(2) by redesignating subsections (c) through (h)
as subsections (b) through (g), respectively.
(c) LIABILITIES AND PENDING CASES.—Nothing in
the amendments made by this section affects—
(1) liability for taxes accrued and enforced be-
fore the date of enactment of this Act; or
(2) ongoing litigation relating to such taxes.
SEC. 3. OTHER AMENDMENTS TO THE TAX FREEDOM ACT.
Title XI of division C of Public Law 105–277 (112
Stat. 2681–719; 47 U.S.C. 151 note) is amended—
(1) by redesignating section 1104 as section
1107; and
(2) by inserting after section 1103 the fol-
lowing:
‘‘SEC. 1104. DETERMINATION OF JURISDICTIONAL NEXUS.
‘‘(a) COLLECTING TAXES.—The following factors
shall not be sufficient, separately or collectively, to em-
power a State to impose on a seller that is not physically
present in such State an obligation to collect a tax payable
to such State by a purchaser that is physically present
in such State:
‘‘(1) The use by such seller of an Internet serv-
ice provider that is physically present in such State.
‘‘(2) The placement of digital data by such sell-
er on a server located in such State.
‘‘(3) The use of telecommunications service pro-
vided to such seller by a telecommunications pro-
vider that is physically present in such State.
‘‘(4) The use or presence in such State of in-
tangible property owned by such seller.
‘‘(5) The presence in such State of persons that
purchase from such seller.
‘‘(6) The affiliation of such seller with a person
that is physically present in such State and that
pays any tax imposed by such State or by a political
subdivision of such State.
‘‘(7) The performance of repair or warranty
services in such State by or on behalf of such seller
with respect to property sold by such seller if such
seller is not physically present in such State except
to perform such services.
‘‘(8) The existence of a contract between such
seller and a person that is physically present in such
State to the extent that such contract provides for
the return to such person of goods purchased from
such seller by means of the Internet or of a nonelec-
tronic catalog.
‘‘(9) The advertisement of the business location,
telephone number, or Internet address of such seller.
‘‘(b) PAYMENT OF INCOME TAXES.—The following
factors shall not be sufficient, separately or collectively,
to empower a State to require a seller to meet the business
activity and income tax reporting and payment obligations
of such State:
‘‘(1) Any of the factors specified in paragraphs
(1) through (9) of subsection (a).
‘‘(2) The registration relating to sales or use
taxes in effect in such State, by such seller with
such State.
‘‘(3) The collection or remittance of use taxes
by such seller to such State.
‘‘SEC. 1105. DEVELOPMENT OF UNIFORM SALES AND USE
TAX ACT.
‘‘It is the sense of the Congress that, not later than
October 21, 2004, States and political subdivisions of
States should work cooperatively with the National Con-
ference of Commissioners on Uniform State Laws (in this
section referred to as the ‘Conference’) to develop and
draft a Uniform Sales and Use Tax Act that—
‘‘(1) reflects a simplified synthesis of the sales
and use tax policies of States and political subdivi-
sions of States, applicable to sellers described in
paragraph (2);
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‘‘(2) creates and maintains parity of collection
costs (net of vendor discounts) between—
‘‘(A) sellers that are not physically present
in a State and that sell goods to purchasers
that are physically present in such State; and
‘‘(B) sellers that are physically present in
a State and that sell goods to purchasers that
are physically present in such State; and
‘‘(3) contains, among other matters—
‘‘(A) uniform tax base definitions;
‘‘(B) a uniform vendor discount;
‘‘(C) uniform and simple sourcing rules;
‘‘(D) a single sale and use tax rate per
State and a uniform limitation on any change
in such rate;
‘‘(E) uniform audit procedures;
‘‘(F) uniform forms for preparation by sell-
ers to determine and report the amount of tax
payable or remittable to a State;
‘‘(G) uniform electronic filing and remit-
tance methods;
‘‘(H) uniform rules for the determination
of the exempt status of sellers, and for the cre-
ation, distribution, and maintenance of a data-
base containing the identities of sellers that
have such status);
‘‘(I) a methodology for approving computer
software that sellers may rely on to determine
State sales and use tax rates; and
‘‘(J) a methodology for maintaining rev-
enue neutrality in overall sales and use tax col-
lections within each State (such as reducing the
Statewide sales tax rate) to account for any in-
crease in revenue that is payable (on a vol-
untary basis or otherwise) with respect to sales
to purchasers that are physically present in
such State made by sellers that are not phys-
ically present in such State.
‘‘SEC. 1106. ADVISORY COMMISSION ON UNIFORM SALES
AND USE TAX.
‘‘(a) ESTABLISHMENT.—There is established the Ad-
visory Commission on Uniform Sales and Use Tax (in this
section referred to as the ‘Commission’). The Commission
shall—
‘‘(1) be composed of 19 members appointed in
accordance with subsection (b), including the chair-
person who shall be selected by the members of the
Commission from among themselves; and
‘‘(2) conduct its business in accordance with the
provisions of this section.
‘‘(b) MEMBERSHIP.—
‘‘(1) IN
GENERAL.—The Commissioners shall
serve for the life of the Commission. The member-
ship of the Commission shall be as follows:
‘‘(A) 3 representatives from the Federal
Government, comprised of the Secretary of
Commerce, the Secretary of the Treasury, and
the United States Trade Representative (or
their respective delegates).
‘‘(B) 8 representatives from State and
local governments (1 such representative shall
be from a State or local government that does
not impose a sales tax and 1 representative
shall be from a State that does not impose an
income tax).
‘‘(C) 8 representatives of the electronic
commerce industry (including small business),
telecommunications carriers, local retail busi-
nesses, and consumer groups, comprised of—
‘‘(i) 3 individuals appointed by the
Majority Leader of the Senate;
‘‘(ii) 1 individual appointed by the Mi-
nority Leader of the Senate;
‘‘(iii) 3 individuals appointed by the
Speaker of the House of Representatives;
and
‘‘(iv) 1 individual appointed by the
Minority Leader of the House of Rep-
resentatives.
‘‘(2) APPOINTMENTS.—Appointments to the
Commission shall be made not later than 45 days
after the date of the enactment of the Internet Tax
Reform and Reduction Act of 2000. The chairperson
shall be selected not later than 60 days after the
date of the enactment of the Internet Tax Reform
and Reduction Act of 2000.
‘‘(3) VACANCIES.—Any vacancy in the Commis-
sion shall not affect its powers, but shall be filled in
the same manner as the original appointment.
‘‘(c) ACCEPTANCE
OF GIFTS
AND GRANTS.—The
Commission may accept, use, and dispose of gifts or
grants of services or property, both real and personal, for
purposes of aiding or facilitating the work of the Commis-
sion. Gifts or grants not used at the expiration of the
Commission shall be returned to the donor or grantor.
‘‘(d) OTHER RESOURCES.—The Commission shall
have reasonable access to materials, resources, data, and
other information from the Department of Justice, the
Department of Commerce, the Department of State, the
Department of the Treasury, and the Office of the United
States Trade Representative. The Commission shall also
have reasonable access to use the facilities of any such
Department or Office for purposes of conducting meet-
ings.
‘‘(e) SUNSET.—The Commission shall terminate 60
days after the Commission submits the report required by
subsection (g).
‘‘(f) RULES OF THE COMMISSION.—
‘‘(1) QUORUM.—Nine members of the Commis-
sion shall constitute a quorum for conducting the
business of the Commission.
‘‘(2) MEETINGS.—Any meetings held by the
Commission shall be duly noticed at least 14 days in
advance and shall be open to the public.
‘‘(3) OPPORTUNITIES TO TESTIFY.—The Com-
mission shall provide opportunities for representa-
tives of the general public, taxpayer groups, con-
sumer groups, and State and local government offi-
cials to testify.
‘‘(4) ADDITIONAL
RULES.—The Commission
may adopt other rules as needed.
‘‘(5) No finding or recommendation shall be in-
cluded in the report required by subsection (g) un-
less agreed to by at least two-thirds of the members
of the Commission serving at the time the finding or
recommendation is made.
‘‘(g) DUTIES
OF
THE COMMISSION.—The duties
are—
‘‘(1) to monitor the progress of the Conference
in carrying out the activities described in section
1105; and
‘‘(2) not later than 180 days after the Con-
ference carries out the activities described in section
1105, submit to the Congress a report containing
the following:
‘‘(A) The findings of the Commission
regarding—
‘‘(i) the growth of electronic com-
merce;
‘‘(ii) the impact of electronic com-
merce on traditional retailers; and
‘‘(iii) the impact of sales to pur-
chasers that are physically present in a
State made by sellers that are not phys-
ically present in such State, on the revenue
of States and political subdivisions of
States;
during the 5-year period ending on December
31, 2004.
‘‘(B) An assessment of whether the Uni-
form Sales and Use Tax Act drafted by the
Conference, as provided in section 1105, con-
tains the matters described in section 1105(3).
‘‘(C) An assessment of whether the enact-
ment by States of such Uniform Sales and Use
Tax Act would result in equal tax collection
burdens (net of vendor discounts)—
‘‘(i) for sellers that are not physically
present in a State and that sell goods to
purchasers that are physically present in
such State; and
‘‘(ii) sellers that are physically present
in a State and that sell goods to pur-
chasers that are physically present in such
State.
‘‘(D) An assessment of whether requiring
sellers that are not physically present in a State
to collect and remit sales and use taxes to any
such State that has not enacted such Uniform
Sales and Use Tax Act, would impose any un-
reasonable burden on interstate commerce or
would have any other adverse impact on eco-
nomic growth and activity through remote elec-
tronic channels.
‘‘(E) A recommendation regarding whether
any State that enacts such Uniform Sales and
Use Tax Act should be permitted by the Con-
gress to collect sales and use taxes from all sell-
ers that are not physically present in such State
and that sell goods to purchasers that are phys-
ically present in such State.
‘‘(F) Any other recommendations as re-
quired to address the findings of the Commis-
sion’s report.’’.
SEC. 4. CONFORMING AMENDMENTS.
(a) CROSS REFERENCE
IN
THE TRADE ACT
OF
1974.—Section 181(d) of the Trade Act of 1974 (19
U.S.C. 2241(d)) is amended by striking ‘‘section 1104(3)’’
and inserting ‘‘1107(3)’’.
(b) OTHER CROSS REFERENCE.—Section 1203(c) of
division C of Public Law 105–277 (112 Stat. 2681–727;
19 U.S.C. 2241 note) by striking ‘‘section 1104(3)’’ and
inserting ‘‘1107(3)’’.
SEC. 5. SENSE OF THE CONGRESS REGARDING DEVELOP-
MENT OF UNIFORM TELECOMMUNICATIONS
STATE AND LOCAL EXCISE TAX ACT.
(a) DEVELOPMENT
OF UNIFORM TELECOMMUNI-
CATIONS STATE AND LOCAL EXCISE TAX ACT.—It is the
sense of the Congress that, not later than October 21,
2003, States and political subdivisions of States should
work cooperatively with the National Conference of Com-
missioners on Uniform State Laws (in this section re-
ferred to as the ‘Conference’) to develop and draft a Uni-
form Telecommunications State and Local Excise Tax Act
under the terms of which States and political subdivisions
of States may impose on telecommunications only a sim-
plified tax described in paragraph (1) or (2) of subsection
(b).
(b) SIMPLIFIED TAX.—(1) Except as provided in
paragraph (2), the simplified tax referred to in subsection
(a) that may be imposed by a State shall—
(A) allow only 1 State transaction tax;
(B) require each telecommunications provider to
file only 1 tax return per reporting period per State;
(C) allow only 1 audit at the State level;
(D) establish nationwide uniform sourcing
rules;
(E) establish nationwide uniform definitions;
and
(F) provide for 120 days lead time for imple-
menting tax base and rate changes.
(2) If, on the effective date of this section, political
subdivisions of a State are authorized by State law to im-
pose a tax on telecommunications, then the simplified tax
referred to in subsection (a) that may be imposed by such
State and such political subdivisions shall—
(A) allow only 1 State transaction tax;
(B) require each telecommunications provider to
file only 1 tax return per reporting period per State;
(C) allow only 1 audit at the State level;
(D) establish nationwide uniform sourcing
rules;
(E) establish nationwide uniform definitions;
(F) provides for 120 days lead time for imple-
menting tax base and rate changes; and
(G) require with respect to such political sub-
divisions that—
(i) tax base and exemptions conform to the
simplified tax as imposed by such State;
(ii) a single tax return be filed with the
State tax return and with State distribution of
funds;
(iii) a unified audit be conducted at the
State level;
(iv) there be maintained a State-adminis-
tered address, jurisdiction, and rate database in
a nationwide uniform format to assign address-
es to the appropriate taxing jurisdiction and to
provide the appropriate rate;
(v) telecommunications providers that rely
on such database be immune to liability to such
political subdivisions for such simplified tax;
and
(vi) there be provided a vendor’s com-
pensation.
SEC. 6. SENSE OF THE CONGRESS REGARDING ELIMI-
NATION OF EXCESSIVE TAX BURDEN ON
TELECOMMUNICATIONS.
It is the sense of the Congress that States and polit-
ical subdivisions of States should eliminate the excessive
tax burden on telecommunications by—
(1) eliminating telecommunications industry-
specific and higher transaction tax rates;
(2) eliminating the excessive tax burdens on
telecommunication real, tangible, and intangible
property; and
(3) affording similar tax treatment of tele-
communications infrastructure by States that ex-
empt from sales and use taxes purchases of certain
types of business equipment.
SEC. 7. ENACTMENT BY STATES.
It is the sense of the Congress that States should es-
tablish, jointly, a deadline for—
(1) enacting the Uniform Telecommunications
State and Local Excise Tax Act drafted under sec-
tion 5; and
(2) removing excess and multiple taxation of
telecommunications.
SEC. 8. PENALTY.
It is the sense of the Congress that Federal require-
ments against adverse discrimination by a State in tax-
ation of telecommunications services, property, or pro-
viders in relation to other services, property, and providers
in such State should apply to any State that fails to enact,
before October 21, 2004, the Uniform Telecommuni-
cations State and Local Excise Tax Act drafted under sec-
tion 5.
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