I 
111TH CONGRESS 
2D SESSION 
H. R. 5649 
To promote neutrality, simplicity, and fairness in the taxation of digital 
goods and digital services. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 30, 2010 
Mr. BOUCHER (for himself and Mr. SMITH of Texas) introduced the following 
bill; which was referred to the Committee on the Judiciary 
A BILL 
To promote neutrality, simplicity, and fairness in the 
taxation of digital goods and digital services. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Digital Goods and 
Services Tax Fairness Act of 2010’’. 
SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) Consumers, businesses, and other partici-
pants engaged in electronic commerce may be sub-
ject to multiple, confusing, and burdensome taxation 
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because of inconsistent rules among thousands of 
State and local jurisdictions and disparate treatment 
of digital goods and digital services. 
(2) A consistent framework for taxation is 
needed that will not impede electronic commerce and 
the sale of digital goods and digital services, by pre-
venting multiple taxation, and providing greater cer-
tainty and simplicity. 
(3) Neutrality should guide tax policy and ad-
ministration in this area. Transactions involving 
similar types of goods and services should be taxed 
fairly, regardless of the method and means of dis-
tribution, whether through electronic transfer or 
through other channels of commerce. New or dif-
ferent taxes on electronic transactions should be 
barred. 
(4) To ensure neutrality and avoid multiple tax-
ation, certain rules should be adapted to reflect the 
unique nature of electronic commerce and how dig-
ital goods and digital services are provided. 
(5) To recognize the critical role that online 
health, energy management, and education services 
will play in our economy, these services should be ex-
empt from all State and local taxes. 
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SEC. 3. MULTIPLE AND DISCRIMINATORY TAXES PROHIB-
ITED. 
No State or local jurisdiction shall impose multiple 
or discriminatory taxes on or with respect to the sale or 
use of digital goods or digital services. 
SEC. 4. RETAIL, SOURCING, AND OTHER LIMITATIONS. 
(a) RETAIL LIMITATION.—Taxes on or with respect 
to the sale or use of digital goods or digital services may 
be imposed only on or with respect to a sale to, or use 
by, a customer. 
(b) SOURCING LIMITATION.— 
(1) IN GENERAL.—Taxes on or with respect to 
the sale or use of digital goods or digital services 
may be imposed only by the State and local jurisdic-
tions whose territorial limits encompass the cus-
tomer’s tax address. This limitation shall be deemed 
satisfied if sourcing is determined by a seller pursu-
ant to State sourcing rules adopted pursuant to the 
Streamlined Sales and Use Tax Agreement. 
(2) TAX
ADDRESS.—The customer’s tax ad-
dress shall be— 
(A) with respect to digital goods or digital 
services that are sold to a customer by a pro-
vider of mobile telecommunications service that 
is subject to being sourced under section 117 of 
title 4 of the United States Code, and furnished 
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to the customer in conjunction with such pro-
vider’s mobile telecommunications service, the 
customer’s place of primary use, as defined in 
section 124 of title 4 of the United States Code; 
(B) if subparagraph (A) does not apply, 
and if the digital good or digital service is re-
ceived by the customer at a business location of 
the seller, such business location; 
(C) if neither subparagraph (A) nor sub-
paragraph (B) applies, and if the location where 
the digital good or digital service is received by 
the customer is known to the seller, such loca-
tion; 
(D) if none of subparagraphs (A) through 
(C) applies, the customer’s address that is ei-
ther known to the seller or, if not known, ob-
tained by the seller during the consummation of 
the transaction, including the address of the 
customer’s payment instrument if no other ad-
dress is available; 
(E) if an address is neither known nor ob-
tained as provided in subparagraph (D), the ad-
dress of the seller from which the digital good 
or digital service was sold; and 
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(F) notwithstanding subparagraphs (A) 
through (E), for digital goods or digital services 
that are delivered to a person other than the 
customer, including advertising services, the de-
livery location if known or, otherwise, the cus-
tomer’s address determined under subpara-
graph (D) or (E). 
(c) LIMIT ON EXPANSIVE INTERPRETATION.—No tax 
on or with respect to the sale or use of tangible personal 
property, telecommunications service, Internet access serv-
ice, or audio or video programming service may be con-
strued by any regulation, administrative ruling, or other-
wise, to be imposed on or with respect to the sale or use 
of a digital good or a digital service. No tax on or with 
respect to the sale or use of a digital good may be con-
strued by any regulation, administrative ruling, or other-
wise, to be imposed on or with respect to the sale or use 
of a digital service. The limitations provided by this sub-
section shall not apply to any construction that was ap-
proved by a judicial determination made on or before June 
30, 2010. 
(d) CERTAIN TAXES PROHIBITED.—No tax shall be 
imposed on or with respect to the sale or use of digital 
medical services, digital education services, or digital en-
ergy management services. 
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SEC. 5. BUNDLED GOODS AND SERVICES. 
If charges for digital goods or digital services are ag-
gregated with, and not separately stated from, charges for 
other goods or services, then the charges for digital goods 
or digital services may be taxed for purposes of this Act 
at the same rate and on the same basis as charges for 
the other goods or services unless the seller can reasonably 
identify the charges for the digital goods or digital services 
from its books and records kept in the regular course of 
business. 
SEC. 6. DEFINITIONS AND OTHER SPECIAL RULES. 
For the purposes of this Act, the following definitions 
and rules apply: 
(1) CUSTOMER.—The term ‘‘customer’’ means 
a person that purchases a digital good or digital 
service, for a purpose other than resale. For the pur-
pose of determining a place of primary use under 
section 4(b)(2)(A), ‘‘customer’’ means the ‘‘end 
user’’, as such term is used in section 124 of title 
4 of the United States Code, of the purchased dig-
ital good or digital service. For purposes of this defi-
nition, purchase for resale includes purchase of a 
digital good or digital service for further commercial 
broadcast, rebroadcast, transmission, retransmission, 
licensing, relicensing, reproduction, copying, dis-
tribution, redistribution, or exhibition of the digital 
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good or digital service, in whole or in part, to an-
other person. 
(2) DELIVERED OR TRANSFERRED ELECTRONI-
CALLY.—The term ‘‘delivered or transferred elec-
tronically’’ means delivered or transferred to the 
customer by means other than tangible storage 
media. It is not necessary that the product or service 
be physically transferred to the customer, provided 
that the customer may access or remotely use the 
product or service. 
(3) DIGITAL
GOOD
AND
DIGITAL
SERVICE.— 
The term ‘‘digital good’’ means any good or product 
that is delivered or transferred electronically to the 
customer, including software, information main-
tained in digital format, digital audio-visual works, 
digital audio works, and digital books; and the term 
‘‘digital service’’ means any service that is delivered 
or transferred electronically to the customer, includ-
ing the provision of remote access to or use of a dig-
ital good, but the term ‘‘digital service’’ does not in-
clude telecommunications service, Internet access 
service, or audio or video programming service. For 
purposes of this section, ‘‘audio or video program-
ming’’ means programming provided by, or generally 
considered comparable to programming provided by, 
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a radio or television broadcast station. ‘‘Video pro-
gramming’’ shall not include interactive on-demand 
services, pay-per-view services, or services generally 
considered comparable to such services regardless of 
the technology used to provide such services. 
(4) DIGITAL EDUCATION SERVICE.—The term 
‘‘digital education service’’ means a primary, sec-
ondary, undergraduate, postgraduate, or professional 
educational service delivered or transferred electroni-
cally to a practitioner or student. 
(5) DIGITAL ENERGY MANAGEMENT SERVICE.— 
The term ‘‘digital energy management service’’ 
means a service that utilizes digital information to 
manage a customer’s energy use, to allow a cus-
tomer to respond to energy market information or 
circumstances, or to identify customer demand with 
particular energy supply. 
(6) DIGITAL
MEDICAL
SERVICE.—The term 
‘‘digital medical service’’ means a health care, health 
information, or health education service that is deliv-
ered or transferred electronically to a practitioner, 
researcher, or patient. 
(7) DIGITAL CODE.—The term ‘‘digital code’’ 
means a code that conveys to a customer only the 
right to obtain a digital good or digital service. A 
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vision applies only to the extent that the higher 
rate or broader tax base is attributable to the 
fact that such person sells digital goods or dig-
ital services; or 
(C) that is required to be collected with re-
spect to the sale or use of digital goods or dig-
ital services by different sellers or under other 
terms that are disadvantageous to those applied 
in taxing the sale or use of tangible personal 
property or of similar services that are not de-
livered or transferred electronically. 
For purposes of this subsection, all taxes, tax rates, 
exemptions, deductions, credits, incentives, exclu-
sions, and other similar factors shall be taken into 
account in determining whether a tax is a discrimi-
natory tax. 
(9) GENERALLY IMPOSED.—A tax shall not be 
considered ‘‘generally imposed’’ if it is imposed only 
on specific services, specific industries or business 
segments, or specific types of property. 
(10) MULTIPLE TAX.—The term ‘‘multiple tax’’ 
means any tax with respect to which no credit is 
given for comparable taxes paid to other States or 
local jurisdictions on the same transaction. Taxes 
imposed by physically overlapping State or local ju-
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risdictions shall not be considered to be multiple 
taxes by reason of being applied within the overlap-
ping area. 
(11) SALE AND PURCHASE.—The terms ‘‘sale’’ 
and ‘‘purchase’’, and all variations thereof, shall in-
clude ‘‘lease’’, ‘‘rent’’, and ‘‘license’’, and cor-
responding variations thereof. 
(12) SELLER.—The term ‘‘seller’’ means a per-
son making sales of tangible personal property, dig-
ital goods, digital services, or other services. 
(13) STATE
OR
LOCAL
JURISDICTION.—The 
term ‘‘State or local jurisdiction’’ means any of the 
several States, the District of Columbia, any terri-
tory or possession of the United States, a political 
subdivision of any State, territory, or possession, or 
any governmental entity or person acting on behalf 
of such State, territory, possession, or subdivision 
and with the authority to assess, impose, levy, or 
collect taxes. 
(14) TAX.—The term ‘‘tax’’ means any charge 
imposed by any governmental entity for the purpose 
of generating revenues for governmental purposes, 
including any tax, charge, or fee levied by a taxing 
jurisdiction as a fixed charge for each customer or 
measured by gross amounts charged to customers, 
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regardless of whether such tax, charge, or fee is im-
posed on the vendor or customer and regardless of 
the terminology used to describe the tax, charge, or 
fee. The term ‘‘tax’’ does not include a tax on or 
measured by net income or an ad valorem tax. 
SEC. 7. FEDERAL JURISDICTION. 
Notwithstanding section 1341 of title 28 of the 
United States Code, and without regard to the amount 
in controversy or citizenship of the parties, a district court 
of the United States has jurisdiction, concurrent with 
other jurisdiction of courts of the United States and the 
States, to prevent a violation of this Act. 
SEC. 8. REGULATIONS. 
The Secretary of Commerce, in consultation with the 
Secretary of the Treasury, shall prescribe such regulations 
as may be necessary or appropriate to carry out the pur-
poses of this Act. In promulgating any regulations under 
this Act, the Secretary shall also seek the consultation of 
the Executive Director of the Governing Board of the 
Streamlined Sales Tax Project. 
SEC. 9. EFFECTIVE DATE; APPLICATION. 
(a) GENERAL RULE.—This Act shall take effect on 
the date of the enactment of this Act. 
(b) APPLICATION
TO LIABILITIES
AND PENDING 
CASES.—Nothing in this Act affects liability for taxes ac-
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crued and enforced before the date of enactment of this 
Act, or affects ongoing litigation relating to such taxes, 
except as provided in section 4(c) of this Act. 
SEC. 10. SENSE OF THE CONGRESS. 
It is the sense of the Congress that each State shall 
take reasonable steps necessary to prevent multiple tax-
ation of digital goods and digital services in situations 
where a foreign country has imposed a tax on such goods 
or services. 
Æ 
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