I 
114TH CONGRESS 
1ST SESSION H. R. 1643 
To promote neutrality, simplicity, and fairness in the taxation of digital 
goods and digital services. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 26, 2015 
Mr. SMITH of Texas (for himself, Mr. COHEN, Mr. CHABOT, and Mr. FRANKS 
of Arizona) introduced the following bill; which was referred to the Com-
mittee on the Judiciary 
A BILL 
To promote neutrality, simplicity, and fairness in the 
taxation of digital goods and digital services. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Digital Goods and 
Services Tax Fairness Act of 2015’’. 
SEC. 2. MULTIPLE AND DISCRIMINATORY TAXES PROHIB-
ITED. 
No State or local jurisdiction shall impose multiple 
or discriminatory taxes on the sale or use of a digital good 
or a digital service. 
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SEC. 3. SOURCING LIMITATION. 
Subject to section 6(a), taxes on the sale of a digital 
good or a digital service may only be imposed by a State 
or local jurisdiction whose territorial limits encompass the 
customer tax address. 
SEC. 4. CUSTOMER TAX ADDRESS. 
(a) SELLER OBLIGATION.— 
(1) IN GENERAL.—Subject to subsection (e)(2), 
a seller shall be responsible for obtaining and main-
taining in the ordinary course of business the cus-
tomer tax address with respect to the sale of a dig-
ital good or a digital service, and shall be responsible 
for collecting and remitting the correct amount of 
tax for the State and local jurisdictions whose terri-
torial limits encompass the customer tax address if 
the State has the authority to require such collection 
and remittance by the seller. 
(2) CERTAIN
TRANSACTIONS.—When a cus-
tomer tax address is not a business location of the 
seller under clause (i) of section 7(2)(A)— 
(A) if the sale is a separate and discrete 
transaction, then a seller shall use reasonable 
efforts to obtain a customer tax address, as 
such efforts are described in clauses (iii), (iv), 
and (v) of section 7(2)(A), before resorting to 
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using a customer tax address as determined by 
clause (vi) of such section 7(2)(A); and 
(B) if the sale is not a separate and dis-
crete transaction, then a seller shall use reason-
able efforts to obtain a customer tax address, 
as such efforts are described in clauses (ii), 
(iii), (iv), and (v) of section 7(2)(A), before re-
sorting to using a customer tax address as de-
termined by clause (vi) of such section 7(2)(A). 
(b) RELIANCE ON CUSTOMER-PROVIDED INFORMA-
TION.—A seller that relies in good faith on information 
provided by a customer to determine a customer tax ad-
dress shall not be held liable for any additional tax based 
on a different determination of that customer tax address 
by a State or local jurisdiction or court of competent juris-
diction, except if and until binding notice is given as pro-
vided in subsection (c). 
(c) ADDRESS CORRECTION.—If a State or local juris-
diction is authorized under State law to administer a tax, 
and the jurisdiction determines that the customer tax ad-
dress determined by a seller is not the customer tax ad-
dress that would have been determined under section 
7(2)(A) if the seller had the additional information pro-
vided by the State or local jurisdiction, then the jurisdic-
tion may give binding notice to the seller to correct the 
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customer tax address on a prospective basis, effective not 
less than 45 days after the date of such notice, if— 
(1) when the determination is made by a local 
jurisdiction, such local jurisdiction obtains the con-
sent of all affected local jurisdictions within the 
State before giving such notice of determination; and 
(2) before the State or local jurisdiction gives 
such notice of determination, the customer is given 
an opportunity to demonstrate in accordance with 
applicable State or local tax administrative proce-
dures that the address used is the customer tax ad-
dress. 
(d) COORDINATION WITH SOURCING
OF MOBILE 
TELECOMMUNICATIONS SERVICE.— 
(1) IN GENERAL.—If— 
(A) a digital good or a digital service is 
sold to a customer by a home service provider 
of mobile telecommunications service that is 
subject to being sourced under section 117 of 
title 4, United States Code, or the charges for 
a digital good or a digital service are billed to 
the customer by such a home service provider; 
and 
(B) the digital good or digital service is de-
livered, transferred, or provided electronically 
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by means of mobile telecommunications service 
that is deemed to be provided by such home 
service provider under section 117 of such title, 
then the home service provider and, if different, the 
seller of the digital good or digital service, may pre-
sume that the customer’s place of primary use for 
such mobile telecommunications service is the cus-
tomer tax address described in section 7(2)(B) with 
respect to the sale of such digital good or digital 
service. 
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘home service provider’’, ‘‘mobile 
telecommunications service’’, and ‘‘place of primary 
use’’ have the same meanings as in section 124 of 
title 4, United States Code. 
(e) MULTIPLE LOCATIONS.— 
(1) IN GENERAL.—If a digital good or a digital 
service is sold to a customer and available for use 
by the customer in multiple locations simultaneously, 
the seller may determine the customer tax addresses 
using a reasonable and consistent method based on 
the addresses of use as provided by the customer 
and determined in agreement with the customer at 
the time of sale. 
(2) DIRECT CUSTOMER PAYMENT.— 
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(A) ESTABLISHMENT OF DIRECT PAYMENT 
PROCEDURES.—Each State and local jurisdic-
tion shall provide reasonable procedures that 
permit the direct payment by a qualified cus-
tomer, as determined under procedures estab-
lished by the State or local jurisdiction, of taxes 
that are on the sale of digital goods and digital 
services to multiple locations of the customer 
and that would, absent such procedures, be re-
quired or permitted by law to be collected from 
the customer by the seller. 
(B) EFFECT OF CUSTOMER COMPLIANCE 
WITH DIRECT PAYMENT PROCEDURES.—When 
a qualified customer elects to pay tax directly 
under the procedures established under sub-
paragraph (A), the seller shall— 
(i) have no obligation to obtain the 
multiple customer tax addresses under sub-
section (a); and 
(ii) not be liable for such tax, provided 
the seller follows the State and local proce-
dures and maintains appropriate docu-
mentation in its books and records. 
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SEC. 5. TREATMENT OF BUNDLED TRANSACTIONS AND DIG-
ITAL CODES. 
(a) BUNDLED TRANSACTION.—If a charge for a dis-
tinct and identifiable digital good or a digital service is 
aggregated with and not separately stated from one or 
more charges for other distinct and identifiable goods or 
services, which may include other digital goods or digital 
services, and any part of the aggregation is subject to tax-
ation, then the entire aggregation may be subject to tax-
ation, except to the extent that the seller can identify, by 
reasonable and verifiable standards, one or more charges 
for the nontaxable goods or services from its books and 
records kept in the ordinary course of business. 
(b) DIGITAL CODE.—The tax treatment of the sale 
of a digital code shall be the same as the tax treatment 
of the sale of the digital good or digital service to which 
the digital code relates. 
(c) RULE OF CONSTRUCTION.—The sale of a digital 
code shall be considered the sale transaction for purposes 
of this Act. 
SEC. 6. NO INFERENCE. 
(a) CUSTOMER LIABILITY.—Subject to the prohibi-
tion provided in section 2, nothing in this Act modifies, 
impairs, supersedes, or authorizes the modification, im-
pairment, or supersession of any law allowing a State or 
local jurisdiction to impose tax on and collect tax directly 
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from a customer based upon use of a digital good or digital 
service in such State. 
(b) NON-TAX MATTERS.—This Act shall not be con-
strued to apply in, or to affect, any non-tax regulatory 
matter or other context. 
(c) STATE TAX MATTERS.—The definitions con-
tained in this Act are intended to be used with respect 
to interpreting this Act. Nothing in this Act shall prohibit 
a State or local jurisdiction from adopting different no-
menclature to enforce the provisions set forth in this Act. 
SEC. 7. DEFINITIONS. 
In this Act, the following definitions shall apply: 
(1) CUSTOMER.—The term ‘‘customer’’ means 
a person that purchases a digital good, digital serv-
ice, or digital code. 
(2) CUSTOMER TAX ADDRESS.— 
(A) IN
GENERAL.—The term ‘‘customer 
tax address’’ means— 
(i) with respect to the sale of a digital 
good or digital service that is received by 
the customer at a business location of the 
seller, such business location; 
(ii) if clause (i) does not apply and 
the primary use location of the digital good 
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or digital service is known by the seller, 
such location; 
(iii) if neither clause (i) nor clause (ii) 
applies, and if the location where the dig-
ital good or digital service is received by 
the customer, or by a donee of the cus-
tomer that is identified by such customer, 
is known to the seller and maintained in 
the ordinary course of the seller’s business, 
such location; 
(iv) if none of clauses (i) through (iii) 
applies, the location indicated by an ad-
dress for the customer that is available 
from the business records of the seller that 
are maintained in the ordinary course of 
the seller’s business, when use of the ad-
dress does not constitute bad faith; 
(v) if none of clauses (i) through (iv) 
applies, the location indicated by an ad-
dress for the customer obtained during the 
consummation of the sale, including the 
address of a customer’s payment instru-
ment, when use of this address does not 
constitute bad faith; or 
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(vi) if none of clauses (i) through (v) 
applies, including the circumstance in 
which the seller is without sufficient infor-
mation to apply such paragraphs, the loca-
tion from which the digital good was first 
available for transmission by the seller 
(disregarding for these purposes any loca-
tion that merely provides for the digital 
transfer of the product sold), or from 
which the digital service was provided by 
the seller. 
(B) EXCLUSION.—For purposes of this 
paragraph, the term ‘‘location’’ does not include 
the location of a server, machine, or device, in-
cluding an intermediary server, that is used 
simply for routing or storage. 
(3) DELIVERED OR TRANSFERRED ELECTRONI-
CALLY; 
PROVIDED
ELECTRONICALLY.—The term 
‘‘delivered or transferred electronically’’ means the 
delivery or transfer by means other than tangible 
storage media, and the term ‘‘provided electroni-
cally’’ means the provision remotely via electronic 
means. 
(4) DIGITAL CODE.—The term ‘‘digital code’’ 
means a code that conveys only the right to obtain 
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a digital good or digital service without making fur-
ther payment. 
(5) DIGITAL GOOD.—The term ‘‘digital good’’ 
means any software or other good that is delivered 
or transferred electronically, including sounds, im-
ages, data, facts, or combinations thereof, main-
tained in digital format, where such good is the true 
object of the transaction, rather than the activity or 
service performed to create such good, and includes, 
as an incidental component, charges for the delivery 
or transfer of the digital good. 
(6) DIGITAL SERVICE.— 
(A) IN GENERAL.—The term ‘‘digital serv-
ice’’ means any service that is provided elec-
tronically, including the provision of remote ac-
cess to or use of a digital good, and includes, 
as an incidental component, charges for the 
electronic provision of the digital service to the 
customer. 
(B) EXCEPTIONS.—The term ‘‘digital serv-
ice’’ does not include a service that is predomi-
nantly attributable to the direct, contempora-
neous expenditure of live human effort, skill, or 
expertise, a telecommunications service, an an-
cillary service, Internet access service, audio or 
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video programming service, or a hotel inter-
mediary service. 
(C) CLARIFYING DEFINITIONS.—For pur-
poses of subparagraph (B)— 
(i) the term ‘‘ancillary service’’ means 
a service that is associated with or inci-
dental to the provision of telecommuni-
cations services, including, but not limited 
to, detailed telecommunications billing, di-
rectory assistance, vertical service, and 
voice mail services; 
(ii) the term ‘‘audio or video program-
ming service’’— 
(I) means programming provided 
by, or generally considered com-
parable to programming provided by, 
a radio or television broadcast station; 
and 
(II) does not include interactive 
on-demand services, as defined in 
paragraph (12) of section 602 of the 
Communications Act of 1934 (47 
U.S.C. 522(12)), pay-per-view serv-
ices, or services generally considered 
comparable to such services regardless 
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of the technology used to provide such 
services; 
(iii) the term ‘‘hotel intermediary 
service’’— 
(I) means a service provided by a 
person that facilitates the sale, use, or 
possession of a hotel room or other 
transient accommodation to the gen-
eral public; and 
(II) does not include the pur-
chase of a digital service by a person 
who provides a hotel intermediary 
service or by a person who owns, oper-
ates, or manages hotel rooms or other 
transient accommodations; 
(iv) the term ‘‘Internet access service’’ 
means a service that enables users to con-
nect to the Internet, as defined in the 
Internet Tax Freedom Act (47 U.S.C. 151 
note), to access content, information, or 
other services offered over the Internet; 
and 
(v) the term ‘‘telecommunications 
service’’— 
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(I) means the electronic trans-
mission, conveyance, or routing of 
voice, data, audio, video, or any other 
information or signals to a point, or 
between or among points; 
(II) includes such transmission, 
conveyance, or routing in which com-
puter processing applications are used 
to act on the form, code, or protocol 
of the content for purposes of trans-
mission, conveyance, or routing, with-
out regard to whether such service is 
referred to as voice over Internet pro-
tocol service; and 
(III) does not include data proc-
essing and information services that 
allow data to be generated, acquired, 
stored, processed, or retrieved and de-
livered by an electronic transmission 
to a purchaser where such purchaser’s 
primary purpose for the underlying 
transaction is the processed data or 
information. 
(7) DISCRIMINATORY
TAX.—The term ‘‘dis-
criminatory tax’’ means any tax imposed by a State 
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or local jurisdiction on digital goods or digital serv-
ices that— 
(A) is not generally imposed and legally 
collectible by such State or local jurisdiction on 
transactions involving similar property, goods, 
or services accomplished through other means; 
(B) is not generally imposed and legally 
collectible at the same or higher rate by such 
State or local jurisdiction on transactions in-
volving similar property, goods, or services ac-
complished through other means; 
(C) imposes an obligation to collect or pay 
the tax on a person, other than the seller, than 
the State or local jurisdiction would impose in 
the case of transactions involving similar prop-
erty, goods, or services accomplished through 
other means; 
(D) establishes a classification of digital 
services or digital goods providers for purposes 
of establishing a higher tax rate to be imposed 
on such providers than the tax rate generally 
applied to providers of similar property, goods, 
or services accomplished through other means; 
or 
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(E) does not provide a resale and compo-
nent part exemption for the purchase of digital 
goods or digital services in a manner consistent 
with the State’s resale and component part ex-
emption applicable to the purchase of similar 
property, 
goods, 
or 
services 
accomplished 
through other means. 
(8) MULTIPLE TAX.— 
(A) IN
GENERAL.—The term ‘‘multiple 
tax’’ means any tax that is imposed by one 
State, one or more of that State’s local jurisdic-
tions, or both on the same or essentially the 
same digital goods and digital services that is 
also subject to tax imposed by another State, 
one or more local jurisdictions in such other 
State (whether or not at the same rate or on 
the same basis), or both, without a credit for 
taxes paid in other jurisdictions. 
(B) EXCEPTION.—The term ‘‘multiple 
tax’’ shall not include a tax imposed by a State 
and one or more political subdivisions thereof 
on the same digital goods and digital services or 
a tax on persons engaged in selling digital 
goods and digital services which also may have 
been subject to a sales or use tax thereon. 
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(9) PRIMARY USE LOCATION.— 
(A) IN GENERAL.—The term ‘‘primary use 
location’’ means a street address representative 
of where the customer’s use of a digital good or 
digital service will primarily occur, which shall 
be the residential street address or a business 
street address of the actual end user of the dig-
ital good or digital service, including, if applica-
ble, the address of a donee of the customer that 
is designated by the customer. 
(B) CUSTOMERS THAT ARE NOT INDIVID-
UALS.—For the purpose of subparagraph (A), if 
the customer is not an individual, the primary 
use location is determined by the location of the 
customer’s employees or equipment (machine or 
device) that make use of the digital good or dig-
ital service, but does not include the location of 
a person who uses the digital good or digital 
service as the purchaser of a separate good or 
service from the customer. 
(10) SALE AND PURCHASE.—The terms ‘‘sale’’ 
and ‘‘purchase’’, and all variations thereof, shall in-
clude the provision, lease, rent, license, and cor-
responding variations thereof. 
(11) SELLER.— 
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