‘‘(b) NO DOUBLE COUNTING.—In no event shall any 
person be considered part of more than 1 qualified family. 
‘‘(c) REVISED
REGISTRATION
PERMISSIBLE.—A 
qualified family may file a revised registration for pur-
poses of section 302(d) to reflect a change in family cir-
cumstances. A revised registration form shall provide—
‘‘(1) the name of each family member who 
shared the qualified family’s residence on the filing 
date of the revised registration, 
‘‘(2) the Social Security number of each family 
member 2 years of age or older who shared the 
qualified family’s residence on the filing date of the 
revised registration, 
‘‘(3) the family member or family members to 
whom the family consumption allowance should be 
paid, 
‘‘(4) a certification that all listed family mem-
bers are lawful residents of the United States,
‘‘(5) a certification that all family members 
sharing the commoner residence are listed, 
‘‘(6) a certification that no family members 
were incarcerated on the family determination date 
(within the meaning of section 302(1)), and 
‘‘(7) the address of the qualified family.
Said revised registration shall be signed by all members 
of the qualified family that have attained the age of 21 
years as of the filing date of the revised registration. 
‘‘(d) CHANGE OF ADDRESS.—A change of address for 
a qualified family may be filed with the sales tax admin-
istering authority at any time and shall not constitute a 
revised registration. 
‘‘(e) REVISED REGISTRATION NOT MANDATORY.—
Revised registrations reflecting changes in family status 
are not mandatory. 
‘‘CHAPTER 4—FEDERAL AND STATE 
COOPERATIVE TAX ADMINISTRATION
‘‘Sec. 401. Authority for States to collect tax. 
‘‘Sec. 402. Federal administrative support for States. 
‘‘Sec. 403. Federal-State tax conferences. 
‘‘Sec. 404. Federal administration in certain States. 
‘‘Sec. 405. Interstate allocation and destination determination. 
‘‘Sec. 406. General administrative matters. 
‘‘Sec. 407. Jurisdiction
‘‘SEC. 401 AUTHORITY FOR STATES TO COLLECT TAX 
‘‘(a) IN GENERAL.—The tax imposed by section 101 
on gross payments for the use or consumption of taxable 
property or services within a State shall be administered, 
collected, and remitted to the United States Treasury by 
such State if the State is an administering State. 
‘‘(b) ADMINISTERING STATE.—For purposes of this 
section, the term ‘administering State’ means any State—
‘‘(1) which maintains a sales tax, and
‘‘(2) which enters into a cooperative agreement 
with the Secretary containing reasonable provisions 
governing the administration by such State of the 
taxes imposed by the subtitle and the remittance to 
the United States in a timely manner of taxes col-
lected under this chapter. 
‘‘(c) COOPERATIVE AGREEMENTS.—The agreement 
under subsection (b)(2) shall include provisions for the ex-
peditious transfer of funds, contact officers, dispute reso-
lution, information exchange, confidentiality, taxpayer 
rights, and other matters of importance. The agreement 
shall not contain extraneous matters. 
‘‘(d) TIMELY REMITTANCE OF TAX.—
‘‘(1) IN GENERAL.—Administering States shall 
remit and pay over taxes collected under this subtitle 
on behalf of the United States (less the administra-
tion fee allowable under paragraph (2)) not later 
than 5 days after receipt. Interest at 150 percent of 
the Federal short-term rate shall be paid with re-
spect to amounts remitted after the due date. 
‘‘(2) ADMINISTRATION FEE.—An administering 
State may retain an administration fee equal to one-
quarter of 1 percent of the amounts otherwise re-
quired to be remitted to the United States under 
this chapter by the administering State.
‘‘(e) LIMITATION ON ADMINISTRATION OF TAX BY 
UNITED STATES.—The Secretary may administer the tax 
imposed by this subtitle in an administering State only 
if—
‘‘(1)(A) such State has failed on a regular basis 
to timely remit to the United States taxes collected 
under this chapter on behalf of the United States, 
or 
‘‘(B) such State has on a regular basis other-
wise materially breached the agreement referred to 
in subsection (b)(2); 
‘‘(2) the State has failed to cure such alleged 
failures and breaches within a reasonable time; 
‘‘(3) the Secretary provides such State with 
written notice of such alleged failures and breaches; 
and 
‘‘(4) a District Court of the United States with-
in such State, upon application of the Secretary, has 
rendered a decision—
‘‘(A) making findings of fact that—
‘‘(i) such State has failed on a regular 
basis to timely remit to the United States 
taxes collected under this chapter on behalf 
of the United States, or such State has on 
a 
regular 
basis 
otherwise 
materially
breached the agreement referred to in sub-
section (b)(2); 
‘‘(ii) the Secretary has provided such 
State with written notice of such alleged 
failures and breaches; and 
‘‘(iii) the State has failed to cure such 
alleged failures and breaches within a rea-
sonable time; and 
‘‘(B) making a determination that it is in 
the best interest of the citizens of the United 
States that the administering State’s authority 
to administer the tax imposed by this subtitle 
be revoked and said tax be administered di-
rectly by the Secretary. 
The order of the District Court revoking the author-
ity of an Administering State shall contain provi-
sions governing the orderly transfer of authority to 
the Secretary. 
‘‘(f) REINSTITUTION.—A State that has had its au-
thority revoked pursuant to subsection (e) shall not be an 
administering State for a period of not less than 5 years 
after the date of the order of revocation. For the first cal-
endar year commencing 8 years after the date of the order 
of revocation, the State shall be regarded without preju-
dice as eligible to become an administering State.
‘‘(g) THIRD
STATE
ADMINISTRATION
PERMIS-
SIBLE.—It shall be permissible for a State to contract with 
an administering State to administer the State’s sales tax 
for an agreed fee. In this case, the agreement con-
templated by subsection (c) shall have both the State and 
the Federal Government as parties. 
‘‘(h) INVESTIGATIONS AND AUDITS.—Administering 
States shall not conduct investigations or audits at facili-
ties in other administering States in connection with the 
tax imposed by section 101 or conforming State sales tax 
but shall instead cooperate with other administering 
States using the mechanisms established by section 402, 
by compact or by other agreement. 
‘‘SEC. 
402. 
FEDERAL 
ADMINISTRATIVE 
SUPPORT 
FOR 
STATES. 
‘‘(a) IN GENERAL.—The Secretary shall administer 
a program to facilitate information sharing among States. 
‘‘(b) STATE COMPACTS.—The Secretary shall facili-
tate, and may be a party to a compact among States for 
purposes of facilitating the taxation of interstate pur-
chases and for other purposes that may facilitate imple-
mentation of this subtitle. 
‘‘(c) AGREEMENT WITH CONFORMING STATES.—The 
Secretary is authorized to enter into and shall enter into 
an agreement among conforming States enabling con-
forming States to collect conforming State sales tax on 
sales made by sellers without a particular conforming 
State to a destination within that particular conforming 
State. 
‘‘(d) SECRETARY’S AUTHORITY.—The Secretary shall 
have the authority to promulgate regulations, to provide 
guidelines, to assist States in administering the national 
sales tax, to provide for uniformity in the administration 
of the tax and to provide guidance to the public. 
‘‘SEC. 403. FEDERAL-STATE TAX CONFERENCES. 
‘‘Not less than once annually, the Secretary shall host 
a conference with the sales tax administrators from the 
various administering States to evaluate the state of the 
national sales tax system, to address issues of mutual con-
cern and to develop and consider legislative, regulatory, 
and administrative proposals to improve the tax system. 
‘‘SEC. 404. FEDERAL ADMINISTRATION IN CERTAIN STATES. 
‘‘The Secretary shall administer the tax imposed by 
this subtitle in any State or other United States jurisdic-
tion that—
‘‘(1) is not an administering State, or 
‘‘(2) elected to have another State administer 
its tax in accordance with section 401(g).
‘‘SEC. 405. INTERSTATE ALLOCATION AND DESTINATION 
DETERMINATION. 
‘‘(a) DESTINATION GENERALLY.—The tax imposed 
by this subtitle is a destination principle tax. This section 
shall govern for purposes of determining—
‘‘(1) whether the destination of taxable property 
and services is within or without the United States, 
and 
‘‘(2) which State or territory within the United 
States is the destination of taxable property and 
services. 
‘‘(b) TANGIBLE PERSONAL PROPERTY.—Except as 
provided in subsection (f) (relating to certain leases), the 
destination of tangible personal property shall be the State 
or territory in which the property was first delivered to 
the purchaser (including agents and authorized represent-
atives). 
‘‘(c) REAL PROPERTY.—The destination of real prop-
erty, or rents or leaseholds on real property, shall be the 
State or territory in which the real property is located. 
‘‘(d) OTHER PROPERTY.—The destination of any 
other taxable property shall be the residence of the pur-
chaser. 
‘‘(e) SERVICES.—
‘‘(1) GENERAL RULE.—The destination of serv-
ices shall be the State or territory in which the use
or consumption of the services occurred. Allocation 
of service invoices relating to more than 1 jurisdic-
tion shall be on the basis of time or another method 
determined by regulation. 
‘‘(2) TELECOMMUNICATIONS
SERVICES.—The 
destination of telecommunications services shall be 
the residence of the purchaser. Telecommunications 
services include telephone, telegraph, beeper, radio, 
cable television, satellite, and computer on-line or 
network services. 
‘‘(3) DOMESTIC TRANSPORTATION SERVICES.—
For transportation services where all of the final 
destinations are within the United States, the des-
tination of transportation services shall be the final 
destination of the trip (in the case of round or mul-
tiple trip fares, the services amount shall be equally 
allocated among each final destination). 
‘‘(4) INTERNATIONAL TRANSPORTATION SERV-
ICES.—For transportation services where the final 
destination or origin of the trip is without the 
United States, the service amount shall be deemed 
50 percent attributable to the United States destina-
tion or origin.
‘‘(5) ELECTRICAL SERVICE.—The destination of 
electrical services shall be the residence of the pur-
chaser. 
‘‘(f) FINANCIAL INTERMEDIATION SERVICES.—The 
destination of financial intermediation services shall be the 
residence of the purchaser. 
‘‘(g) RENTS PAID FOR THE LEASE OF TANGIBLE 
PROPERTY.—
‘‘(1) GENERAL RULE.—Except as provided in 
paragraph (2), the destination of rents paid for the 
lease of tangible property and leaseholds on such 
property shall be where the property is located while 
in use.
‘‘(2) 
LAND
VEHICLES; 
AIRCRAFT, 
WATER 
CRAFT.—The destination of rental and lease pay-
ments on land vehicles, aircraft and water craft shall 
be—
‘‘(A) in the case of rentals and leases of a 
term of 1 month or less, the location where the 
land vehicle, aircraft, or water craft was origi-
nally delivered to the renter or lessee; and 
‘‘(B) in the case of rentals and leases of a 
term greater than 1 month, the residence of the 
renter or lessee.
‘‘(h) ALLOCATION RULES.—For purposes of allo-
cating revenue—
‘‘(1) between or among administering States 
from taxes imposed by this subtitle or from State 
sales taxes administered by third-party admin-
istering States, or 
‘‘(2) between or among States imposing con-
forming State sales taxes, 
the revenue shall be allocated to those States that are the 
destination of the taxable property or service. 
‘‘(i) FEDERAL OFFICE OF REVENUE ALLOCATION.—
The Secretary shall establish an Office of Revenue Alloca-
tion to arbitrate any claims or disputes among admin-
istering States as to the destination of taxable property 
and services for purposes of allocating revenue between or 
among the States from taxes imposed by this subtitle. The 
determination of the Administrator of the Office of Rev-
enue Allocation shall be subject to judicial review in any 
Federal court with competent jurisdiction. The standard 
of review shall be abuse of discretion. 
‘‘SEC. 406. GENERAL ADMINISTRATIVE MATTERS. 
‘‘(a) IN GENERAL.—The Secretary and each sales tax 
administering authority may employ such persons as may 
be necessary for the administration of this subtitle and 
may delegate to employees the authority to conduct inter-
views, hearings, prescribe rules, promulgate regulations, 
and perform such other duties as are required by this sub-
title. 
‘‘(b) RESOLUTION OF ANY INCONSISTENT RULES 
AND REGULATIONS.—In the event that the Secretary and 
any sales tax administering authority have issued incon-
sistent rules or regulations, any lawful rule or regulation 
issued by the Secretary shall govern. 
‘‘(c) ADEQUATE NOTICE TO BE PROVIDED.—Except 
in the case of an emergency declared by the Secretary (and 
not his designee), no rule or regulation issued by the Sec-
retary with respect to any internal revenue law shall take 
effect before 90 days have elapsed after its publication in 
the Federal Register. Upon issuance, the Secretary shall 
provide copies of all rules or regulations issued under this 
title to each sales tax administering authority. 
‘‘(d) NO RULES, RULINGS, OR REGULATIONS WITH 
RETROACTIVE EFFECT.—No rule, ruling, or regulation 
issued or promulgated by the Secretary relating to any in-
ternal revenue law or by a sales tax administering author-
ity shall apply to a period prior to its publication in the 
Federal Register (or State equivalent) except that a regu-
lation may take retroactive effect to prevent abuse. 
‘‘(e) REVIEW OF IMPACT OF REGULATIONS, RULES, 
AND RULINGS ON SMALL BUSINESS.—
‘‘(1) SUBMISSION TO SMALL BUSINESS ADMIN-
ISTRATION.—After publication of any proposed or 
temporary regulation by the Secretary relating to in-
ternal revenue laws, the Secretary shall submit such 
regulation to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on the 
impact of such regulation on small businesses. Not 
later than the date 30 days after the date of such 
submission, the Chief Counsel for Advocacy of the 
Small Business Administration shall submit com-
ments on such regulation to the Secretary. 
‘‘(2) CONSIDERATION OF COMMENTS.—In pre-
scribing any final regulation which supersedes a pro-
posed or temporary regulation which had been sub-
mitted under this subsection to the Chief Counsel 
for Advocacy of the Small Business Administration, 
the Secretary shall—
‘‘(A) consider the comments of the Chief 
Counsel for Advocacy of the Small Business 
Administration on such proposed or temporary 
regulation, and 
‘‘(B) in promulgating such final regulation, 
include a narrative that describes the response 
to such comments.
‘‘(3) SUBMISSION OF CERTAIN FINAL REGULA-
TION.—In the case of promulgation by the Secretary 
of any final regulations (other than a temporary reg-
ulation) which do not supersede a proposed regula-
tion, the requirements of paragraphs (1) and (2) 
shall apply, except that the submission under para-
graph (1) shall be made at least 30 days before the 
date of such promulgation, and the consideration 
and discussion required under paragraph (2) shall 
be made in connection with the promulgation of such 
final regulation. 
‘‘(f) SMALL BUSINESS REGULATORY SAFEGUARDS.—
The Small Business Regulatory Enforcement Fairness Act 
(Public Law 104–121; 110 Stat. 857 (‘SBREFA’)) and 
the Regulatory Flexibility Act (5 U.S.C. 601–612 
(‘RFA’)) shall apply to regulations promulgated under this 
subtitle. 
‘‘SEC. 407. JURISDICTION. 
‘‘(a) STATE JURISDICTION.—A sales tax admin-
istering authority shall have jurisdiction over any gross 
payments made which have a destination (as determined 
in accordance with section 405) within the State of said 
sales tax administering authority. This grant of jurisdic-
tion is not exclusive of any other jurisdiction that such 
sales tax administering authority may have.
‘‘(b) FEDERAL JURISDICTION.—The grant of juris-
diction in subsection (a) shall not be in derogation of Fed-
eral jurisdiction over the same matter. The Federal Gov-
ernment shall have the right to exercise preemptive juris-
diction over matters relating to the taxes imposed by this 
subtitle.
‘‘CHAPTER 5—OTHER ADMINISTRATIVE 
PROVISIONS
‘‘Sec. 501. Monthly reports and payments. 
‘‘Sec. 502. Registration. 
‘‘Sec. 503. Accounting. 
‘‘Sec. 504. Registration certificates. 
‘‘Sec. 505. Penalties. 
‘‘Sec. 506. Burden of persuasion and burden of production. 
‘‘Sec. 507. Attorneys’ and accountancy fees. 
‘‘Sec. 508. Summons, examinations, audits, etc. 
‘‘Sec. 509. Records. 
‘‘Sec. 510. Tax to be separately stated and charged. 
‘‘Sec. 511. Coordination with title 11. 
‘‘Sec. 512. Applicable interest rate.
‘‘SEC. 501. MONTHLY REPORTS AND PAYMENTS. 
‘‘(a) TAX REPORTS AND FILING DATES.—
‘‘(1) IN GENERAL.—On or before the 15th day 
of each month, each person who is—
‘‘(A) liable to collect and remit the tax im-
posed by this subtitle by reason of section 
103(a), or 
‘‘(B) liable to pay tax imposed by this sub-
title which is not collected pursuant to section 
103(a),
shall submit to the appropriate sales tax admin-
istering authority (in a form prescribed by the Sec-
retary) a report relating to the previous calendar 
month. 
‘‘(2) CONTENTS OF REPORT.—The report re-
quired under paragraph (1) shall set forth—
‘‘(A) the gross payments referred to in sec-
tion 101, 
‘‘(B) the tax collected under chapter 4 in 
connection with such payments, 
‘‘(C) the amount and type of any credit 
claimed, and 
‘‘(D) other information reasonably required 
by the Secretary or the sales tax administering 
authority for the administration, collection, and 
remittance of the tax imposed by this subtitle. 
‘‘(b) TAX PAYMENTS DATE.—
‘‘(1) GENERAL RULE.—The tax imposed by this 
subtitle during any calendar month is due and shall 
be paid to the appropriate sales tax administering 
authority on or before the 15th day of the suc-
ceeding month. Both Federal tax imposed by this 
subtitle and confirming State sales tax (if any) shall 
be paid in 1 aggregate payment.
‘‘(2) CROSS REFERENCE.—
‘‘See subsection (e) relating to remitting of 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 calender year to remit 
taxes and report transactions with respect to the month 
where a sale was invoiced and accrued. 
‘‘(c) CROSS REFERENCE.—
‘‘See section 205 for rules relating to bad debts for 
sellers electing the accrual 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 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-
NISHMENTS.—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 officer (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 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 when 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.
‘‘(3) MIXED
USE
PROPERTY
OR
SERVICES 
CREDIT.—A person registered pursuant to section 
502 is entitled to a business use conversion credit 
(pursuant to section 202) equal to the product of—
‘‘(A) the mixed use property amount; and 
‘‘(B) the business use ratio; and 
‘‘(C) the rate of tax imposed by section 
101. 
‘‘(4) MIXED
USE
PROPERTY
AMOUNT.—The 
mixed use property amount for each month (or frac-
tion thereof) in which the property was owned shall 
be—
‘‘(A) 
one-three-hundred-sixtieth 
of 
the 
gross payments for real property for 360 
months or until the property is sold; 
‘‘(B) one-eighty-fourth of the gross pay-
ments for tangible personal property for 84 
months or until the property is sold; 
‘‘(C) one-sixtieth of the gross payments for 
vehicles for 60 months or until the property is 
sold; or 
‘‘(D) for other types of taxable property or 
services, a reasonable amount or in accordance 
with regulations prescribed by the Secretary.
‘‘(5) BUSINESS USE RATIO.—For purposes of 
this section, the term ‘business use ratio’ means the 
ratio of business use to total use for a particular cal-
endar month (or portion thereof if the property was 
owned for only part of said calendar month). For ve-
hicles, the business use ratio will be the ratio of 
business purpose miles to total miles in a particular 
calendar month. For real property, the business use 
ratio is the ratio of floor space used primarily for 
business purposes to total floor space in a particular 
calendar month. For tangible personal property (ex-
cept for vehicles), the business use ratio is the ratio 
of total time used for business purposes to total time 
used in a particular calendar year. For other prop-
erty or services, the business ratio shall be cal-
culated using a reasonable method. Reasonable 
records must be maintained to support a person’s 
business use of the mixed use property or service. 
‘‘(b) TIMING OF BUSINESS USE CONVERSION CRED-
IT ARISING OUT OF OWNERSHIP OF MIXED USE PROP-
ERTY.—A person entitled to a credit pursuant to sub-
section (a)(3) arising out of the ownership of mixed use 
property must account for the mixed use on a calendar 
year basis, and may file for the credit with respect to
mixed use property in any month following the calendar 
year giving rise to the credit. 
‘‘(c) CROSS REFERENCE.—
‘‘For business use conversion credit, see section 
202.
‘‘SEC. 706. NOT-FOR-PROFIT ORGANIZATIONS. 
‘‘(a) NOT-FOR-PROFIT ORGANIZATIONS.—Dues, con-
tributions, and similar payments to qualified not-for-profit 
organizations shall not be considered gross payments for 
taxable property or services for purposes of this subtitle. 
‘‘(b) DEFINITION.—For purposes of this section, the 
term ‘qualified not-for-profit organization’ means a not-
for-profit organization organized and operated exclu-
sively—
‘‘(1) for religious, charitable, scientific, testing 
for public safety, literary, or educational purposes; 
‘‘(2) as civic leagues or social welfare organiza-
tions; 
‘‘(3) as labor, agricultural, or horticultural or-
ganizations; 
‘‘(4) as chambers of commerce, business 
leagues, or trade associations; or 
‘‘(5) as fraternal beneficiary societies, orders, or 
associations; 
no part of the net earnings of which inures to the benefit 
of any private shareholder or individual.
‘‘(c) QUALIFICATION CERTIFICATES.—Upon applica-
tion in a form prescribed by the Secretary, the sales tax 
administering authority shall provide qualification certifi-
cates to qualified not-for-profit organizations. 
‘‘(d) TAXABLE TRANSACTIONS.—If a qualified not-
for-profit organization provides taxable property or serv-
ices in connection with contributions, dues, or similar pay-
ments to the organization, then it shall be required to 
treat the provision of said taxable property or services as 
a purchase taxable pursuant to this subtitle at the fair 
market value of said taxable property or services. 
‘‘(e) EXEMPTIONS.—Taxable property and services 
purchased by a qualified not-for-profit organization shall 
be eligible for the exemptions provided in section 102. 
‘‘CHAPTER 8—FINANCIAL 
INTERMEDIATION SERVICES
‘‘Sec. 801. Determination of financial intermediation services amount. 
‘‘Sec. 802. Bad debts. 
‘‘Sec. 803. Timing of tax on financial intermediation services. 
‘‘Sec. 804. Financing leases. 
‘‘Sec. 805. Basic interest rate. 
‘‘Sec. 806. Foreign financial intermediation services.
‘‘SEC. 801. DETERMINATION OF FINANCIAL INTERMEDI-
ATION SERVICES AMOUNT. 
‘‘(a) FINANCIAL INTERMEDIATION SERVICES.—For 
purposes of this subtitle—
‘‘(1) IN GENERAL.—The term ‘financial inter-
mediation services’ means the sum of—
‘‘(A) explicitly charged fees for financial 
intermediation services, and 
‘‘(B) implicitly charged fees for financial 
intermediation services. 
‘‘(2) EXPLICITLY CHARGED FEES FOR FINAN-
CIAL INTERMEDIATION SERVICES.—The term ‘explic-
itly charged fees for financial intermediation serv-
ices’ includes—
‘‘(A) brokerage fees; 
‘‘(B) explicitly stated banking, loan origi-
nation, processing, documentation, credit check 
fees, or other similar fees; 
‘‘(C) safe-deposit box fees; 
‘‘(D) insurance premiums, to the extent 
such premiums are not allocable to the invest-
ment account of the underlying insurance pol-
icy; 
‘‘(E) trustees’ fees; and 
‘‘(F) other financial services fees (includ-
ing mutual fund management, sales, and exit 
fees). 
‘‘(3) IMPLICITLY CHARGED FEES FOR FINAN-
CIAL INTERMEDIATION SERVICES.—
‘‘(A) IN GENERAL.—The term ‘implicitly 
charged fees for financial intermediation serv-
ices’ includes the gross imputed amount in rela-
tion to any underlying interest-bearing invest-
ment, account, or debt. 
‘‘(B) GROSS IMPUTED AMOUNT.—For pur-
poses of subparagraph (A), the term ‘gross im-
puted amount’ means—
‘‘(i) with respect to any underlying in-
terest-bearing investment or account, the 
product of—
‘‘(I) the excess (if any) of the 
basic interest rate (as defined in sec-
tion 805) over the rate paid on such 
investment; and 
‘‘(II) the amount of the invest-
ment or account; and 
‘‘(ii) with respect to any underlying 
interest-bearing debt, the product of—
‘‘(I) the excess (if any) of the 
rate paid on such debt over the basic 
interest rate (as defined in section 
805); and 
‘‘(II) the amount of the debt. 
‘‘(b) SELLER OF FINANCIAL INTERMEDIATION SERV-
ICES.—For purposes of section 103(a), the seller of finan-
cial intermediation services shall be—
‘‘(1) in the case of explicitly charged fees for fi-
nancial intermediation services, the seller shall be 
the person who receives the gross payments for the 
charged financial intermediation services; 
‘‘(2) in the case of implicitly charged fees for fi-
nancial intermediation services with respect to any 
underlying interest-bearing investment or account, 
the person making the interest payments on the in-
terest-bearing investment or account; and 
‘‘(3) in the case of implicitly charged fees for fi-
nancial intermediation services with respect to any 
interest-bearing debt, the person receiving the inter-
est payments on the interest-bearing debt. 
‘‘SEC. 802. BAD DEBTS. 
‘‘(a) IN GENERAL.—For purposes of section 205(a), 
a bad debt shall be a business debt that becomes wholly 
or partially worthless to the payee. 
‘‘(b) BUSINESS LOAN.—For purposes of subsection 
(a), a business loan or debt is a bona fide loan or debt 
made for a business purpose that both parties intended 
be repaid. 
‘‘(c) DETERMINATION OF WORTHLESSNESS.—
‘‘(1) IN GENERAL.—No loan or debt shall be 
considered wholly or partially worthless unless it has 
been in arrears for 180 days or more, except that if