‘‘(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 finan-
cial intermediation services as determined 
by section 801). 
‘‘(B) SERVICE.—For purposes of subpara-
graph (A), the term ‘service’— 
‘‘(i) shall include any service per-
formed by an employee for which the em-
ployee is paid wages or a salary by a tax-
able employer, and 
‘‘(ii) shall not include any service per-
formed by an employee for which the em-
ployee is paid wages or a salary— 
‘‘(I) by an employer in the reg-
ular 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 prop-
erty’ means— 
‘‘(A) property on which the tax imposed by 
section 101 has been collected and for which no 
credit has been allowed under section 203, or 
‘‘(B) property that was held other than for 
a business purpose (as defined in section 
102(b)) on December 31, 2006. 
‘‘(17) WAGES AND SALARY.—The terms ‘wage’ 
and ‘salary’ mean all compensation paid for employ-
ment 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 em-
ployment 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 sec-
tion 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 enter-
prise, 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 intermedi-
ation 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 2007.—In the calendar year 2007, the 
rate of tax is 23 percent of the gross payments for 
the taxable property or service. 
‘‘(2) FOR YEARS AFTER 2007.—For years after 
the calendar year 2007, the rate of tax is the com-
bined Federal tax rate percentage (as defined in 
paragraph (3)) of the gross payments for the taxable 
property or service. 
‘‘(3) COMBINED FEDERAL TAX RATE PERCENT-
AGE.—The combined Federal tax rate percentage is 
the sum of—
‘‘(A) the general revenue rate (as defined 
in paragraph (4), and 
‘‘(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 col-
lected 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 con-
suming 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 sub-
section. 
‘‘(2) EXCEPTION WHERE TAX PAID TO SELL-
ER.—A person using or consuming a taxable prop-
erty 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 510. 
‘‘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 tax-
able property or service purchased for— 
‘‘(A) a business purpose in a trade or busi-
ness, or 
‘‘(B) export from the United States for use 
or consumption outside the United States, if, 
the purchaser provided the seller with a reg-
istration certificate, and the seller was a whole-
sale seller. 
‘‘(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 govern-
ment functions that do not constitute the final con-
sumption 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 ap-
preciation or the production of income but not entailing 
more than minor personal efforts. 
‘‘SEC. 103. RULES RELATING TO COLLECTION AND REMIT-
TANCE OF TAX. 
‘‘(a) LIABILITY FOR COLLECTION AND REMITTANCE 
OF THE TAX.—Except as provided otherwise by this sec-
tion, 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 CER-
TAIN CIRCUMSTANCES.— 
‘‘(1) IN GENERAL.—In the case of taxable prop-
erty 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 PROP-
ERTY 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 subse-
quently converted to personal use shall be deemed pur-
chased 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) SELLER RELIEVED OF LIABILITY IN CERTAIN 
CASES.—In the case of any taxable property or service 
which is sold untaxed pursuant to section 102(a), the sell-
er shall be relieved of the duty to collect and remit the 
tax imposed under section 101 on such purchase if the 
seller—
‘‘(1) received in good faith, and retains on file 
for the period set forth in section 509, a copy of a 
registration certificate from the purchaser, and 
‘‘(2) did not, at the time of sale, have reason-
able cause to believe that the buyer was not reg-
istered pursuant to section 502. 
‘‘(e) PURCHASER LIABLE TO COLLECT AND REMIT 
IN CERTAIN CASES.—In the case of any taxable property 
or service which is sold untaxed pursuant to section 102, 
if the seller is relieved by reason of subsection (d) of the 
duty to collect and remit the tax imposed by section 101, 
then the duty to pay any tax due shall rest with the pur-
chaser. 
‘‘(f) 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 tax-
able property or services purchased. 
‘‘(g) INTERCOMPANY SALES.—Firms that make pur-
chases from affiliated firms that are untaxed pursuant to 
section 102, or make sales to affiliated firms that are 
untaxed pursuant to section 102, shall not need to comply
with the requirements of subsection (d) (relating to certifi-
cates) for said purchases or sales to remain untaxed. 
‘‘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 sec-
tion 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.