contract, and an insurance contract that provides a com-
bination of these types of insurance.
‘‘SEC. 207. REFUNDS.
‘‘(a) REGISTERED SELLERS.—If a registered seller
files a monthly tax report with an overpayment, then,
upon application by the registered seller in a form pre-
scribed by the sales tax administering authority, the over-
payment shown on the report shall be refunded to the reg-
istered seller within 60 days of receipt of said application.
In the absence of such application, the overpayment may
be carried forward, without interest, by the person entitled
to the credit.
‘‘(b) OTHER PERSONS.—If a person other than a reg-
istered seller has an overpayment for any month, then,
upon application by the person in a form prescribed by
the sales tax administering authority, the credit balance
due shall be refunded to the person within 60 days of re-
ceipt of said application.
‘‘(c) INTEREST.—No interest shall be paid on any
balance due from the sales tax administering authority
under this subsection for any month if such balance due
is paid within 60 days after the application for refund is
received. Balances due not paid within 60 days after the
application for refund is received shall bear interest from
the date of application. Interest shall be paid at the Fed-
eral short-term rate (as defined in section 512).
‘‘(d) SUSPENSION
OF PERIOD TO PAY REFUND
ONLY IF FEDERAL OR STATE COURT RULING.—The 60-
day periods under subsections (a) and (b) shall be sus-
pended with respect to a purported overpayment (or por-
tion thereof) only during any period that there is in effect
a preliminary, temporary, or final ruling from a Federal
or State court that there is reasonable cause to believe
that such overpayment may not actually be due.
‘‘CHAPTER 3—FAMILY CONSUMPTION
ALLOWANCE
‘‘Sec. 301. Family consumption allowance.
‘‘Sec. 302. Qualified family.
‘‘Sec. 303. Monthly poverty level.
‘‘Sec. 304. Rebate mechanism.
‘‘Sec. 305. Change in family circumstances.
‘‘SEC. 301. FAMILY CONSUMPTION ALLOWANCE.
‘‘Each qualified family shall be eligible to receive a
sales tax rebate each month. The sales tax rebate shall
be in an amount equal to the product of—
‘‘(1) the rate of tax imposed by section 101,
and
‘‘(2) the monthly poverty level.
‘‘SEC. 302. QUALIFIED FAMILY.
‘‘(a) GENERAL RULE.—For purposes of this chapter,
the term ‘qualified family’ shall mean 1 or more family
members sharing a common residence. All family members
sharing a common residence shall be considered as part
of 1 qualified family.
‘‘(b) FAMILY SIZE DETERMINATION.—
‘‘(1) IN GENERAL.—To determine the size of a
qualified family for purposes of this chapter, family
members shall mean—
‘‘(A) an individual,
‘‘(B) the individual’s spouse,
‘‘(C) all lineal ancestors and descendants
of said individual (and such individual’s
spouse),
‘‘(D) all legally adopted children of such
individual (and such individual’s spouse), and
‘‘(E) all children under legal guardianship
of such individual (or such individual’s spouse).
‘‘(2) 
IDENTIFICATION
REQUIREMENTS.—In
order for a person to be counted as a member of the
family for purposes of determining the size of the
qualified family, such person must—
‘‘(A) have a bona fide social security num-
ber; and
‘‘(B) be a lawful resident of the United
States.
‘‘(c) CHILDREN LIVING AWAY FROM HOME.—
‘‘(1) STUDENTS LIVING AWAY FROM HOME.—
Any person who was a registered student during not
fewer than 5 months in a calendar year while living
away from the common residence of a qualified fam-
ily but who receives over 50 percent of such person’s
support during a calendar year from members of the
qualified family shall be included as part of the fam-
ily unit whose members provided said support for
purposes of this chapter.
‘‘(2) CHILDREN OF DIVORCED OR SEPARATED
PARENTS.—If a child’s parents are divorced or le-
gally separated, a child for purposes of this chapter
shall be treated as part of the qualified family of the
custodial parent. In cases of joint custody, the custo-
dial parent for purposes of this chapter shall be the
parent that has custody of the child for more than
one– half of the time during a given calendar year.
A parent entitled to be treated as the custodial par-
ent pursuant to this paragraph may release this
claim to the other parent if said release is in writing.
‘‘(d) ANNUAL REGISTRATION.—In order to receive
the family consumption allowance provided by section 301,
a qualified family must register with the sales tax admin-
istering authority in a form prescribed by the Secretary.
The annual registration form shall provide—
‘‘(1) the name of each family member who
shared the qualified family’s residence on the family
determination date,
‘‘(2) the social security number of each family
member on the family determination date who
shared the qualified family’s residence on the family
determination date,
‘‘(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 common residence are listed,
‘‘(6) a certification that no family members
were incarcerated on the family determination date
(within the meaning of subsection (l)), and
‘‘(7) the address of the qualified family.
Said registration shall be signed by all members of the
qualified family that have attained the age of 21 years
as of the date of filing.
‘‘(e) REGISTRATION NOT MANDATORY.—Registra-
tion is not mandatory for any qualified family.
‘‘(f) EFFECT
OF FAILURE TO PROVIDE ANNUAL
REGISTRATION.—Any qualified family that fails to reg-
ister in accordance with this section within 30 days of the
family determination date, shall cease receiving the
monthly family consumption allowance in the month be-
ginning 90 days after the family determination date.
‘‘(g) EFFECT OF CURING FAILURE TO PROVIDE AN-
NUAL REGISTRATION.—Any qualified family that failed to
timely make its annual registration in accordance with this
section but subsequently cures its failure to register, shall
be entitled to up to 6 months of lapsed sales tax rebate
payments. No interest on lapsed payment amounts shall
be paid.
‘‘(h) EFFECTIVE
DATE
OF
ANNUAL
REGISTRA-
TIONS.—Annual registrations shall take effect for the
month beginning 90 days after the family registration
date.
‘‘(i) EFFECTIVE
DATE
OF
REVISED
REGISTRA-
TIONS.—A revised registration made pursuant to section
305 shall take effect for the first month beginning 60 days
after the revised registration was filed. The existing reg-
istration shall remain in effect until the effective date of
the revised registration.
‘‘(j) DETERMINATION
OF
REGISTRATION
FILING
DATE.—An annual or revised registration shall be deemed
filed when—
‘‘(1) deposited in the United States mail, post-
age prepaid, to the address of the sales tax admin-
istering authority,
‘‘(2) delivered and accepted at the offices of the
sales tax administering authority, or
‘‘(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.
‘‘(k) PROPOSED REGISTRATION TO BE PROVIDED.—
30 or more days before the family registration date, the
sales tax administering authority shall mail to the address
shown on the most recent rebate registration or change
of address notice filed pursuant to section 305(d) a pro-
posed registration that may be simply signed by the appro-
priate family members if family circumstances have not
changed.
‘‘(l) INCARCERATED INDIVIDUALS.—An individual
shall not be eligible under this chapter to be included as
a member of any qualified family if that individual—
‘‘(1) is incarcerated in a local, State, or Federal
jail, prison, mental hospital, or other institution on
the family determination date, and
‘‘(2) is scheduled to be incarcerated for 6
months or more in the 12-month period following
the effective date of the annual registration or the
revised registration of said qualified family.
‘‘(m) FAMILY DETERMINATION DATE.—The family
determination date is a date assigned to each family by
the Secretary for purposes of determining qualified family
size and other information necessary for the administra-
tion of this chapter. The Secretary shall promulgate regu-
lations regarding the issuance of family determination
dates. In the absence of any regulations, the family deter-
mination date for all families shall be October 1. The Sec-
retary may assign family determination dates for adminis-
trative convenience. Permissible means of assigning family
determination dates include a method based on the
birthdates of family members.
‘‘(n) CROSS REFERENCE.—
‘‘For penalty for filing false rebate claim, see sec-
tion 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 section 652 and 673(2) of the Om-
nibus 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 section 652 and 673(2) of the Om-
nibus 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 common residence are listed,
‘‘(6) a certification that no family members
were incarcerated on the family determination date
(within the meaning of section 302(l)), 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 this 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).
‘‘(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 conforming State sales tax (if any) shall
be paid in 1 aggregate payment.
‘‘(2) CROSS REFERENCE.—
‘‘See subsection (e) relating to remitting of sepa-
rate 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 sec-
tion 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 calendar 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 method.
‘‘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 the 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-
standing marketable obligations of the United States with
remaining periods to maturity of 3 years or fewer.
‘‘(c) FEDERAL MID-TERM RATE.—The Federal mid-
term rate shall be the rate determined by the Secretary
based on the average market yield (selected by the Sec-
retary and ending in the calendar month in which the de-
termination is made during any 1 month) on outstanding
marketable obligations of the United States with remain-
ing periods to maturity of more than 3 years and not over
9 years.
‘‘(d) FEDERAL LONG-TERM RATE.—The Federal
long-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 1 month) on out-
standing marketable obligations of the United States with
remaining periods to maturity of over 9 years.
‘‘(e) DETERMINATION OF RATES.—During each cal-
endar month, the Secretary shall determine the Federal
short-term rate, the Federal mid-term rate and the Fed-
eral long-term rate which shall apply during the following
calendar month.
‘‘CHAPTER 6—COLLECTIONS; APPEALS;
TAXPAYER RIGHTS
‘‘Sec. 601. Collections.
‘‘Sec. 602. Power to levy, etc.
‘‘Sec. 603. Problem resolution offices.
‘‘Sec. 604. Appeals.
‘‘Sec. 605. Taxpayer rights.
‘‘Sec. 606. Installment agreements; compromises.
‘‘SEC. 601. COLLECTIONS.
‘‘The sales tax administering authority shall collect
the taxes imposed by this subtitle, except as provided in
section 404 (relating to Federal administration in certain
States).
‘‘SEC. 602. POWER TO LEVY, ETC.
‘‘(a) IN GENERAL.—The sales tax administering au-
thority may levy and seize property, garnish wages or sal-
ary and file liens to collect amounts due under this sub-
title, pursuant to enforcement of—
‘‘(1) a judgment duly rendered by a court of
law;
‘‘(2) an amount due if the taxpayer has failed
to exercise his appeals rights under section 604; or
‘‘(3) an amount due if the appeals process de-
termined that an amount remained due and the tax-
payer has failed to timely petition the Tax Court for
relief.
‘‘(b) EXEMPTION FROM LEVY, SEIZURE, AND GAR-
NISHMENT.—There shall be exempt from levy, seizure,
and garnishment or penalty in connection with any tax
imposed by this subtitle—
‘‘(1) wearing apparel, school books, fuel, provi-
sions, furniture, personal effects, tools of a trade or
profession, livestock in a household up to an aggre-
gate value of $15,000; and
‘‘(2) monthly money income equal to 150 per-
cent of the monthly poverty level (as defined in sec-
tion 303).
‘‘(c) LIENS TO BE TIMELY RELEASED.—Subject to
such reasonable regulations as the Secretary may provide,
any lien imposed with respect to a tax imposed by this
title shall be released not later than 30 days after—
‘‘(1) the liability was satisfied or became unen-
forceable; or
‘‘(2) a bond was accepted as security.
‘‘SEC. 603. PROBLEM RESOLUTION OFFICES.
‘‘(a) PROBLEM RESOLUTION OFFICE TO BE ESTAB-
LISHED.—Each sales tax administering authority shall es-
tablish an independent Problem Resolution Office and ap-
point an adequate number of problem resolution officers.
The head of the problem resolution office must be ap-
pointed by, and serve at the pleasure of, either the State
Governor (in the case of an administering State) or the
President of the United States.
‘‘(b) AUTHORITY OF PROBLEM RESOLUTION OFFI-
CERS.—Problem resolution officers shall have the author-
ity to investigate complaints and issue a Taxpayer Assist-
ance Order to administratively enjoin any collection activ-
ity if, in the opinion of the problem resolution officer, said
collection activity is reasonably likely to not be in compli-
ance with law or to prevent hardship (other than by reason
of having to pay taxes lawfully due). Problem resolution
officers shall also have the authority to issue Taxpayer As-
sistance Orders releasing or returning property that has
been levied upon or seized, ordering that a lien be released
and that garnished wages be returned. A Taxpayer Assist-
ance Order may only be rescinded or modified by the prob-
lem resolution officer that issued it, by the highest official
in the relevant sales tax administering authority or by its
general counsel upon a finding that the collection activity
is justified by clear and convincing evidence. The authority
to reverse this Taxpayer Assistance Order may not be del-
egated.
‘‘(c) FORM OF REQUEST FOR TAXPAYER ASSISTANCE
ORDER.—The Secretary shall establish a form and proce-
dure to aid persons requesting the assistance of the Prob-
lem Resolution Office and to aid the Problem Resolution
Office in understanding the needs of the person seeking
assistance. The use of this form, however, shall not be a
prerequisite to a problem resolution officer taking action,
including issuing a Taxpayer Assistance Order.
‘‘(d) CONTENT OF TAXPAYER ASSISTANCE ORDER.—
A Taxpayer Assistance Order shall contain the name of
the problem resolution officer, any provision relating to
the running of any applicable period of limitation, the
name of the person that the Taxpayer Assistance Order
assists, the government office (or employee or officer of
said government office) to whom it is directed and the ac-
tion or cessation of action that the Taxpayer Assistance
Order requires of said government office (or employee or
officer of said government office). The Taxpayer Assist-
ance Order need not contain findings of fact or its legal
basis; however, the problem resolution officer must provide
findings of fact and the legal basis for the issuance of the
Taxpayer Assistance Order to the sales tax administering
authority upon the request of an officer of said authority
within 2 weeks of the receipt of such request.
‘‘(e) INDEPENDENCE PROTECTED.—Problem resolu-
tion officers shall not be disciplined or adversely affected
for the issuance of administrative injunctions unless a pat-
tern of issuing injunctions that are manifestly unreason-
able is proven in an administrative hearing by a prepon-
derance of the evidence.
‘‘(f) OTHER RIGHTS NOT LIMITED.—Nothing in this
section shall limit the authority of the sales tax admin-
istering authority, the registered person or other person
from pursuing any legal remedy in any court with jurisdic-
tion over the dispute at issue.
‘‘(g) LIMITATIONS.—The running of any applicable
period of limitation shall be suspended for a period of 8
weeks following the issuance of a Taxpayer Assistance
Order or, if specified, for a longer period set forth in the
Taxpayer Assistance Order provided the suspension does
not exceed 6 months.
‘‘SEC. 604. APPEALS.
‘‘(a) ADMINISTRATIVE APPEALS.—The sales tax ad-
ministering authority shall establish an administrative ap-
peals process wherein the registered person or other per-
son in disagreement with a decision of the sales tax admin-
istering authority asserting liability for tax is provided a
full and fair hearing in connection with any disputes said
person has with the sales tax administering authority.
‘‘(b) TIMING OF ADMINISTRATIVE APPEALS.—Said
administrative appeal must be made within 60 days of re-
ceiving a final notice of amount due pursuant to section
605(d) unless leave for an extension is granted by the ap-
peals officer in a form prescribed by the Secretary. Leave
shall be granted to avoid hardship.
‘‘SEC. 605. TAXPAYER RIGHTS.
‘‘(a) RIGHTS TO BE DISCLOSED.—The sales tax ad-
ministering authority shall provide to any person against
whom it has—
‘‘(1) commenced an audit or investigation;
‘‘(2) issued a final notice of amount due;
‘‘(3) filed an administrative lien, levy, or gar-
nishment;
‘‘(4) commenced other collection action;
‘‘(5) commenced an action for civil penalties; or
‘‘(6) any other legal action,
a document setting forth in plain English the rights of
the person. The document shall explain the administrative
appeals process, the authority of the Problem Resolution
Office (established pursuant to section 603) and how to
contact that Office, the burden of production and persua-
sion that the person and the sales tax administering au-
thority bear (pursuant to section 506), the right of the
person to professional fees (pursuant to section 507), the
right to record interviews and such other rights as the per-
son may possess under this subtitle. Said document will
also set forth the procedures for entering into an install-
ment agreement.
‘‘(b) RIGHT TO PROFESSIONAL ASSISTANCE.—In all
dealings with the sales tax administering authority, a per-
son shall have the right to assistance, at their own ex-
pense, of 1 or more professional advisors.
‘‘(c) RIGHT TO RECORD INTERVIEWS.—Any person
who is interviewed by an agent of the sales tax admin-
istering authority shall have the right to video or audio
tape the interview at the person’s own expense.
‘‘(d) RIGHT TO FINAL NOTICE OF AMOUNT DUE.—
No collection or enforcement action will be commenced
against a person until 30 days after they have been pro-
vided with a final notice of amount due under this subtitle
by the sales tax administering authority. The final notice
of amount due shall set forth the amount of tax due (along
with any interest and penalties due) and the factual and
legal basis for such amounts being due with sufficient
specificity that such basis can be understood by a reason-
able person who is not a tax professional reading the no-
tice. The final notice shall be sent by certified mail, return
receipt requested, to—
‘‘(1) the address last provided by a registered
seller; or
‘‘(2) the best available address to a person who
is not a registered seller.
‘‘(e) CONFIDENTIALITY OF TAX INFORMATION.—
‘‘(1) IN GENERAL.—All reports and report in-
formation (related to any internal revenue law) shall
be confidential and except as authorized by this
title—
‘‘(A) no officer or employee (including
former officers and employees) of the United
States;
‘‘(B) no officer or employee (including
former officers and employees) of any State or
local agency who has had access to returns or
return information; and
‘‘(C) no other person who has had access
to returns or return information,
shall disclose any report or report information ob-
tained by him in any manner in connection with his
service as such officer or employee or otherwise.
‘‘(2) DESIGNEES.—The sales tax administering
authority may, subject to such requirements as the
Secretary may impose, disclose the report and report
information of a person to that person or persons as
that person may designate to receive said informa-
tion or return.
‘‘(3) OTHER
SALES
TAX
ADMINISTERING
AU-
THORITIES.—A sales tax administering authority
may, subject to such requirements as the Secretary
may impose, disclose the report and report informa-
tion to another sales tax administering authority.
‘‘(4) INCOMPETENCY.—A sales tax admin-
istering authority may, subject to such requirements
as the Secretary may impose, disclose the report and
report information to the committee, trustee, or
guardian of a person who is incompetent.
‘‘(5) DECEASED PERSONS.—A sales tax admin-
istering authority may, subject to such requirements
as the Secretary may impose, disclose the report and
report information to the decedent’s—
‘‘(A) administrator, executor, estate trust-
ee, or
‘‘(B) heir at law, next of kin, or beneficiary
under a will who has a material interest that
will be affected by the information.
‘‘(6) BANKRUPTCY.—A sales tax administering
authority may, subject to such requirements as the
Secretary may impose, disclose the report and report
information to a person’s trustee in bankruptcy.
‘‘(7) CONGRESS.—Upon written request from
the Chairman of the Committee on Ways and
Means, the Chairman of the Committee on Finance
of the Senate, or the Chairman or Chief of Staff of
the Joint Committee on Taxation, a sales tax admin-
istering authority shall disclose the report and report
information, except that any report or report infor-
mation that can be associated with or otherwise
identify a particular person shall be furnished to
such committee only when sitting in closed executive
session unless such person otherwise consents in
writing to such disclosure.
‘‘(8) WAIVER OF PRIVACY RIGHTS.—A person
may waive confidentiality rights provided by this sec-
tion. Such waiver must be in writing.
‘‘(9) INTERNAL USE.—Disclosure of the report
or report information by officers or employees of a
sales tax administering authority to other officers or
employees of a sales tax administering authority in
the ordinary course of tax administration activities
shall not constitute unlawful disclosure of the report
or report information.
‘‘(10) STATISTICAL
USE.—Upon request in
writing by the Secretary of Commerce, the Secretary
shall furnish such reports and report information to
officers and employees of the Department of Com-
merce as the Secretary may prescribe by regulation
for the purposes of, and only to the extent necessary
in, the structuring of censuses and national eco-
nomic accounts and conducting related statistical ac-
tivities authorized by law.
‘‘(11) DEPARTMENT OF THE TREASURY.—Re-
turns and return information shall be open for in-
spection by officers and employees of the Depart-
ment of the Treasury whose official duties require
such inspection or disclosure for the purpose of, and
only to the extent necessary for, preparing economic
or financial forecasts, projections, analyses, or esti-
mates. Such inspection or disclosure shall be per-
mitted only upon written request that sets forth the
reasons why such inspection or disclosure is nec-
essary and is signed by the head of the bureau or
office of the Department of the Treasury requesting
the inspection or disclosure.
‘‘SEC. 606. INSTALLMENT AGREEMENTS; COMPROMISES.
‘‘The sales tax administering authority is authorized
to enter into written agreements with any person under
which the person is allowed to satisfy liability for payment
of any tax under this subtitle (and penalties and interest
relating thereto) in installment payments if the sales tax
administering authority determines that such agreement
will facilitate the collection of such liability. The agree-
ment shall remain in effect for the term of the agreement
unless the information that the person provided to the
sales tax administering authority was materially inac-
curate or incomplete. The sales tax administering author-
ity may compromise any amounts alleged to be due.
‘‘CHAPTER 7—SPECIAL RULES
‘‘Sec. 701. Hobby activities.
‘‘Sec. 702. Gaming activities.
‘‘Sec. 703. Government purchases.
‘‘Sec. 704. Government enterprises.
‘‘Sec. 705. Mixed use property.
‘‘Sec. 706. Not-for-profit organizations.
‘‘SEC. 701. HOBBY ACTIVITIES.
‘‘(a) HOBBY ACTIVITIES.—Neither the exemption af-
forded by section 102 for intermediate sales nor the cred-
its available pursuant to section 202 or 203 shall be avail-
able for any taxable property or service purchased for use
in an activity if that activity is not engaged in for-profit.
‘‘(b) STATUS DEEMED.—If the activity has received
gross payments for the sale of taxable property or services
that exceed the sum of—
‘‘(1) taxable property and services purchased;
‘‘(2) wages and salary paid; and
‘‘(3) taxes (of any type) paid,
in 2 or more of the most recent 3 calendar years during
which it operated then the business activity shall be con-
clusively deemed to be engaged in for profit.
‘‘SEC. 702. GAMING ACTIVITIES.
‘‘(a) REGISTRATION.—Any person selling 1 or more
chances is a gaming sponsor and shall register, in a form
prescribed by the Secretary, with the sales tax admin-
istering authority as a gaming sponsor.
‘‘(b) CHANCE DEFINED.—For purposes of this sec-
tion, the term ‘chance’ means a lottery ticket, a raffle tick-
et, chips, other tokens, a bet or bets placed, a wager or
wagers placed, or any similar device where the purchase
of the right gives rise to an obligation by the gaming spon-
sor to pay upon the occurrence of—
‘‘(1) a random or unpredictable event; or
‘‘(2) an event over which neither the gaming
sponsor nor the person purchasing the chance has
control over the outcome.
‘‘(c) CHANCES NOT TAXABLE PROPERTY OR SERV-
ICE.—Notwithstanding any other provision in this sub-
title, a chance is not taxable property or services for pur-
poses of section 101.
‘‘(d) TAX ON GAMING SERVICES IMPOSED.—A 23-
percent tax is hereby imposed on the taxable gaming serv-
ices of a gaming sponsor. This tax shall be paid and remit-
ted by the gaming sponsor. The tax shall be remitted by
the 15th day of each month with respect to taxable gaming
services during the previous calendar month.
‘‘(e) TAXABLE GAMING SERVICES DEFINED.—For
purposes of this section, the term ‘taxable gaming services’
means—
‘‘(1) gross receipts of the gaming sponsor from
the sale of chances, minus
‘‘(2) the sum of—
‘‘(A) total gaming payoffs to chance pur-
chasers (or their designees); and
‘‘(B) gaming specific taxes (other than the
tax imposed by this section) imposed by the
Federal, State, or local government.
‘‘SEC. 703. GOVERNMENT PURCHASES.
‘‘(a) GOVERNMENT PURCHASES.—
‘‘(1) PURCHASES BY THE FEDERAL GOVERN-
MENT.—Purchases by the Federal Government of
taxable property and services shall be subject to the
tax imposed by section 101.
‘‘(2) PURCHASE BY STATE GOVERNMENTS AND
THEIR
POLITICAL
SUBDIVISIONS.—Purchases by
State governments and their political subdivisions of
taxable property and services shall be subject to the
tax imposed by section 101.
‘‘(b) CROSS REFERENCES.—
‘‘For purchases by government enterprises see
section 704.
‘‘SEC. 704. GOVERNMENT ENTERPRISES.
‘‘(a) GOVERNMENT ENTERPRISES TO COLLECT AND
REMIT TAXES ON SALES.—Nothing in this subtitle shall
be construed to exempt any Federal, State, or local gov-
ernmental unit or political subdivision (whether or not the
State is an administering State) operating a government
enterprise from collecting and remitting tax imposed by
this subtitle on any sale of taxable property or services.
Government enterprises shall comply with all duties im-
posed by this subtitle and shall be liable for penalties and
subject to enforcement action in the same manner as pri-
vate persons that are not government enterprises.
‘‘(b) GOVERNMENT ENTERPRISE.—Any entity owned
or operated by a Federal, State, or local governmental unit
or political subdivision that receives gross payments from
private persons is a government enterprise, except that a
government-owned entity shall not become a government
enterprise for purposes of this section unless in any quar-
ter it has revenues from selling taxable property or serv-
ices that exceed $2,500.
‘‘(c) GOVERNMENT ENTERPRISES INTERMEDIATE
SALES.—
‘‘(1) IN
GENERAL.—Government enterprises
shall not be subject to tax on purchases that would
not be subject to tax pursuant to section 102(b) if
the government enterprise were a private enterprise.
‘‘(2) 
EXCEPTION.—Government 
enterprises
may not use the exemption afforded by section
102(b) to serve as a conduit for tax-free purchases
by government units that would otherwise be subject
to taxation on purchases pursuant to section 703.
Transfers of taxable property or services purchased
exempt from tax from a government enterprise to
such government unit shall be taxable.
‘‘(d) SEPARATE BOOKS OF ACCOUNT.—Any govern-
ment enterprise must maintain books of account, separate
from the nonenterprise government accounts, maintained
in accordance with generally accepted accounting prin-
ciples.
‘‘(e) TRADE OR BUSINESS.—A government enterprise
shall be treated as a trade or business for purposes of this
subtitle.
‘‘(f) ENTERPRISE SUBSIDIES CONSTITUTE TAXABLE
PURCHASE.—A transfer of funds to a government enter-
prise by a government entity without full consideration
shall constitute a taxable government purchase with the
meaning of section 703 to the extent that the transfer of
funds exceeds the fair market value of the consideration.
‘‘SEC. 705. MIXED USE PROPERTY.
‘‘(a) MIXED USE PROPERTY OR SERVICE.—
‘‘(1) MIXED USE PROPERTY OR SERVICE DE-
FINED.—For purposes of this section, the term
‘mixed use property or service’ is a taxable property
or taxable service used for both taxable use or con-
sumption and for a purpose that would not be sub-
ject to tax pursuant to section 102(a)(1).
‘‘(2) TAXABLE THRESHOLD.—Mixed use prop-
erty or service shall be subject to tax notwith-
standing section 102(a)(1) unless such property or
service is used more than 95 percent for purposes
that would give rise to an exemption pursuant to
section 102(a)(1) during each calendar year (or por-
tions thereof) it is owned.