I 
112TH CONGRESS 
1ST SESSION H. R. 1860 
To promote neutrality, simplicity, and fairness in the taxation of digital 
goods and digital services. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 12, 2011 
Mr. SMITH of Texas (for himself, Mr. COHEN, Mr. COBLE, and Mr. HASTINGS 
of Florida) introduced the following bill; which was referred to the Com-
mittee 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 2011’’. 
SEC. 2. FINDING. 
The Congress finds that it is appropriate to exercise 
congressional enforcement authority under section 5 of the 
14th amendment to the Constitution of the United States 
and Congress’ plenary power under article I, section 8, 
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clause 3 of the Constitution of the United States (com-
monly known as the ‘‘commerce clause’’) in order to en-
sure that States and political subdivisions thereof do not 
discriminate against providers and consumers of digital 
goods and digital services by imposing multiple, excessive 
and discriminatory taxes and other burdens on such pro-
viders and consumers. 
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 AND 
RULES. 
(a) RETAIL LIMITATION.—Taxes on or with respect 
to the sale of digital goods or digital services may only 
be imposed on or with respect to a sale to a customer. 
(b) TAXPAYER LIMITATION.—Taxes on or with re-
spect to the sale of digital goods or digital services may 
only be imposed on and collected only from a customer 
or a seller. 
(c) SOURCING LIMITATION.— 
(1) IN GENERAL.—Taxes on or with respect to 
the sale of digital goods or digital services may be 
imposed only by the State and local jurisdictions 
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whose territorial limits encompass the customer’s tax 
address. 
(2) MULTIPLE LOCATIONS.—If the sale of dig-
ital goods or digital services is made to multiple lo-
cations of a customer, whether simultaneously or 
over a period of time, the seller may determine the 
customer’s tax address or addresses using the ad-
dress or addresses of use as provided by the cus-
tomer. 
(3) SELLER HELD HARMLESS.—A seller that 
relies in good faith on information provided by a 
customer to determine the customer’s tax address or 
addresses shall not be held liable for any additional 
tax based on a different determination of the cus-
tomer’s tax address or addresses. 
(d) LIMITATION ON EXPANSIVE INTERPRETATION.— 
No tax on or with respect to the sale or use of tangible 
personal property, telecommunications service, Internet 
access service, or audio or video programming service may 
be construed by any regulation, administrative ruling, or 
otherwise, to be imposed on or with respect to the sale 
or use of a digital good or a digital service. For purposes 
of this Act, a transaction involving a digital good shall 
be characterized solely as a transaction involving the pro-
vision of a digital service unless the transaction results 
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in the transfer or delivery of a complete copy, with the 
right to use permanently or for a specified period, of the 
digital good that is the subject of the transaction. No tax 
on or with respect to the sale or use of a digital good may 
be construed by any regulation, administrative ruling, or 
otherwise, to be imposed on or with respect to the sale 
or use of a digital service. The limitations provided by this 
subsection shall not apply to any construction of a statute 
that was approved by a judicial interpretation of that stat-
ute on or before the date of the enactment of this Act. 
(e) TREATMENT OF BUNDLED GOODS AND SERV-
ICES.— 
(1) IN GENERAL.—Subject to paragraph (2), 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 busi-
ness. 
(2) CHARGES
FOR
DELIVERY
AND
TRANS-
PORT.—If the charge for a digital good or digital 
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