‘‘(n) CROSS REFERENCE.—For penalty for filing 
false rebate claim, see section 505(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 Depart-
ment of Health and Human Services poverty guide-
lines 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 sec-
tions 652 and 673(2) of the Omnibus Reconciliation 
Act of 1981 for a family of one, less 
‘‘(2) the annual level determined by the Depart-
ment of Health and Human Services poverty guide-
lines 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 Adminis-
tration 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 quali-
fied 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 des-
ignated 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) SMARTCARDS AND DIRECT ELECTRONIC DE-
POSIT PERMISSIBLE.—The Social Security Administration 
may provide rebates in the form of smartcards that carry 
cash balances in their memory for use in making pur-
chases at retail establishments or by direct electronic de-
posit. 
‘‘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 sta-
tus and number of persons in a qualified family on the 
family registration date shall govern determinations re-
quired 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 1 qualified family. 
‘‘(c) REVISED
REGISTRATION
PERMISSIBLE.—A 
qualified family may file a revised registration for pur-
poses of section 302(d) to reflect a change in family cir-
cumstances. 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 2 years of age or older 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 mem-
bers 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 admin-
istering 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 col-
lected under this chapter. 
‘‘(c) COOPERATIVE AGREEMENTS.—The agreement 
under subsection (b)(2) shall include provisions for the ex-
peditious transfer of funds, contact officers, dispute reso-
lution, 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 administra-
tion 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 re-
spect 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 re-
quired 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 other-
wise 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 with-
in 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 sub-
section (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 rea-
sonable 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 di-
rectly by the Secretary. 
The order of the District Court revoking the author-
ity of an Administering State shall contain provi-
sions governing the orderly transfer of authority to 
the Secretary. 
‘‘(f) REINSTITUTION.—A State that has had its au-
thority 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 cal-
endar year commencing 8 years after the date of the order 
of revocation, the State shall be regarded without preju-
dice as eligible to become an administering State. 
‘‘(g) THIRD
STATE
ADMINISTRATION
PERMIS-
SIBLE.—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 con-
templated 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 facili-
ties 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 facili-
tate, and may be a party to a compact among States for 
purposes of facilitating the taxation of interstate pur-
chases and for other purposes that may facilitate imple-
mentation 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 con-
forming 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 con-
cern 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 jurisdic-
tion 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 (f) (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 represent-
atives). 
‘‘(c) REAL PROPERTY.—The destination of real prop-
erty, 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 pur-
chaser. 
‘‘(e) SERVICES.— 
‘‘(1) GENERAL RULE.—The destination of serv-
ices 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 jurisdic-
tion 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 des-
tination of transportation services shall be the final 
destination of the trip (in the case of round or mul-
tiple trip fares, the services amount shall be equally 
allocated among each final destination). 
‘‘(4) INTERNATIONAL TRANSPORTATION SERV-
ICES.—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 destina-
tion or origin. 
‘‘(5) ELECTRICAL SERVICE.—The destination of 
electrical services shall be the residence of the pur-
chaser. 
‘‘(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 pay-
ments 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 origi-
nally 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 allo-
cating revenue— 
‘‘(1) between or among administering States 
from taxes imposed by this subtitle or from State 
sales taxes administered by third-party admin-
istering States, or 
‘‘(2) between or among States imposing con-
forming 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 Alloca-
tion to arbitrate any claims or disputes among admin-
istering 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 Rev-
enue 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 inter-
views, hearings, prescribe rules, promulgate regulations, 
and perform such other duties as are required by this sub-
title. 
‘‘(b) RESOLUTION OF ANY INCONSISTENT RULES 
AND REGULATIONS.—In the event that the Secretary and 
any sales tax administering authority have issued incon-
sistent 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 Sec-
retary 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 in-
ternal revenue law or by a sales tax administering author-
ity shall apply to a period prior to its publication in the 
Federal Register (or State equivalent) except that a regu-
lation may take retroactive effect to prevent abuse. 
‘‘(e) REVIEW OF IMPACT OF REGULATIONS, RULES, 
AND RULINGS ON SMALL BUSINESS.— 
‘‘(1) SUBMISSION TO SMALL BUSINESS ADMIN-
ISTRATION.—After publication of any proposed or 
temporary regulation by the Secretary relating to in-
ternal 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 com-
ments on such regulation to the Secretary.
‘‘(2) CONSIDERATION OF COMMENTS.—In pre-
scribing any final regulation which supersedes a pro-
posed or temporary regulation which had been sub-
mitted 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 REGULA-
TION.—In the case of promulgation by the Secretary 
of any final regulations (other than a temporary reg-
ulation) which do not supersede a proposed regula-
tion, the requirements of paragraphs (1) and (2) 
shall apply, except that the submission under para-
graph (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 admin-
istering 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 jurisdic-
tion is not exclusive of any other jurisdiction that such 
sales tax administering authority may have. 
‘‘(b) FEDERAL JURISDICTION.—The grant of juris-
diction in subsection (a) shall not be in derogation of Fed-
eral jurisdiction over the same matter. The Federal Gov-
ernment shall have the right to exercise preemptive juris-
diction 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. Registration certificates. 
‘‘Sec. 505. Penalties. 
‘‘Sec. 506. Burden of persuasion and burden of production.
‘‘Sec. 507. Attorneys’ and accountancy fees. 
‘‘Sec. 508. Summons, examinations, audits, etc. 
‘‘Sec. 509. Records. 
‘‘Sec. 510. Tax to be separately stated and charged. 
‘‘Sec. 511. Coordination with title 11. 
‘‘Sec. 512. 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 im-
posed by this subtitle by reason of section 
103(a), or 
‘‘(B) liable to pay tax imposed by this sub-
title which is not collected pursuant to section 
103(a), 
shall submit to the appropriate sales tax admin-
istering authority (in a form prescribed by the Sec-
retary) a report relating to the previous calendar 
month. 
‘‘(2) CONTENTS OF REPORT.—The report re-
quired under paragraph (1) shall set forth— 
‘‘(A) the gross payments referred to in sec-
tion 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 suc-
ceeding month. Both Federal tax imposed by this 
subtitle and confirming 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, ex-
tensions 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 ad-
ministering 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 col-
lected 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 col-
lected $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 depos-
ited 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, post-
age 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 pri-
vate 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 Sec-
retary. 
‘‘(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 sur-
ety 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 con-
tinuing 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 dis-
charged. 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 pursu-
ant to section 604 has passed or the appeal was de-
nied, 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 author-
ized to maintain a program of awards wherein individuals 
that assist the Secretary or sales tax administering au-
thorities 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 im-
posed 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 pro-
vide notice of a change in the identity of the tax matters 
person within 30 days of said change. 
‘‘(d) CERTIFICATES OF REGISTRATION.—The sales 
tax administering authority shall provide certificates of 
registration to registered sellers. 
‘‘(e) EFFECT OF FAILURE TO REGISTER.—Any per-
son 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 in-
junction, 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 trans-
actions 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 per-
son 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 meth-
od 
‘‘SEC. 504. REGISTRATION CERTIFICATES. 
‘‘The sales tax administering authority shall issue 
certificates of registration to registered sellers and such 
other certificates as are necessary or may prove useful in 
the administration of the taxes imposed by this subtitle. 
‘‘SEC. 505. 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 per-
cent 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 deter-
mined in accordance with paragraph (1) or impris-
oned 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 inter-
mediate 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 sub-
title may be fined an amount up to the amount de-
termined in accordance with paragraph (1) or im-
prisoned 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 re-
port 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 re-
quired to be shown on the report. 
‘‘(2) INCREASED PENALTY ON RETURNS FILED 
AFTER WRITTEN INQUIRY.—The amount of the pen-
alty under paragraph (1) shall be doubled with re-
spect 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 re-
spect to any failure if it is shown that such fail-
ure is due to reasonable cause. 
‘‘(B) OTHER WAIVER AUTHORITY.—In ad-
dition to penalties not imposed by reason of 
subparagraph (A), the sales tax administering 
authority, on application, shall waive the pen-
alty imposed by paragraph (1) once per reg-
istered person per 24-month period. The pre-
ceding sentence shall not apply to a penalty de-
termined under paragraph (2). 
‘‘(g) PENALTY FOR WILLFULLY OR RECKLESSLY AC-
CEPTING A FALSE INTERMEDIATE OR EXPORT SALES
CERTIFICATE.—A person who willingly or recklessly ac-
cepts 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 re-
bate amount not actually due, and
‘‘(B) repay any rebates received as a result 
of the false rebate claim (together with inter-
est). 
‘‘(2) CRIMINAL PENALTY.—A person who will-
ingly files a false claim for a family consumption al-
lowance rebate (within the meaning of chapter 3) 
may be fined an amount up to the amount deter-
mined in accordance with paragraph (1) or impris-
oned 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 SEPA-
RATE SEGREGATED ACCOUNT.—Any person required to 
maintain a separate segregated account pursuant to sec-
tion 501(e) that fails to maintain such a separate seg-
regated account shall pay a penalty of $1,000. 
‘‘(l) PENALTY
FOR FAILURE
TO DEPOSIT COL-
LECTED
TAXES
IN
A
SEPARATE
SEGREGATED
AC-
COUNT.—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 tri-
pled unless said taxes have been deposited in the separate 
segregated account or remitted to the sales tax admin-
istering authority within 16 days of the date said deposit 
was due. 
‘‘(m) JOINT AND SEVERAL LIABILITY FOR TAX MAT-
TERS 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 sub-
title and penalties imposed by this subtitle. 
‘‘(n) RIGHT OF CONTRIBUTION.—If more than 1 per-
son 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 ex-
cess 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 im-
position of a criminal fine. 
‘‘(2) CRIMINAL FINE.—The fact that a criminal 
fine has been imposed shall not prevent the imposi-
tion of a civil penalty. 
‘‘(p) CONFIDENTIALITY.—Any person who violates 
the requirements relating to confidentiality of tax informa-
tion (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. 506. BURDEN OF PERSUASION AND BURDEN OF PRO-
DUCTION. 
‘‘In all disputes concerning taxes imposed by this sub-
title, 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 dis-
putes 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 pro-
vided 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 ex-
emption shall rest with the purchaser and not with the 
seller. 
‘‘SEC. 507. ATTORNEYS’ AND ACCOUNTANCY FEES. 
‘‘In all disputes concerning taxes imposed by this sub-
title, 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, account-
ancy fees, and other reasonable professional fees incurred 
in direct relation to the dispute unless the sales tax admin-
istering authority or the Secretary establishes that its po-
sition was substantially justified. 
‘‘SEC. 508. SUMMONS, EXAMINATIONS, AUDITS, ETC. 
‘‘(a) SUMMONS.—Persons are subject to administra-
tive summons by the sales tax administering authority for 
records, documents, and testimony required by the sales 
tax administering authority to accurately determine liabil-
ity 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 de-
scribe with reasonable certainty what is sought.
‘‘(b) EXAMINATIONS AND AUDITS.—The sales tax ad-
ministering authority has the authority to conduct at a 
reasonable time and place examinations and audits of per-
sons 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 rel-
evant or material to the determination of tax due. 
‘‘(c) LIMITATION ON AUTHORITY IN CASE OF REFER-
RAL.—No administrative summons may be issued by the 
sales tax administering authority and no action be com-
menced to enforce an administrative summons with re-
spect 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 Sec-
retary 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 Attor-
ney General’s Office notifies the sales tax admin-
istering 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 investiga-
tion, or 
‘‘(2) a final disposition has been made of any 
criminal proceeding connected with the internal rev-
enue laws, or conforming State sales tax, against 
such person. 
‘‘SEC. 509. RECORDS. 
‘‘Any person liable to remit taxes pursuant to this 
subtitle shall keep records (including a record of all section 
510 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 prop-
erty or services. 
‘‘SEC. 510. 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 require-
ments of subsection (a) shall be inapplicable in the case 
of sales by vending machines. Vending machines for pur-
poses 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 EXCEP-
TION.—The requirements of subsection (a) shall be inap-
plicable in the case of sales financial intermediation serv-
ice. Receipts shall be issued when the tax is imposed (in 
accordance with section 803 (relating to timing of tax on 
financial intermediation services)). 
‘‘SEC. 511. COORDINATION WITH TITLE 11. 
‘‘No addition to tax shall be made under section 505 
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. 512. 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 Sec-
retary 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 out-