be 
        paid in 1 aggregate payment.
            ``(2) Cross reference.--See subsection (e) relating to 
        remitting of separate segregated funds for sellers that are not 
        small sellers.
    ``(c) Extensions for Filing Reports.--
            ``(1) Automatic extensions for not more than 30 days.--On 
        application, an extension of not more than 30 days to file 
        reports under subsection (a) shall be automatically granted.
            ``(2) Other extensions.--On application, extensions of 30 
        to 60 days to file such reports shall be liberally granted by 
        the sales tax administering authority for reasonable cause. 
        Extensions greater than 60 days may be granted by the sales tax 
        administering authority to avoid hardship.
            ``(3) No extension for payment of taxes.--Notwithstanding 
        paragraphs (1) and (2), no extension shall be granted with 
        respect to the time for paying or remitting the taxes under 
        this subtitle.
    ``(d) Telephone Reporting of Violations.--The Secretary shall 
establish a system under which a violation of this subtitle can be 
brought to the attention of the sales tax administering authority for 
investigation through the use of a toll-free telephone number and 
otherwise.
    ``(e) Separate Segregated Accounts.--
            ``(1) In general.--Any registered seller that is not a 
        small seller shall deposit all sales taxes collected pursuant 
        to section 103 in a particular week in a separate segregated 
        account maintained at a bank or other financial institution 
        within 3 business days of the end of such week. Said registered 
        seller shall also maintain in that account sufficient funds to 
        meet the bank or financial institution minimum balance 
        requirements, if any, and to pay account fees and costs.
            ``(2) Small seller.--For purposes of this subsection, a 
        small seller is any person that has not collected $20,000 or 
        more of the taxes imposed by this subtitle in any of the 
        previous 12 months.
            ``(3) Large sellers.--Any seller that has collected 
        $100,000 or more of the taxes imposed by this subtitle in any 
        of the previous 12 months is a large seller. A large seller 
        shall remit to the sales tax administering authority the entire 
        balance of deposited taxes in its separate segregated account 
        on the first business day following the end of the calendar 
        week. The Secretary may by regulation require the electronic 
        transfer of funds due from large sellers.
            ``(4) Week.--For purposes of this subsection, the term 
        `week' shall mean the 7-day period ending on a Friday.
    ``(f) Determination of Report Filing Date.--A report filed pursuant 
to subsection (a) shall be deemed filed when--
            ``(1) deposited in the United States mail, postage prepaid, 
        addressed to the sales tax administering authority,
            ``(2) delivered and accepted at the offices of the sales 
        tax administering authority,
            ``(3) provided to a designated commercial private courier 
        service for delivery within 2 days to the sales tax 
        administering authority at the address of the sales tax 
        administering authority, or
            ``(4) by other means permitted by the Secretary.
    ``(g) Security Requirements.--A large seller (within the meaning of 
subsection (e)(3)) shall be required to provide security in an amount 
equal to the greater of $100,000 or one and one-half times the seller's 
average monthly tax liability during the previous 6 calendar months. 
Security may be a cash bond, a bond from a surety company approved by 
the Secretary, a certificate of deposit, or a State or United States 
Treasury bond. A bond qualifying under this subsection must be a 
continuing instrument for each calendar year (or portion thereof) that 
the bond is in effect. The bond must remain in effect until the surety 
or sureties are released and discharged. Failure to provide security in 
accordance with this section shall result in revocation of the seller's 
section 502 registration. If a person who has provided security 
pursuant to this subsection--
            ``(1) fails to pay an amount indicated in a final notice of 
        amount due under this subtitle (within the meaning of section 
        605(d)),
            ``(2) no Taxpayer Assistance Order is in effect relating to 
        the amount due,
            ``(3) either the time for filing an appeal pursuant to 
        section 604 has passed or the appeal was denied, and
            ``(4) the amount due is not being litigated in any judicial 
        forum,
then the security or part of the security, as the case may be, may be 
forfeited in favor of the Secretary to the extent of such tax due (plus 
interest if any).
    ``(h) Rewards Program.--The Secretary is authorized to maintain a 
program of awards wherein individuals that assist the Secretary or 
sales tax administering authorities in discovering or prosecuting tax 
fraud may be remunerated.
    ``(i) Cross Reference.--For interest due on taxes remitted late, 
see section 6601.

``SEC. 502. REGISTRATION.

    ``(a) In General.--Any person liable to collect and remit taxes 
pursuant to section 103(a) who is engaged in a trade or business shall 
register as a seller with the sales tax administering authority 
administering the taxes imposed by this subtitle.
    ``(b) Affiliated Firms.--Affiliated firms shall be treated as 1 
person for purposes of this section. Affiliated firms may elect, upon 
giving notice to the Secretary in a form prescribed by the Secretary, 
to treat separate firms as separate persons for purposes of this 
subtitle.
    ``(c) Designation of Tax Matters Person.--Every person registered 
pursuant to subsection (a) shall designate a tax matters person who 
shall be an individual whom the sales tax administering authority may 
contact regarding tax matters. Each person registered must provide 
notice of a change in the identity of the tax matters person within 30 
days of said change.
    ``(d) Effect of Failure To Register.--Any person that is required 
to register and who fails to do so is prohibited from selling taxable 
property or services. The Secretary or a sales tax administering 
authority may bring an action seeking a temporary restraining order, an 
injunction, or such other order as may be appropriate to enforce this 
section.

``SEC. 503. ACCOUNTING.

    ``(a) Cash Method To Be Used Generally.--Registered sellers and 
other persons shall report transactions using the cash method of 
accounting unless an election to use the accrual method of accounting 
is made pursuant to subsection (b).
    ``(b) Election To Use Accrual Method.--A person may elect with 
respect to a calender year to remit taxes and report transactions with 
respect to the month where a sale was invoiced and accrued.
    ``(c) Cross Reference.--See section 205 for rules relating to bad 
debts for sellers electing the accrual method.

``SEC. 504. PENALTIES.

    ``(a) Failure To Register.--Each person who is required to register 
pursuant to section 502 but fails to do so prior to notification by the 
sales tax administering authority shall be liable for a penalty of 
$500.
    ``(b) Reckless or Willful Failure To Collect Tax.--
            ``(1) Civil penalty; fraud.--Each person who is required to 
        and recklessly or willfully fails to collect taxes imposed by 
        this subtitle shall be liable for a penalty equal to the 
        greater of $500 or 20 percent of tax not collected.
            ``(2) Criminal penalty.--Each person who is required to and 
        willfully fails as part of a trade or business to collect taxes 
        imposed by this subtitle may be fined an amount up to the 
        amount determined in accordance with paragraph (1) or 
        imprisoned for a period of not more than 1 year or both.
    ``(c) Reckless or Willful Assertion of Invalid Exemption.--
            ``(1) Civil penalty; fraud.--Each person who recklessly or 
        willfully asserts an invalid intermediate or export sales 
        exemption from the taxes imposed by this subtitle shall be 
        liable for a penalty equal to the greater of $500 or 20 percent 
        of the tax not collected or remitted.
            ``(2) Criminal penalty.--Each person who willfully asserts 
        an invalid intermediate or export sales exemption from the 
        taxes imposed by this subtitle may be fined an amount up to the 
        amount determined in accordance with paragraph (1) or 
        imprisoned for a period of not more than 1 year or both.
    ``(d) Reckless or Willful Failure To Remit Tax Collected.--
            ``(1) Civil penalty; fraud.--Each person who is required to 
        and recklessly or willfully fails to remit taxes imposed by 
        this subtitle and collected from purchasers shall be liable for 
        a penalty equal to the greater of $1,000 or 50 percent of the 
        tax not remitted.
            ``(2) Criminal penalty.--Each person who willfully fails to 
        remit taxes imposed by this subtitle and collected from 
        purchasers may be fined an amount up to the amount determined 
        in accordance with paragraph (1) or imprisoned for a period of 
        not more than 2 years or both.
    ``(e) Reckless or Willful Failure To Pay Tax.--Each person who is 
required to and recklessly or willfully fails to pay taxes imposed by 
this subtitle shall be liable for a penalty equal to the greater of 
$500 or 20 percent of the tax not paid.
    ``(f) Penalty for Late Filing.--
            ``(1) In general.--In the case of a failure by any person 
        who is required to and fails to file a report required by 
        section 501 on or before the due date (determined with regard 
        to any extension) for such report, such person shall pay a 
        penalty for each month or fraction thereof that said report is 
        late equal to the greater of--
                    ``(A) $50, or
                    ``(B) 0.5 percent of the gross payments required to 
                be shown on the report.
            ``(2) Increased penalty on returns filed after written 
        inquiry.--The amount of the penalty under paragraph (1) shall 
        be doubled with respect to any report filed after a written 
        inquiry with respect to such report is received by the taxpayer 
        from the sales tax administering authority.
            ``(3) Limitation.--The penalty imposed under this 
        subsection shall not exceed 12 percent.
            ``(4) Exceptions.--
                    ``(A) Reasonable cause.--No penalty shall be 
                imposed under this subsection with respect to any 
                failure if it is shown that such failure is due to 
                reasonable cause.
                    ``(B) Other waiver authority.--In addition to 
                penalties not imposed by reason of subparagraph (A), 
                the sales tax administering authority, on application, 
                shall waive the penalty imposed by paragraph (1) once 
                per registered person per 24-month period. The 
                preceding sentence shall not apply to a penalty 
                determined under paragraph (2).
    ``(g) Penalty for Willfully or Recklessly Accepting a False 
Intermediate or Export Sales Certificate.--A person who willingly or 
recklessly accepts a false intermediate or export sales certificate 
shall pay a penalty equal to 20 percent of the tax not collected by 
reason of said acceptance.
    ``(h) Penalty for Late Remittance of Taxes.--
            ``(1) In general.--A person who is required to timely remit 
        taxes imposed by this subtitle and remits taxes more than 1 
        month after such taxes are due shall pay a penalty equal to 1 
        percent per month (or fraction thereof) from the due date.
            ``(2) Limitation.--The penalty imposed under this 
        subsection shall not exceed 24 percent.
            ``(3) Exceptions for reasonable cause.--No penalty shall be 
        imposed under paragraph (1) with respect to any late remittance 
        if it is shown that such late remittance is due to reasonable 
        cause.
    ``(i) Penalty for Filing False Rebate Claim.--
            ``(1) Civil penalty; fraud.--A person who willingly or 
        recklessly files a false claim for a family consumption 
        allowance rebate (within the meaning of chapter 3) shall--
                    ``(A) pay a penalty equal to the greater of $500 or 
                50 percent of the claimed annual rebate amount not 
                actually due, and
                    ``(B) repay any rebates received as a result of the 
                false rebate claim (together with interest).
            ``(2) Criminal penalty.--A person who willingly files a 
        false claim for a family consumption allowance rebate (within 
        the meaning of chapter 3) may be fined an amount up to the 
        amount determined in accordance with paragraph (1) or 
        imprisoned for a period not more than 1 year or both.
    ``(j) Penalty for Bad Check.--If any check or money order in 
payment of any amount receivable under this subtitle is not duly paid, 
in addition to other penalties provided by law, the person who tendered 
such check shall pay a penalty equal to the greater of--
            ``(1) $25, or
            ``(2) two percent of the amount of such check.
    ``(k) Penalty for Failure To Maintain a Separate Segregated 
Account.--Any person required to maintain a separate segregated account 
pursuant to section 501(e) that fails to maintain such a separate 
segregated account shall pay a penalty of $1,000.
    ``(l) Penalty for Failure To Deposit Collected Taxes in a Separate 
Segregated Account.--Any person required to deposit collected taxes 
into a separate segregated account maintained pursuant to section 
501(e) that fails to timely deposit said taxes into the separate 
segregated account shall pay a penalty equal to 1 percent of the amount 
required to be deposited. The penalty imposed by the previous sentence 
shall be tripled unless said taxes have been deposited in the separate 
segregated account or remitted to the sales tax administering authority 
within 16 days of the date said deposit was due.
    ``(m) Joint and Several Liability for Tax Matters Person and 
Responsible Officers.--The tax matters person (designated pursuant to 
section 502(c)) and responsible officers or partners of a firm shall be 
jointly and severally liable for the tax imposed by this subtitle and 
penalties imposed by this subtitle.
    ``(n) Right of Contribution.--If more than 1 person is liable with 
respect to any tax or penalty imposed by this subtitle, each person who 
paid such tax or penalty shall be entitled to recover from other 
persons who are liable for such tax or penalty an amount equal to the 
excess of the amount paid by such person over such person's 
proportionate share of the tax or penalty.
    ``(o) Civil Penalties and Criminal Fines Not Exclusive.--
            ``(1) Civil penalty.--The fact that a civil penalty has 
        been imposed shall not prevent the imposition of a criminal 
        fine.
            ``(2) Criminal fine.--The fact that a criminal fine has 
        been imposed shall not prevent the imposition of a civil 
        penalty.
    ``(p) Confidentiality.--Any person who violates the requirements 
relating to confidentiality of tax information (as provided in section 
605(e)) may be fined up to $10,000 or imprisoned for a period of not 
more than 1 year, or both.
    ``(q) Cross Reference.--For interest due on late payments, see 
section 6601.

``SEC. 505. BURDEN OF PERSUASION AND BURDEN OF PRODUCTION.

    ``In all disputes concerning taxes imposed by this subtitle, the 
person engaged in a dispute with the sales tax administering authority 
or the Secretary, as the case may be, shall have the burden of 
production of documents and records but the sales tax administering 
authority or the Secretary shall have the burden of persuasion. In all 
disputes concerning an exemption claimed by a purchaser, if the seller 
has on file an intermediate sale or export sale certificate from the 
purchaser and did not have reasonable cause to believe that the 
certificate was improperly provided by the purchaser with respect to 
such purchase (within the meaning of section 103), then the burden of 
production of documents and records relating to that exemption shall 
rest with the purchaser and not with the seller.

``SEC. 506. ATTORNEYS' AND ACCOUNTANCY FEES.

    ``In all disputes concerning taxes imposed by this subtitle, the 
person engaged in a dispute with the sales tax administering authority 
or the Secretary, as the case may be, shall be entitled to reasonable 
attorneys' fees, accountancy fees, and other reasonable professional 
fees incurred in direct relation to the dispute unless the sales tax 
administering authority or the Secretary establishes that its position 
was substantially justified.

``SEC. 507. SUMMONS, EXAMINATIONS, AUDITS, ETC.

    ``(a) Summons.--Persons are subject to administrative summons by 
the sales tax administering authority for records, documents, and 
testimony required by the sales tax administering authority to 
accurately determine liability for tax under this subtitle. A summons 
shall be served by the sales tax administering authority by an attested 
copy delivered in hand to the person to whom it is directed or left at 
his last known address. The summons shall describe with reasonable 
certainty what is sought.
    ``(b) Examinations and Audits.--The sales tax administering 
authority has the authority to conduct at a reasonable time and place 
examinations and audits of persons who are or may be liable to collect 
and remit tax imposed by this subtitle and to examine the books, 
papers, records, or other data of such persons which may be relevant or 
material to the determination of tax due.
    ``(c) Limitation on Authority in Case of Referral.--No 
administrative summons may be issued by the sales tax administering 
authority and no action be commenced to enforce an administrative 
summons with respect to any person if a Justice Department referral or 
referral to a State Attorney General's Office is in effect with respect 
to such person relating to a tax imposed by this subtitle. Such 
referral is in effect with respect to any person if the sales tax 
administering authority or the Secretary has recommended to the Justice 
Department or a State Attorney General's Office a grand jury 
investigation of such person or a criminal prosecution of such person 
that contemplates criminal sanctions under this title. A referral shall 
be terminated when--
            ``(1) the Justice Department or a State Attorney General's 
        Office notifies the sales tax administering authority or the 
        Secretary that he will not--
                    ``(A) prosecute such person for any offense 
                connected with the internal revenue laws,
                    ``(B) authorize a grand jury investigation of such 
                person with respect to such offense, or
                    ``(C) continue such a grand jury investigation, or
            ``(2) a final disposition has been made of any criminal 
        proceeding connected with the internal revenue laws, or 
        conforming State sales tax, against such person.

``SEC. 508. RECORDS.

    ``Any person liable to remit taxes pursuant to this subtitle shall 
keep records (including a record of all section 509 receipts provided, 
complete records of intermediate and export sales, including 
purchaser's intermediate and export sales certificates and tax number 
and the net of tax amount of purchase) sufficient to determine the 
amounts reported, collected, and remitted for a period of 6 years after 
the latter of the filing of the report for which the records formed the 
basis or when the report was due to be filed. Any purchaser who 
purchased taxable property or services but did not pay tax by reason of 
asserting an intermediate and export sales exemption shall keep records 
sufficient to determine whether said exemption was valid for a period 
of 7 years after the purchase of taxable property or services.

``SEC. 509. TAX TO BE SEPARATELY STATED AND CHARGED.

    ``(a) In General.--For each purchase of taxable property or 
services for which a tax is imposed by section 101, the seller shall 
charge the tax imposed by section 101 separately from the purchase. For 
purchase of taxable property or services for which a tax is imposed by 
section 101, the seller shall provide to the purchaser a receipt for 
each transaction that includes--
            ``(1) the property or services price exclusive of tax,
            ``(2) the amount of tax paid,
            ``(3) the property or service price inclusive of tax,
            ``(4) the tax rate (the amount of tax paid (per paragraph 
        (2))) divided by the property or service price inclusive of tax 
        (per paragraph (3)),
            ``(5) the date that the good or service was sold,
            ``(6) the name of the vendor, and
            ``(7) the vendor registration number.
    ``(b) Vending Machine Exception.--The requirements of subsection 
(a) shall be inapplicable in the case of sales by vending machines. 
Vending machines for purposes of this subsection are machines--
            ``(1) that dispense taxable property in exchange for coins 
        or currency, and
            ``(2) that sell no single item exceeding $10 per unit in 
        price.
    ``(c) Financial Intermediation Services Exception.--The 
requirements of subsection (a) shall be inapplicable in the case of 
sales financial intermediation service. Receipts shall be issued when 
the tax is imposed (in accordance with section 803 (relating to timing 
of tax on financial intermediation services)).

``SEC. 510. COORDINATION WITH TITLE 11.

    ``No addition to tax shall be made under section 504 with respect 
to a period during which a case is pending under title 11, United 
States Code--
            ``(1) if such tax was incurred by the estate and the 
        failure occurred pursuant to an order of the court finding 
        probable insufficiency of funds of the estate to pay 
        administrative expenses, or
            ``(2) if--
                    ``(A) such tax was incurred by the debtor before 
                the earlier of the order for relief or (in the 
                involuntary case) the appointment of a trustee, and
                    ``(B) the petition was filed before the due date 
                prescribed by law (including extensions) for filing a 
                return of such tax, or the date for making the addition 
                to tax occurs on or after the date the petition was 
                filed.

``SEC. 511. APPLICABLE INTEREST RATE.

    ``(a) In General.--
            ``(1) Federal short-term rate.--In the case of a debt 
        instrument, investment, financing lease, or account with a term 
        of not over 3 years, the applicable interest rate is the 
        Federal short-term rate.
            ``(2) Federal mid-term rate.--In the case of a debt 
        instrument, investment, financing lease, or account with a term 
        of over 3 years but not over 9 years, the applicable interest 
        rate is the Federal mid-term rate.
            ``(3) Federal long-term rate.--In the case of a debt 
        instrument, investment, financing lease, or account with a term 
        of over 9 years, the applicable interest rate is the Federal 
        long-term rate.
    ``(b) Federal Short-Term Rate.--The Federal short-term rate shall 
be the rate determined by the Secretary based on the average market 
yield (selected by the Secretary and ending in the calendar month in 
which the determination is made during any one month) on outstanding 
marketable obligations of the United States with remaining periods to 
maturity of 3 years or fewer.
    ``(c) Federal Mid-Term Rate.--The Federal mid-term rate shall be 
the rate determined by the Secretary based on the average market yield 
(selected by the Secretary and ending in the calendar month in which 
the determination is made during any 1 month) on outstanding marketable 
obligations of the United States with remaining periods to maturity of 
more than 3 years and not over 9 years.
    ``(d) Federal Long-Term Rate.--The Federal long-term rate shall be 
the rate determined by the Secretary based on the average market yield 
(selected by the Secretary and ending in the calendar month in which 
the determination is made during any 1 month) on outstanding marketable 
obligations of the United States with remaining periods to maturity of 
over 9 years.
    ``(e) Determination of Rates.--During each calendar month, the 
Secretary shall determine the Federal short-term rate, the Federal mid-
term rate and the Federal long-term rate which shall apply during the 
following calendar month.

           ``CHAPTER 6--COLLECTIONS; APPEALS; TAXPAYER RIGHTS

``Sec. 601. Collections.
``Sec. 602. Power to levy, etc.
``Sec. 603. Problem resolution offices.
``Sec. 604. Appeals.
``Sec. 605. Taxpayer rights.
``Sec. 606. Installment agreements compromises.

``SEC. 601. COLLECTIONS.

    ``The sales tax administering authority shall collect the taxes 
imposed by this subtitle, except as provided in section 404 (relating 
to Federal administration in certain States).

``SEC. 602. POWER TO LEVY, ETC.

    ``(a) In General.--The sales tax administering authority may levy 
and seize property, garnish wages or salary and file liens to collect 
amounts due under this subtitle, pursuant to enforcement of--
            ``(1) a judgment duly rendered by a court of law,
            ``(2) an amount due if the taxpayer has failed to exercise 
        his appeals rights under section 604, or
            ``(3) an amount due if the appeals process determined that 
        an amount remained due and the taxpayer has failed to timely 
        petition the Tax Court for relief.
    ``(b) Exemption From Levy, Seizure, and Garnishments.--There shall 
be exempt from levy, seizure, and garnishment or penalty in connection 
with any tax imposed by this subtitle--
            ``(1) wearing apparel, school books, fuel, provisions, 
        furniture, personal effects, tools of a trade or profession, 
        livestock in a household up to an aggregate value of $15,000, 
        and
            ``(2) monthly money income equal to 150 percent of the 
        monthly poverty level (as defined in section 303).
    ``(c) Liens To Be Timely Released.--Subject to such reasonable 
regulations as the Secretary may provide, any lien imposed with respect 
to a tax imposed by this title shall be released not later than 30 days 
after--
            ``(1) the liability was satisfied or became unenforceable, 
        or
            ``(2) a bond was accepted as security.

``SEC. 603. PROBLEM RESOLUTION OFFICES.

    ``(a) Problem Resolution Office To Be Established.--Each sales tax 
administering authority shall establish an independent Problem 
Resolution Office and appoint an adequate number of problem resolution 
officers. The head of the problem resolution office must be appointed 
by, and serve at the pleasure of either the State Governor (in the case 
of an administering State) or the President of the United States.
    ``(b) Authority of Problem Resolution Officers.--Problem resolution 
officers shall have the authority to investigate complaints and issue a 
Taxpayer Assistance Order to administratively enjoin any collection 
activity if, in the opinion of the problem resolution officer, said 
collection activity is reasonably likely to not be in compliance with 
law or to prevent hardship (other than by reason of having to pay taxes 
lawfully due). Problem resolution officers shall also have the 
authority to issue Taxpayer Assistance Orders releasing or returning 
property that has been levied upon or seized, ordering that a lien be 
released and that garnished wages be returned. A Taxpayer Assistance 
Order may only be rescinded or modified by the problem resolution 
officer that issued it, by the highest official in the relevant sales 
tax administering authority or by its general counsel upon a finding 
that the collection activity is justified by clear and convincing 
evidence. The authority to reverse this Taxpayer Assistance Order may 
not be delegated.
    ``(c) Form of Request for Taxpayer Assistance Order.--The Secretary 
shall establish a form and procedure to aid persons requesting the 
assistance of the Problem Resolution Office and to aid the Problem 
Resolution Office in understanding the needs of the person seeking 
assistance. The use of this form, however, shall not be a prerequisite 
to a problem resolution officer taking action, including issuing a 
Taxpayer Assistance Order.
    ``(d) Content of Taxpayer Assistance Order.--A Taxpayer Assistance 
Order shall contain the name of the problem resolution officer, any 
provision relating to the running of any applicable period of 
limitation, the name of the person that the Taxpayer Assistance Order 
assists, the government office (or employee or officer of said 
government office) to whom it is directed and the action or cessation 
of action that the Taxpayer Assistance Order requires of said 
government officer (or employee or officer of said government office). 
The Taxpayer Assistance Order need not contain findings of fact or its 
legal basis; however, the problem resolution officer must provide 
findings of fact and the legal basis for the issuance of the Taxpayer 
Assistance Order to the sales tax administering authority upon the 
request of an officer of said authority within 2 weeks of the receipt 
of such request.
    ``(e) Independence Protected.--Problem resolution officers shall 
not be disciplined or adversely affected for the issuance of 
administrative injunctions unless a pattern of issuing injunctions that 
are manifestly unreasonable is proven in an administrative hearing by a 
preponderance of the evidence.
    ``(f) Other Rights Not Limited.--Nothing in this section shall 
limit the authority of the sales tax administering authority, the 
registered person or other person from pursuing any legal remedy in any 
court with jurisdiction over the dispute at issue.
    ``(g) Limitations.--The running of any applicable period of 
limitation shall be suspended for a period of 8 weeks following the 
issuance of a Taxpayer Assistance Order or, if specified, for a longer 
period set forth in the Taxpayer Assistance Order provided the 
suspension does not exceed 6 months.

``SEC. 604. APPEALS.

    ``(a) Administrative Appeals.--The sales tax administering 
authority shall establish an administrative appeals process wherein the 
registered person or other person in disagreement with a decision of 
the sales tax administering authority asserting liability for tax is 
provided a full and fair hearing in connection with any disputes said 
person has with the sales tax administering authority.
    ``(b) Timing of Administrative Appeals.--Said administrative appeal 
must be made within 60 days of receiving a final notice of amount due 
pursuant to section 605(d) unless leave for an extension is granted by 
the appeals officer in a form prescribed by the Secretary. Leave shall 
be granted to avoid hardship.

``SEC. 605. TAXPAYER RIGHTS.

    ``(a) Rights To Be Disclosed.--The sales tax administering 
authority shall provide to any person against whom it has--
            ``(1) commenced an audit or investigation,
            ``(2) issued a final notice of amount due,
            ``(3) filed an administrative lien, levy, or garnishment,
            ``(4) commenced other collection action,
            ``(5) commenced an action for civil penalties, or
            ``(6) any other legal action,
a document setting forth in plain English the rights of the person. The 
document shall explain the administrative appeals process, the 
authority of the Problem Resolution Office (established pursuant to 
section 603) and how to contact that Office, the burden of production 
and persuasion that the person and the sales tax administering 
authority bear (pursuant to section 505), the right of the person to 
professional fees (pursuant to section 506), the right to record 
interviews and such other rights as the person may possess under this 
subtitle. Said document will also set forth the procedures for entering 
into an installment agreement.
    ``(b) Right to Professional Assistance.--In all dealings with the 
sales tax administering authority, a person shall have the right to 
assistance, at their own expense, of one or more professional advisors.
    ``(c) Right To Record Interviews.--Any person who is interviewed by 
an agent of the sales tax administering authority shall have the right 
to video or audio tape the interview at the person's own expense.
    ``(d) Right to Final Notice of Amount Due.--No collection or 
enforcement action will be commenced against a person until 30 days 
after they have been provided with a final notice of amount due under 
this subtitle by the sales tax administering authority. The final 
notice of amount due shall set forth the amount of tax due (along with 
any interest and penalties due) and the factual and legal basis for 
such amounts being due with sufficient specificity that such basis can 
be understood by a reasonable person who is not a tax professional 
reading the notice. The final notice shall be sent by certified mail, 
return receipt requested, to--
            ``(1) the address last provided by a registered seller, or
            ``(2) the best available address to a person who is not a 
        registered seller.
    ``(e) Confidentiality of Tax Information.--
            ``(1) In general.--All reports and report information 
        (related to any internal revenue law) shall be confidential and 
        except as authorized by this title--
                    ``(A) no officer or employee (including former 
                officers and employees) of the United States,
                    ``(B) no officer or employee (including former 
                officers and employees) of any State or local agency 
                who has had access to returns or return information, 
                and
                    ``(C) no other person who has had access to returns 
                or return information,
        shall disclose any report or report information obtained by him 
        in any manner in connection with his service as such officer or 
        employee or otherwise.
            ``(2) Designees.--The sales tax administering authority 
        may, subject to such requirements as the Secretary may impose, 
        disclose the report and report information of a person to that 
        person or persons as that person may designate to receive said 
        information or return.
            ``(3) Other sales tax administering authorities.--A sales 
        tax administering authority may impose, disclose the report and 
        report information to another sales tax administering 
        authority.
            ``(4) Incompetency.--A sales tax administering authority 
        may, subject to such requirements as the Secretary may impose, 
        disclose the report and report information to the committee, 
        trustee, or guardian of a person who is incompetent.
            ``(5) Deceased persons.--A sales tax administering 
        authority may, subject to such requirements as the Secretary 
        may impose, disclose the report and report information to the 
        decedent's--
                    ``(A) administrator, executor, estate trustee, or
                    ``(B) heir at law, next of kin, or beneficiary 
                under a will who has a material interest that will be 
                affected by the information.
            ``(6) Bankruptcy.--A sales tax administering authority may, 
        subject to such requirements as the Secretary may impose, 
        disclose the report and report information to a person's 
        trustee in bankruptcy.
            ``(7) Congress.--Upon written request from the Chairman of 
        the Committee on Ways and Means, the Chairman of the Committee 
        on Finance of the Senate, or the Chairman or Chief of Staff of 
        the Joint Committee on Taxation, a sales tax administering 
        authority shall disclose the report and report information, 
        except that any report or report information that can be 
        associated with or otherwise identify a particular person shall 
        be furnished to such committee only when sitting in closed 
        executive session unless such person otherwise consents in 
        writing to such disclosure.
            ``(8) Waiver of privacy rights.--A person may waive 
        confidentiality rights provided by this section. Such waiver 
        must be in writing.
            ``(9) Internal use.--Disclosure of the report or report 
        information by officers or employees of a sales tax 
        administering authority to other officers or employees of a 
        sales tax administering authority in the ordinary course of tax 
        administration activities shall not constitute unlawful 
        disclosure of the report or report information.
            ``(10) Statistical use.--Upon request in writing by the 
        Secretary of Commerce, the Secretary shall furnish such reports 
        and report information to officers and employees of the 
        Department of Commerce as the Secretary may prescribe by 
        regulation for the purposes of, and only to the extent 
        necessary in, the structuring of censuses and national economic 
        accounts and conducting related statistical activities 
        authorized by law.
            ``(11) Department of the treasury.--Returns and return 
        information shall be open for inspection by officers and 
        employees of the Department of the Treasury whose official 
        duties require such inspection or disclosure for the purpose 
        of, and only to the extent necessary for, preparing economic or 
        financial forecasts, projections, analyses, or estimates. Such 
        inspection or disclosure shall be permitted only upon written 
        request that sets forth the reasons why such inspection or 
        disclosure is necessary and is signed by the head of the bureau 
        or office of the Department of the Treasury requesting the 
        inspection or disclosure.

``SEC. 606. INSTALLMENT AGREEMENTS; COMPROMISES.

    ``The sales tax administering authority is authorized to enter into 
written agreements with any person under which the person is allowed to 
satisfy liability for payment of any tax under this subtitle (and 
penalties and interest relating thereto) in installment payments if the 
sales tax administering authority determines that such agreement will 
facilitate the collection of such liability. The agreement shall remain 
in effect for the term of the agreement unless the information that the 
person provided to the sales tax administering authority was materially 
inaccurate or incomplete. The sales tax administering authority may 
compromise any amounts alleged to be due.

                       ``CHAPTER 7--SPECIAL RULES

``Sec. 701. Hobby activities.
``Sec. 702. Gaming activities.
``Sec. 703. Government purchases.
``Sec. 704. Government enterprises.
``Sec. 705. Mixed use property.
``Sec. 706. Not-for-profit organizations.

``SEC. 701. HOBBY ACTIVITIES.

    ``(a) Hobby Activities.--Neither the exemption afforded by section 
102 for intermediate sales nor the credits available pursuant to 
section 202 or 203 shall be available for any taxable property or 
service purchased for use in an activity if that activity is not 
engaged in for-profit.
    ``(b) Status Deemed.--If the activity has received gross payments 
for the sale of taxable property or services that exceed the sum of--
            ``(1) taxable property and services purchased,
            ``(2) wages and salary paid, and
            ``(3) taxes (of any type) paid,
in two or more of the most recent 3 calendar years during which it 
operated then the business activity shall be conclusively deemed to be 
engaged in for profit.

``SEC. 702. GAMING ACTIVITIES.

    ``(a) Registration.--Any person selling one or more chances is a 
gaming sponsor and shall register, in a form prescribed by the 
Secretary, with the sales tax administering authority as a gaming 
sponsor.
    ``(b) Chance Defined.--For purposes of this section, the term 
`chance' means a lottery ticket, a raffle ticket, chips, other tokens, 
a bet or bets placed, a wager or wagers placed, or any similar device 
where the purchase of the right gives rise to an obligation by the 
gaming sponsor to pay upon the occurrence of--
            ``(1) a random or unpredictable event, or
            ``(2) an event over which neither the gaming sponsor nor 
        the person purchasing the chance has control over the outcome.
    ``(c) Chances Not Taxable Property or Service.--Notwithstanding any 
other provision in this subtitle, a chance is not taxable property or 
services for purposes of section 101.
    ``(d) Tax on Gaming Services Imposed.--A 23-percent tax is hereby 
imposed on the taxable gaming services of a gaming sponsor. This tax 
shall be paid and remitted by the gaming sponsor. The tax shall be 
remitted by the 15th day of each month with respect to taxable gaming 
services during the previous calendar month.
    ``(e) Taxable Gaming Services Defined.--For purposes of this 
section, the term `taxable gaming services' means--
            ``(1) gross receipts of the gaming sponsor from the sale of 
        chances, minus
            ``(2) the sum of--
                    ``(A) total gaming payoffs to chance purchasers (or 
                their designees), and
                    ``(B) gaming specific taxes (other than the tax 
                imposed by this section) imposed by the Federal, State, 
                or local government.

``SEC. 703. GOVERNMENT PURCHASES.

    ``(a) Government Purchases.--
            ``(1) Purchases by the federal government.--Purchases by 
        the Federal Government of taxable property and services shall 
        be subject to the tax imposed by section 101.
            ``(2) Purchase by state governments and their political 
        subdivisions.--Purchases by State governments and their 
        political subdivisions of taxable property and services shall 
        be subject to the tax imposed by section 101.
    ``(b) Cross References.--For purchases by government enterprises 
see section 704.

``SEC. 704. GOVERNMENT ENTERPRISES.

    ``(a) Government Enterprises To Collect and Remit Taxes on Sales.--
Nothing in this subtitle shall be construed to exempt any Federal, 
State, or local governmental unit or political subdivision (whether or 
not the State is an administering State) operating a government 
enterprise from collecting and remitting tax imposed by this subtitle 
on any sale of taxable property or services. Government enterprises 
shall comply with all duties imposed by this subtitle and shall be 
liable for penalties and subject to enforcement action in the same 
manner as private persons that are not government enterprises.
    ``(b) Government Enterprise.--Any entity owned or operated by a 
Federal, State, or local governmental unit or political subdivision 
that receives gross payments from private persons is a government 
enterprise, except that a government-owned entity shall not become a 
government enterprise for purposes of this section unless in any 
quarter it has revenues from selling taxable property or services that 
exceed $2,500.
    ``(c) Government Enterprises Intermediate Sales.--
            ``(1) In general.--Government enterprises shall not be 
        subject to tax on purchases that would not be subject to tax 
        pursuant to section 102(b) if the government enterprise were a 
        private enterprise.
            ``(2) Exception.--Government enterprises may not use the 
        exemption afforded by section 102(b) to serve as a conduit for 
        tax-free purchases by government units that would otherwise be 
        subject to taxation on purchases pursuant to section 703. 
        Transfers of taxable property or services purchased exempt from 
        tax from a government enterprise to such government unit shall 
        be taxable.
    ``(d) Separate Books of Account.--Any government enterprise must 
maintain books of account, separate from the nonenterprise government 
accounts, maintained in accordance with generally accepted accounting 
principles.
    ``(e) Trade or Business.--A government enterprise shall be treated 
as a trade or business for purposes of this subtitle.
    ``(f) Enterprise Subsidies Constitute Taxable Purchase.--A transfer 
of funds to a government enterprise by a government entity without full 
consideration shall constitute a taxable government purchase with the 
meaning of section 703 to the extent that the transfer of funds exceeds 
the fair market value of the consideration.

``SEC. 705. MIXED USE PROPERTY.

    ``(a) Mixed Use Property or Service.--
            ``(1) Mixed use property or service defined.--For purposes 
        of this section, the term `mixed use property or service' is a 
        taxable property or taxable service used for both taxable use 
        or consumption and for a purpose that would not be subject to 
        tax pursuant to section 102(a)(1).
            ``(2) Taxable threshold.--Mixed use property or service 
        shall be subject to tax notwithstanding section 102(a)(1) 
        unless such property or service is used more than 95 percent 
        for purposes that would give rise to an exemption pursuant to 
        section 102(a)(1) during each calendar year (or portions 
        thereof) it is owned.
            ``(3) Mixed use property or services credit.--A person 
        registered pursuant to section 502 is entitled to a business 
        use conversion credit (pursuant to section 202) equal to the 
        product of--
                    ``(A) the mixed use property amount,
                    ``(B) the business use ratio, and
                    ``(C) the rate of tax imposed by section 101.
            ``(4) Mixed use property amount.--The mixed use property 
        amount for each month (or fraction thereof) in which the 
        property was owned shall be--
                    ``(A) one-three-hundred-sixtieth of the gross 
                payments for real property for 360 months or until the 
                property is sold,
                    ``(B) one-eighty-fourth of the gross payments for 
                tangible personal property for 84 months or until the 
                property is sold,
                    ``(C) one-sixtieth of the gross payments for 
                vehicles for 60 months or until the property is sold, 
                or
                    ``(D) for other types of taxable property or 
                services, a reasonable amount or in accordance with 
                regulations prescribed by the Secretary.
            ``(5) Business use ratio.--For purposes of this section, 
        the term `business use ratio' means the ratio of business use 
        to total use for a particular calendar month (or portion 
        thereof if the property was owned for only part of said 
        calendar month). For vehicles, the business use ratio will be 
        the ratio of business purpose miles to total miles in a 
        particular calendar month. For real property, the business use 
        ratio is the ratio of floor space used primarily for business 
        purposes to total floor space in a particular calendar month. 
        For tangible personal property (except for vehicles), the 
        business use ratio is the ratio of total time used for business 
        purposes to total time used in a particular calendar year. For 
        other property or services, the business ratio shall be 
        calculated using a reasonable method. Reasonable records must 
        be maintained to support a person's business use of the mixed 
        use property or service.
    ``(b) Timing of Business Use Conversion Credit Arising Out of 
Ownership of Mixed Use Property.--A person entitled to a credit 
pursuant to subsection (a)(3) arising out of the ownership of mixed use 
property must account for the mixed use on a calendar year basis, and 
may file for the credit with respect to mixed use property in any month 
following the calendar year giving rise to the credit.
    ``(c) Cross Reference.--For business use conversion credit, see 
section 202.

``SEC. 706. NOT-FOR-PROFIT ORGANIZATIONS.

    ``(a) Not-for-Profit Organizations.--Dues, contributions, and 
similar payments to qualified not-for-profit organizations shall not be 
considered gross payments for taxable property or services for purposes 
of this subtitle.
    ``(b) Definition.--For purposes of this section, the term 
`qualified not-for-profit organization' means a not-for-profit 
organization organized and operated exclusively--
            ``(1) for religious, charitable, scientific, testing for 
        public safety, literary, or educational purposes,
            ``(2) as civic leagues or social welfare organizations,
            ``(3) as labor, agricultural, or horticultural 
        organizations,
            ``(4) as chambers of commerce, business leagues, or trade 
        associations, or
            ``(5) as fraternal beneficiary societies, orders, or 
        associations,
no part of the net earnings of which inures to the benefit of any 
private shareholder or individual.
    ``(c) Qualification Certificates.--Upon application in a form 
prescribed by the Secretary, the sales tax administering authority 
shall provide qualification certificates to qualified not-for-profit 
organizations.
    ``(d) Taxable Transactions.--If a qualified not-for-profit 
organization provides taxable property or services in connection with 
contributions, dues, or similar payments to the organization, then it 
shall be required to treat the provision of said taxable property or 
services as a purchase taxable pursuant to this subtitle at the fair 
market value of said taxable property or services.
    ``(e) Exemptions.--Taxable property and services purchased by a 
qualified not-for-profit organization shall be eligible for the 
exemptions provided in section 102.

             ``CHAPTER 8--FINANCIAL INTERMEDIATION SERVICES

``Sec. 801. Determination of financial intermediation services amount.
``Sec. 802. Bad debts.
``Sec. 803. Timing of tax on financial intermediation services.
``Sec. 804. Financing leases.
``Sec. 805. Basic interest rate.
``Sec. 806. Foreign financial intermediation services.

``SEC. 801. DETERMINATION OF FINANCIAL INTERMEDIATION SERVICES AMOUNT.

    ``(a) Financial Intermediation Services.--For purposes of this 
subtitle--
            ``(1) In general.--The term `financial intermediation 
        services' means the sum of--
                    ``(A) explicitly charged fees for financial 
                intermediation services, and
                    ``(B) implicitly charged fees for financial 
                intermediation services.
            ``(2) Explicitly charged fees for financial intermediation 
        services.--The term `explicitly charged fees for financial 
        intermediation services' includes--
                    ``(A) brokerage fees,
                    ``(B) explicitly stated banking, loan origination, 
                processing, documentation, credit check fees, or other 
                similar fees,
                    ``(C) safe-deposit box fees,
                    ``(D) insurance premiums, to the extent such 
                premiums are not allocable to the investment account of 
                the underlying insurance policy,
                    ``(E) trustees' fees, and
                    ``(F) other financial services fees (including 
                mutual fund management, sales, and exit fees).
            ``(3) Implicitly charged fees for financial intermediation 
        services.--
                    ``(A) In general.--The term `implicitly charged 
                fees for financial intermediation services' includes 
                the gross imputed amount in relation to any underlying 
                interest-bearing investment, account, or debt.
                    ``(B) Gross imputed amount.--For purposes of 
                subparagraph (A), the term `gross imputed amount' 
                means--
                            ``(i) with respect to any underlying 
                        interest-bearing investment or account, the 
                        product of--
                                    ``(I) the excess (if any) of the 
                                basic interest rate (as defined in 
                                section 805) over the rate paid on such 
                                investment, and
                                    ``(II) the amount of the investment 
                                or account, and
                            ``(ii) with respect to any underlying 
                        interest-bearing debt, the product of--
                                    ``(I) the excess (if any) of the 
                                rate paid on such debt over the basic 
                                interest rate (as defined in section 
                                805), and
                                    ``(II) the amount of the debt.
    ``(b) Seller of Financial Intermediation Services.--For purposes of 
section 103(a), the seller of financial intermediation services shall 
be--
            ``(1) in the case of explicitly charged fees for financial 
        intermediation services, the seller shall be the person who 
        receives the gross payments for the charged financial 
        intermediation services,
            ``(2) in the case of implicitly charged fees for financial 
        intermediation services with respect to any underlying 
        interest-bearing investment or account, the person making the 
        interest payments on the interest-bearing investment or 
        account, and
            ``(3) in the case of implicitly charged fees for financial 
        intermediation services with respect to any interest-bearing 
        debt, the person receiving the interest payments on the 
        interest-bearing debt.

``SEC. 802. BAD DEBTS.

    ``(a) In General.--For purposes of section 205(a), a bad debt shall 
be a business debt that becomes wholly or partially worthless to the 
payee.
    ``(b) Business Loan.--For purposes of subsection (a), a business 
loan or debt is a bona fide loan or debt made for a business purpose 
that both parties intended be repaid.
    ``(c) Determination of Worthlessness.--
            ``(1) In general.--No loan or debt shall be considered 
        wholly or partially worthless unless it has been in arrears for 
        180 days or more, except that if a debt is discharged wholly or 
        partially in bankruptcy before 180 days has elapsed, then it 
        shall be deemed wholly or partially worthless on the date of 
        discharge.
            ``(2) Determination by holder.--A loan or debt that has 
        been in arrears for 180 days or more may be deemed wholly or 
        partially worthless by the holder unless a payment schedule has 
        been entered into between the debtor and the lender.
    ``(d) Cross Reference.--See section 205(c) for tax on subsequent 
payments.

``SEC. 803. TIMING OF TAX ON FINANCIAL INTERMEDIATION SERVICES.

    ``The tax on financial intermediation services provided by section 
801 with respect to an underlying investment account or debt shall be 
imposed and collected with the same frequency that statements are 
rendered by the financial institution in connection with the investment 
account or debt but not less frequently than quarterly.

``SEC. 804. FINANCING LEASES.

    ``(a) Definition.--For purposes of this section, the term 
`financing lease' means any lease under which the lessee has the right 
to acquire the property for 50 percent or less of its fair market value 
at the end of the lease term.
    ``(b) General Rule.--Financing leases shall be taxed in the method 
set forth in this section.
    ``(c) Determination of Principal and Interest Components of 
Financing Lease.--The Secretary shall promulgate rules for 
disaggregating the principal and interest components of a financing 
lease. The principal amount shall be determined to the extent possible 
by examination of the contemporaneous sales price or prices of property 
the same or similar as the leased property.
    ``(d) Alternative Method.--In the event that contemporaneous sales 
prices or property the same or similar as the leased property are not 
available, the principal and interest components of a financing lease 
shall be disaggregated using the applicable interest rate (as defined 
in section 511) plus 4 percent.
    ``(e) Principal Component.--The principal component of the 
financing lease shall be subject to tax as if a purchase in the amount 
of the principal component had been made on the day on which said lease 
was executed.
    ``(f) Interest Component.--The financial intermediation services 
amount with respect to the interest component of the financing lease 
shall be subject to tax under this subtitle.
    ``(g) Coordination.--If the principal component and financial 
intermediation services amount with respect to the interest component 
of a lease have been taxed pursuant to this section, then the gross 
lease or rental payments shall not be subject to additional tax.

``SEC. 805. BASIC INTEREST RATE.

    ``For purposes of this chapter, the basic interest rate with 
respect to a debt instrument, investment, financing lease, or account 
shall be the applicable interest rate (as determined in section 511). 
For debt instruments, investments, or accounts of contractually fixed 
interest, the applicable interest rate of the month of issuance shall 
apply. For debt instruments, investments, or accounts of variable 
interest rates and which have no reference interest rate, the 
applicable interest shall be the Federal short-term interest rate for 
each month. For debt instruments, investments, or accounts of variable 
interest rates and which have a reference interest rate, the applicable 
interest shall be the applicable interest rate for the reference 
interest rate for each month.

``SEC. 806. FOREIGN FINANCIAL INTERMEDIATION SERVICES.

    ``(a) Special Rules Relating to International Financial 
Intermediation Services.--Financial intermediation services shall be 
deemed as used or consumed within the United States if the person (or 
any related party as defined in section 205(e)) purchasing the services 
is a resident of the United States.
    ``(b) Designation of Tax Representative.--Any person that provides 
financial intermediation services to United States residents must, as a 
condition of lawfully providing such services, designate, in a form 
prescribed by the Secretary, a tax representative for purposes of this 
subtitle. The tax representative shall be responsible for ensuring that 
the taxes imposed by this subtitle are collected and remitted and shall 
be jointly and severally liable for collecting and remitting these 
taxes. The Secretary may require reasonable bond of the tax 
representative. The Secretary or a sales tax administering authority 
may bring an action seeking a temporary restraining order, an 
injunction, or such other order as may be appropriate to enforce this 
section.
    ``(c) Cross References.--For definition of person, see section 901.

                    ``CHAPTER 9--ADDITIONAL MATTERS

``Sec. 901. Additional matters.
``Sec. 902. Transition matters.
``Sec. 903. Wages to be reported to Social Security Administration.
``Sec. 904. Trust Fund revenue.
``Sec. 905. Withholding of tax on nonresident aliens and foreign 
                            corporations.

``SEC. 901. ADDITIONAL MATTERS.

    ``(a) Intangible Property Antiavoidance Rule.--Notwithstanding 
section 2(a)(14)(a)(i), the sale of a copyright or trademark shall be 
treated as the sale of taxable services (within the meaning of section 
101(a)) if the substance of the sales of copyright or trademark 
constituted the sale of the services that produced the copyrighted 
material or the trademark.
    ``(b) De Minimis Payments.--Up to $400 of gross payments per 
calendar year shall be exempt from the tax imposed by section 101 if--
            ``(1) made by a person not in connection with a trade or 
        business at any time during such calendar year prior to making 
        said gross payments, and
            ``(2) made to purchase any taxable property or service 
        which is imported into the United States by such person for use 
        or consumption by such person in the United States.
    ``(c) De Minimis Sales.--Up to $1,200 per calendar year of gross 
payments shall be exempt from the tax imposed by section 101 if 
received--
            ``(1) by a person not in connection with a trade or 
        business during such calendar year prior to the receipt of said 
        gross payments, and
            ``(2) in connection with a casual or isolated sale.
    ``(d) De Minimis Sale of Financial Intermediation Services.--Up to 
$10,000 per calendar year of gross payments received by a person from 
the sale of financial intermediation services (as determined in 
accordance with section 801) shall be exempt from the tax imposed by 
section 101. The exemption provided by this subsection is in addition 
to other exemptions afforded by this chapter. The exemption provided by 
this subsection shall not be available to large sellers (as defined in 
section 501(e)(3)).
    ``(e) Proxy Buying Taxable.--If a registered person provides 
taxable property or services to a person either as a gift, prize, 
reward, or as remuneration for employment, and such taxable property or 
services were not previously subject to tax pursuant to section 101, 
then the provision of such taxable property or services by the 
registered person shall be deemed the conversion of such taxable 
property or services to personal use subject to tax pursuant to section 
103(c) at the tax inclusive fair market value of such taxable property 
or services.
    ``(f) Substance Over Form.--The substance of a transaction will 
prevail over its form if the transaction has no bona fide economic 
purpose and is designed to evade tax imposed by this subtitle.
    ``(g) Certain Employee Discounts Taxable.--
            ``(1) Employee discount.--For purposes of this subsection, 
        the term `employee discount' means an employer's offer of 
        taxable property or services for sale to its employees or their 
        families (within the meaning of section 302(b)) for less than 
        the offer of such taxable property or services to the general 
        public.
            ``(2) Employee discount amount.--For purposes of this 
        subsection, the employee discount amount is the amount by which 
        taxable property or services are sold pursuant to an employee 
        discount below the amount for which such taxable property or 
        services would have been sold to the general public.
            ``(3) Taxable amount.--If the employee discount amount 
        exceeds 20 percent of the price that the taxable property or 
        services would have been sold to the general public, then the 
        sale of such taxable property or services by the employer shall 
        be deemed the conversion of such taxable property or services 
        to personal use and tax shall be imposed on the taxable 
        employee discount amount. The taxable employee discount amount 
        shall be--
                    ``(A) the employee discount amount, minus
                    ``(B) 20 percent of the amount for which said 
                taxable property or services would have been sold to 
                the general public.
    ``(h) Saturday, Sunday, or Legal Holiday.--When the last day 
prescribed for performing any act required by this subtitle falls on a 
Saturday, Sunday, or legal holiday (in the jurisdiction where the 
return is to be filed), the performance of such act shall be considered 
timely if it is performed on the next day which is not a Saturday, 
Sunday, or legal holiday (in the jurisdiction where the return is to be 
filed).

``SEC. 902. TRANSITION MATTERS.

    ``(a) Inventory.--
            ``(1) Qualified inventory.--Inventory held by a trade or 
        business on the close of business on December 31, 2024, shall 
        be qualified inventory if it is sold--
                    ``(A) before December 31, 2025,
                    ``(B) by a registered person, and
                    ``(C) subject to the tax imposed by section 101.
            ``(2) Costs.--For purposes of this section, qualified 
        inventory shall have the cost that it had for Federal income 
        tax purposes for the trade or business as of December 31, 2024 
        (including any amounts capitalized by reason of section 263A of 
        the Internal Revenue Code of 1986 as in effect on December 31, 
        2024).
            ``(3) Transitional inventory credit.--The trade or business 
        which held the qualified inventory on the close of business on 
        December 31, 2024, shall be entitled to a transitional 
        inventory credit equal to the cost of the qualified inventory 
        (determined in accordance with paragraph (2)) times the rate of 
        tax imposed by section 101.
            ``(4) Timing of credit.--The credit provided under 
        paragraph (3) shall be allowed with respect to the month when 
        the inventory is sold subject to the tax imposed by this 
        subtitle. Said credit shall be reported as an intermediate and 
        export sales credit and the person claiming said credit shall 
        attach supporting schedules in the form that the Secretary may 
        prescribe.
    ``(b) Work-in-Process.--For purposes of this section, inventory 
shall include work-in-process.
    ``(c) Qualified Inventory Held by Businesses Not Selling Said 
Qualified Inventory at Retail.--
            ``(1) In general.--Qualified inventory held by businesses 
        that sells said qualified inventory not subject to tax pursuant 
        to section 102(a) shall be eligible for the transitional 
        inventory credit only if that business (or a business that has 
        successor rights pursuant to paragraph (2)) receives 
        certification in a form satisfactory to the Secretary that the 
        qualified inventory was subsequently sold subject to the tax 
        imposed by this subtitle.
            ``(2) Transitional inventory credit right may be sold.--The 
        business entitled to the transitional inventory credit may sell 
        the right to receive said transitional inventory credit to the 
        purchaser of the qualified inventory that gave rise to the 
        credit entitlement. Any purchaser of such qualified inventory 
        (or property or services into which the qualified inventory has 
        been incorporated) may sell the right to said transitional 
        inventory credit to a subsequent purchaser of said qualified 
        inventory (or property or services into which the qualified 
        inventory has been incorporated).

``SEC. 903. WAGES TO BE REPORTED TO SOCIAL SECURITY ADMINISTRATION.

    ``(a) In General.--Employers shall submit such information to the 
Social Security Administration as is required by the Social Security 
Administration to calculate Social Security benefits under title II of 
the Social Security Act, including wages paid, in a form prescribed by 
the Secretary. A copy of the employer submission to the Social Security 
Administration relating to each employee shall be provided to each 
employee by the employer.
    ``(b) Wages.--For purposes of this section, the term `wages' means 
all cash remuneration for employment (including tips to an employee by 
third parties provided that the employer or employee maintains records 
documenting such tips) including self-employment income; except that 
such term shall not include--
            ``(1) any insurance benefits received (including death 
        benefits),
            ``(2) pension or annuity benefits received,
            ``(3) tips received by an employee over $5,000 per year, 
        and
            ``(4) benefits received under a government entitlement 
        program (including Social Security benefits and unemployment 
        compensation benefits).
    ``(c) Self-Employment Income.--For purposes of subsection (b), the 
term `self-employment income' means gross payments received for taxable 
property or services minus the sum of--
            ``(1) gross payments made for taxable property or services 
        (without regard to whether tax was paid pursuant to section 101 
        on such taxable property or services), and
            ``(2) wages paid by the self-employed person to employees 
        of the self-employed person.

``SEC. 904. TRUST FUND REVENUE.

    ``(a) Secretary To Make Allocation of Sales Tax Revenue.--The 
Secretary shall allocate the revenue received by virtue of the tax 
imposed by section 101 in accordance with this section. The revenue 
shall be allocated among--
            ``(1) the general revenue,
            ``(2) the old-age and survivors insurance trust fund,
            ``(3) the disability insurance trust fund,
            ``(4) the hospital insurance trust fund, and
            ``(5) the Federal supplementary medical insurance trust 
        fund.
    ``(b) General Rule.--
            ``(1) General revenue.--The proportion of total revenue 
        allocated to the general revenue shall be the same proportion 
        as the rate in section 101(b)(4) bears to the combined Federal 
        tax rate percentage (as defined in section 101(b)(3)).
            ``(2) The amount of revenue allocated to the old-age and 
        survivors insurance and disability insurance trust funds shall 
        be the same proportion as the old-age, survivors and disability 
        insurance rate (as defined in subsection (d)) bears to the 
        combined Federal tax rate percentage (as defined in section 
        101(b)(3)).
            ``(3) The amount of revenue allocated to the hospital 
        insurance and Federal supplementary medical insurance trust 
        funds shall be the same proportion as the hospital insurance 
        rate (as defined in subsection (e)) bears to the combined 
        Federal tax rate percentage (as defined in section 101(b)(3)).
    ``(c) Calendar Year 2025.--Notwithstanding subsection (b), the 
revenue allocation pursuant to subsection (a) for calendar year 2025 
shall be as follows:
            ``(1) 64.83 percent of total revenue to general revenue,
            ``(2) 27.43 percent of total revenue to the old-age and 
        survivors insurance and disability insurance trust funds, and
            ``(3) 7.74 percent of total revenue to the hospital 
        insurance and Federal supplementary medical insurance trust 
        funds.
    ``(d) Old-Age, Survivors and Disability Insurance Rate.--The old-
age, survivors and disability insurance rate shall be determined by the 
Social Security Administration. The old-age, survivors and disability 
insurance rate shall be that sales tax rate which is necessary to raise 
the same amount of revenue that would have been raised by imposing a 
12.4 percent tax on the Social Security wage base (including self-
employment income) as determined in accordance with chapter 21 of the 
Internal Revenue Code most recently in effect prior to the enactment of 
this Act. The rate shall be determined using actuarially sound 
methodology and announced at least 6 months prior to the beginning of 
the calendar year for which it applies.
    ``(e) Hospital Insurance Rate.--The hospital insurance rate shall 
be determined by the Social Security Administration. The hospital 
insurance rate shall be that sales tax rate which is necessary to raise 
the same amount of revenue that would have been raised by imposing a 
2.9 percent tax on the Medicare wage base (including self-employment 
income) as determined in accordance with chapter 21 of the Internal 
Revenue Code most recently in effect prior to the enactment of this 
Act. The rate shall be determined using actuarially sound methodology 
and announced at least 6 months prior to the beginning of the calendar 
year for which it applies.
    ``(f) Assistance.--The Secretary shall provide such technical 
assistance as the Social Security Administration shall require to 
determine the old-age, survivors and disability insurance rate and the 
hospital insurance rate.
    ``(g) Further Allocations.--
            ``(1) Old-age, survivors and disability insurance.--The 
        Secretary shall allocate revenue received because of the old-
        age, survivors and disability insurance rate to the old-age and 
        survivors insurance trust fund and the disability insurance 
        trust fund in accordance with law or, in the absence of other 
        statutory provision, in the same proportion that the old-age 
        and survivors insurance trust fund receipts bore to the sum of 
        the old-age and survivors insurance trust fund receipts and the 
        disability insurance trust fund receipts in calendar year 2024 
        (taking into account only receipts pursuant to chapter 21 of 
        the Internal Revenue Code).
            ``(2) Hospital insurance.--The Secretary shall allocate 
        revenue received because of the hospital insurance rate to the 
        hospital insurance trust fund and the Federal supplementary 
        medical insurance trust fund in accordance with law or, in the 
        absence of other statutory provision, in the same proportion 
        that hospital insurance trust fund receipts bore to the sum of 
        the hospital insurance trust fund receipts and Federal 
        supplementary medical insurance trust fund receipts in calendar 
        year 2024 (taking into account only receipts pursuant to 
        chapter 21 of the Internal Revenue Code).

``SEC. 905. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN 
              CORPORATIONS.

    ``(a) In General.--All persons, in whatever capacity acting 
(including lessees or mortgagors or real or personal property, 
fiduciaries, employers, and all officers and employees of the United 
States) having control, receipt, custody, disposal, or payment of any 
income to the extent such income constitutes gross income from sources 
within the United States of any nonresident alien individual, foreign 
partnership, or foreign corporation shall deduct and withhold from that 
income a tax equal to 23 percent thereof.
    ``(b) Exception.--No tax shall be required to be deducted from 
interest on portfolio debt investments.
    ``(c) Treaty Countries.--In the case of payments to nonresident 
alien individuals, foreign partnerships, or foreign corporations that 
have a residence in (or the nationality of a country) that has entered 
into a tax treaty with the United States, then the rate of withholding 
tax prescribed by the treaty shall govern.''.

SEC. 202. CONFORMING AND TECHNICAL AMENDMENTS.

    (a) Repeals.--The following provisions of the Internal Revenue Code 
of 1986 are repealed:
            (1) Subchapter A of chapter 61 of subtitle D (as 
        redesignated by section 104) (relating to information and 
        returns).
            (2) Sections 6103 through 6116 of subchapter B of chapter 
        61 of subtitle D (as so redesignated).
            (3) Section 6157 (relating to unemployment taxes).
            (4) Section 6163 (relating to estate taxes).
            (5) Section 6164 (relating to corporate taxes).
            (6) Section 6166 (relating to estate taxes).
            (7) Section 6167 (relating to foreign expropriation 
        losses).
            (8) Sections 6201, 6205, and 6207 (relating to 
        assessments).
            (9) Subchapter C of chapter 63 of subtitle D (as so 
        redesignated) (relating to tax treatment of partnership items).
            (10) Section 6305 (relating to collections of certain 
        liabilities).
            (11) Sections 6314, 6315, 6316, and 6317 (relating to 
        payments of repealed taxes).
            (12) Sections 6324, 6324A, and 6324B (relating to liens for 
        estate and gift taxes).
            (13) Section 6344 (relating to cross references).
            (14) Section 6411 (relating to carrybacks).
            (15) Section 6413 (relating to employment taxes).
            (16) Section 6414 (relating to withheld income taxes).
            (17) Section 6422 (relating to cross references).
            (18) Section 6425 (relating to overpayment of corporate 
        estimated taxes).
            (19) Section 6504 (relating to cross references).
            (20) Section 6652 (relating to failure to file certain 
        information returns).
            (21) Sections 6654 and 6655 (relating to failure to payment 
        estimated income tax).
            (22) Section 6662 (relating to penalties).
            (23) Sections 6677 through 6711 (relating to income tax 
        related penalties).
            (24) Part II of subchapter B of chapter 68 (relating to 
        certain information returns).
            (25) Part I of subchapter A of chapter 70 (relating to 
        termination of taxable year).
            (26) Section 6864 (relating to certain carrybacks).
            (27) Section 7103 (relating to cross references).
            (28) Section 7204 (relating to withholding statements).
            (29) Section 7211 (relating certain statements).
            (30) Section 7231 (relating to failure to obtain certain 
        licenses).
            (31) Section 7270 (relating to insurance policies).
            (32) Section 7404 (relating to estate taxes).
            (33) Section 7407 (relating to income tax preparers).
            (34) Section 7408 (relating to income tax shelters).
            (35) Section 7409 (relating to 501(c)(3) organizations).
            (36) Section 7427 (relating to income tax preparers).
            (37) Section 7428 (relating to 501(c)(3) organizations).
            (38) Section 7476 (relating to declaratory judgments 
        relating to retirement plans).
            (39) Section 7478 (relating to declaratory judgments 
        relating to certain tax-exempt obligations).
            (40) Section 7508 (relating to postponing time for certain 
        actions required by the income, estate, and gift tax).
            (41) Section 7509 (relating to Postal Service payroll 
        taxes).
            (42) Section 7512 (relating to payroll taxes).
            (43) Section 7517 (relating to estate and gift tax 
        evaluation).
            (44) Section 7518 (relating to Merchant Marine tax 
        incentives).
            (45) Section 7519 (relating to taxable years).
            (46) Section 7520 (relating to insurance and annuity 
        valuation tables).
            (47) Section 7523 (relating to reporting Federal income and 
        outlays on Form 1040s).
            (48) Section 7611 (relating to church income tax exemptions 
        and church unrelated business income tax inquiries).
            (49) Section 7654 (relating to possessions' income taxes).
            (50) Section 7655 (relating to cross references).
            (51) Section 7701(a)(16).
            (52) Section 7701(a)(19).
            (53) Section 7701(a)(20).
            (54) Paragraphs (32) through (38) of section 7701(a).
            (55) Paragraphs (41) through (46) of section 7701(a).
            (56) Section 7701(b).
            (57) Subsections (e) through (m) of section 7701.
            (58) Section 7702 (relating to life insurance contracts).
            (59) Section 7702A (relating to modified endowment 
        contracts).
            (60) Section 7702B (relating to long-term care insurance).
            (61) Section 7703 (relating to the determination of marital 
        status).
            (62) Section 7704 (relating to publicly traded 
        partnerships).
            (63) Section 7805.
            (64) Section 7851.
            (65) Section 7872.
            (66) Section 7873.
    (b) Other Conforming and Technical Amendments.--
            (1) Section 6151 of such Code is amended by striking 
        subsection (b) and by redesignating subsection (c) as 
        subsection (b).
            (2) Section 6161 of such Code is amended to read as 
        follows:

``SEC. 6161. EXTENSION OF TIME FOR PAYING TAX.

    ``The Secretary, except as otherwise provided in this title, may 
extend the time for payment of the amount of the tax shown or required 
to be shown on any return, report, or declaration required under 
authority of this title for a reasonable period not to exceed 6 months 
(12 months in the case of a taxpayer who is abroad).''.
            (3) Section 6211(a) of such Code is amended--
                    (A) by striking ``income, estate, and gift taxes 
                imposed by subtitles A and B and'',
                    (B) by striking ``subtitle A or B, or'', and
                    (C) by striking ``, as defined in subsection 
                (b)(2),'' in paragraph (2).
            (4) Section 6211(b) of such Code is amended to read as 
        follows:
    ``(b) Rebate Defined.--For purposes of subsection (a)(2), the term 
`rebate' means so much of an abatement, credit, refund, or other 
payment, as was made on the ground that the tax imposed by chapter 41, 
42, 43, or 44 was less than the excess of the amount specified in 
subsection (a)(1) over the rebates previously made.''.
            (5) Section 6212(b) of such Code is amended to read as 
        follows:
    ``(b) Address for Notice of Deficiency.--In the absence of notice 
to the Secretary under section 6903 of the existence of a fiduciary 
relationship, notice of a deficiency in respect of a tax imposed by 
chapter 42, 43, or 44 if mailed to the taxpayer at his last known 
address, shall be sufficient for purposes of such chapter and this 
chapter even if such taxpayer is deceased, or is under a legal 
disability, or, in the case of a corporation has terminated its 
existence.''.
            (6) Section 6302(b) of such Code is amended by striking 
        ``21,''.
            (7) Section 6302 of such Code is amended by striking 
        subsections (g) and (i) and by redesignating subsection (h) as 
        subsection (g).
            (8) Section 6325 of such Code is amended by striking 
        subsection (c) and by redesignating subsections (d) through (h) 
        as subsections (c) through (g), respectively.
            (9) Section 6402(d) of such Code is amended by striking 
        paragraph (3).
            (10) Section 6402 of such Code is amended by striking 
        subsection (j) and by redesignating subsection (k) as 
        subsection (j).
            (11) Section 6501(b) of such Code is amended--
                    (A) by striking ``except tax imposed by chapter 3, 
                4, 21, or 24,'' in paragraph (1), and
                    (B) by striking paragraph (2) and by redesignating 
                paragraphs (3) and (4) as paragraphs (2) and (3), 
                respectively.
            (12) Section 6501(c) of such Code is amended by striking 
        paragraphs (5) through (9).
            (13) Section 6501(e) of such Code is amended by striking 
        ``subsection (c)--'' and all that follows through ``subtitle 
        D'' in paragraph (3) and inserting ``subsection (c), in the 
        case of a return of a tax imposed under a provision of subtitle 
        B''.
            (14) Section 6501 of such Code is amended by striking 
        subsections (f) through (k) and subsections (m) and (n) and by 
        redesignating subsection (1) as subsection (f).
            (15) Section 6503(a) of such Code is amended--
                    (A) by striking paragraph (2),
                    (B) by striking ``Deficiency.--'' and all that 
                follows through ``The running'' and inserting 
                ``Deficiency.--The running'', and
                    (C) by striking ``income, estate, gift and''.
            (16) Section 6503 of such Code is amended by striking 
        subsections (e), (f), (i), and (k) and by redesignating 
        subsections (g), (h), and (j) as subsections (e), (f), and (g), 
        respectively.
            (17) Section 6511 of such Code is amended by striking 
        subsections (d) and (g) and by redesignating subsections (f) 
        and (h) as subsections (d) and (e), respectively.
            (18) Section 6512(b)(1) of such Code is amended by striking 
        ``of income tax for the same taxable year, of gift tax for the 
        same calendar year or calendar quarter, of estate tax in 
        respect of the taxable estate of the same decedent, or''.
            (19) Section 6513 of such Code is amended--
                    (A) by striking ``(a) Early Return or Advance 
                Payment of Tax.--'', and
                    (B) by striking subsections (b) and (e).
            (20) Chapter 67 of such Code is amended by striking 
        subchapters A through D and inserting the following:

``SEC. 6601. INTEREST ON OVERPAYMENTS AND UNDERPAYMENT.

    ``(a) Underpayments.--If any amount of tax imposed by this title is 
not paid on or before the last date prescribed for payment, interest on 
such amount at the Federal short-term rate (as defined in section 
511(b)) shall be paid from such last date to the date paid.
    ``(b) Overpayments.--Interest shall be allowed and paid upon any 
overpayment in respect of any internal revenue tax at the Federal 
short-term rate (as defined in section 511(b)) from 60 days after the 
date of the overpayment until the date the overpayment is refunded.''.
            (21) Section 6651(a)(1) of such Code is amended by striking 
        ``subchapter A of chapter 61 (other than part III thereof),''.
            (22) Section 6656 of such Code is amended by striking 
        subsection (c) and by redesignating subsection (d) as 
        subsection (c).
            (23) Section 6663 of such Code is amended by striking 
        subsection (c).
            (24) Section 6664(c) of such Code is amended--
                    (A) by striking ``Exception.--'' and all that 
                follows through ``No penalty'' and inserting 
                ``Exception.--No penalty'', and
                    (B) by striking paragraphs (2) and (3).
            (25) Chapter 72 of such Code is amended by striking all 
        matter preceding section 7011.
            (26) Section 7422 of such Code is amended by striking 
        subsections (h) and (i) and by redesignating subsections (j) 
        and (k) as subsections (h) and (i), respectively.
            (27) Section 7451 of such Code is amended to read as 
        follows:

``SEC. 7451. FEE FOR FILING PETITION.

    ``The Tax Court is authorized to impose a fee in an amount not in 
excess of $60 to be fixed by the Tax Court for the filing of any 
petition for the redetermination of a deficiency.''.
            (28) Section 7454 of such Code is amended by striking 
        subsection (b) and by redesignating subsection (c) as 
        subsection (b).
            (29) Section 7463(a) of such Code is amended--
                    (A) by striking paragraphs (2) and (3),
                    (B) by redesignating paragraph (4) as paragraph 
                (2), and
                    (C) by striking ``D'' in paragraph (2) (as so 
                redesignated) and inserting ``B''.
            (30) Section 7463(c) of such Code is amended by striking 
        ``sections 6214(a) and'' and inserting ``section''.
            (31) Section 7463(e) of such Code is amended by striking 
        ``, to the extent that the procedures described in subchapter B 
        of chapter 63 apply''.
            (32) Section 7481 of such Code is amended by striking 
        subsection (d).
            (33) Section 7608 of such Code is amended by striking 
        ``subtitle E'' each place it appears and inserting ``subtitle 
        C''.
            (34) Section 7701(a)(29) of such Code is amended by 
        striking ``1986'' and inserting ``2023''.
            (35) Section 7809(c) of such Code is amended by striking 
        paragraphs (1) and (4) and by redesignating paragraphs (2) and 
        (3) as paragraphs (1) and (2), respectively.
            (36) Section 7871(a) of such Code is amended by striking 
        paragraphs (1) and (3) through (6) and by redesignating 
        paragraphs (2) and (7) as paragraphs (1) and (2), respectively.
            (37) Section 7871 of such Code is amended by striking 
        subsection (c) and by redesignating subsections (d) and (e) as 
        subsections (c) and (d), respectively.
            (38) Section 8021 of such Code is amended by striking 
        subsection (a) and by redesignating subsections (b) through (f) 
        as subsections (a) through (e), respectively.
            (39) Section 8022(2)(A) of such Code is amended by striking 
        ``, particularly the income tax''.
            (40) Section 8023 of such Code is amended by striking 
        ``Internal Revenue Service'' each place it appears and 
        inserting ``Department of the Treasury''.
            (41) Section 9501(b)(2) of such Code is amended by striking 
        subparagraph (C).
            (42) Section 9702(a) of such Code is amended by striking 
        paragraph (4).
            (43) Section 9705(a) of such Code is amended by striking 
        paragraph (4) and by redesignating paragraph (5) as paragraph 
        (4).
            (44) Section 9706(d)(2)(A) of such Code is amended by 
        striking ``6103'' and inserting ``605(e)''.
            (45) Section 9707 of such Code is amended by striking 
        subsection (f).
            (46) Section 9712(d) of such Code is amended by striking 
        paragraph (5) and by redesignating paragraph (6) as paragraph 
        (5).
            (47) Section 9803(a) of such Code is amended by striking 
        ``(as defined in section 414(f))''.

                        TITLE III--OTHER MATTERS

SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.

    (a) Appropriations.--Appropriations for any expenses of the 
Internal Revenue Service including processing tax returns for years 
prior to the repeal of the taxes repealed by title I of this Act, 
revenue accounting, management, transfer of payroll and wage data to 
the Social Security Administration for years after fiscal year 2027 
shall not be authorized.
    (b) Records.--Federal records related to the administration of 
taxes repealed by title I of this Act shall be destroyed by the end of 
fiscal year 2027, except that any records necessary to calculate Social 
Security benefits shall be retained by the Social Security 
Administration and any records necessary to support ongoing litigation 
with respect to taxes owed or refunds due shall be retained until final 
disposition of such litigation.
    (c) Conforming Amendments.--Section 7802 of the Internal Revenue 
Code of 1986 is amended--
            (1) by striking subsections (a) and (b) and by 
        redesignating subsections (c) and (d) as subsections (a) and 
        (b),
            (2) by striking ``Internal Revenue Service'' each place it 
        appears and inserting ``Department of the Treasury'', and
            (3) by striking ``Commissioner'' or ``Commissioner of 
        Internal Revenue'' each place they appear and inserting 
        ``Secretary''.
    (d) Effective Date.--The amendments made by subsection (c) shall 
take effect on January 1, 2027.

SEC. 302. ADMINISTRATION OF OTHER FEDERAL TAXES.

    (a) In General.--Section 7801 of the Internal Revenue Code of 1986 
(relating to the authority of the Department of the Treasury) is 
amended by adding at the end the following:
    ``(d) Excise Tax Bureau.--There shall be in the Department of the 
Treasury an Excise Tax Bureau to administer those excise taxes not 
administered by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives.
    ``(e) Sales Tax Bureau.--There shall be in the Department of the 
Treasury a Sales Tax Bureau to administer the national sales tax in 
those States where it is required pursuant to section 404, and to 
discharge other Federal duties and powers relating to the national 
sales tax (including those required by sections 402, 403, and 405). The 
Office of Revenue Allocation shall be within the Sales Tax Bureau.''.
    (b) Assistant General Counsels.--Section 7801(a)(2) of such Code is 
amended to read as follows:
            ``(2) Assistant general counsels.--The Secretary of the 
        Treasury may appoint, without regard to the provisions of the 
        civil service laws, and fix the duties of not more than 5 
        assistant general counsels.''.

SEC. 303. SALES TAX INCLUSIVE SOCIAL SECURITY BENEFITS INDEXATION.

    Subparagraph (D) of section 215(i)(1) of the Social Security Act 
(42 U.S.C. 415(i)(1)) (relating to cost-of-living increases in Social 
Security benefits) is amended to read as follows:
            ``(D)(i) the term `CPI increase percentage', with respect 
        to a base quarter or cost-of-living quarter in any calendar 
        year, means the percentage (rounded to the nearest one-tenth of 
        1 percent) by which the Consumer Price Index for that quarter 
        (as prepared by the Department of Labor) exceeds such index for 
        the most recent prior calendar quarter which was a base quarter 
        under subparagraph (A)(ii) or, if later, the most recent cost-
        of-living computation quarter under subparagraph (B),
            ``(ii) if the Consumer Price Index (as so prepared) does 
        not include the national sales tax paid, then the term `CPI 
        increase percentage', with respect to a base quarter or cost-
        of-living quarter in any calendar year, means the percentage 
        (rounded to the nearest one-tenth of 1 percent) by which the 
        product of--
                    ``(I) the Consumer Price Index for that quarter (as 
                so prepared), and
                    ``(II) the national sales tax factor,
        exceeds such index for the most recent prior calendar quarter 
        which was a base quarter under subparagraph (A)(ii) or, if 
        later, the most recent cost of living computation quarter under 
        subparagraph (B), and
            ``(iii) the national sales tax factor is equal to one plus 
        the quotient that is--
                    ``(I) the sales tax rate imposed by section 101 of 
                the Internal Revenue Code of 2023, divided by
                    ``(II) the quantity that is one minus such sales 
                tax rate.''.

   TITLE IV--SUNSET OF SALES TAX IF SIXTEENTH AMENDMENT NOT REPEALED

SEC. 401. ELIMINATION OF SALES TAX IF SIXTEENTH AMENDMENT NOT REPEALED.

    If the Sixteenth Amendment to the Constitution of the United States 
is not repealed before the end of the 7-year period beginning on the 
date of the enactment of this Act, then all provisions of, and 
amendments made by, this Act shall not apply to any use or consumption 
in any year beginning after December 31 of the calendar year in which 
or with which such period ends, except that the Sales Tax Bureau of the 
Department of the Treasury shall not be terminated until 6 months after 
such December 31.
                                 <all>
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