I 
116TH CONGRESS 
1ST SESSION H. R. 1725 
To promote neutrality, simplicity, and fairness in the taxation of digital 
goods and digital services. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 13, 2019 
Mr. COHEN (for himself and Mr. RATCLIFFE) introduced the following bill; 
which was referred to the Committee 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 2019’’. 
SEC. 2. MULTIPLE AND DISCRIMINATORY TAXES PROHIB-
ITED. 
(a) MULTIPLE TAXES.—No State or local jurisdiction 
shall impose multiple taxes on the sale or use of a covered 
electronic good or service. 
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efforts to obtain a customer tax address, as 
such efforts are described in clauses (iii), (iv), 
and (v) of section 7(4)(A), before resorting to 
using a customer tax address as determined by 
clause (vi) of such section 7(4)(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(4)(A), before re-
sorting to using a customer tax address as de-
termined by clause (vi) of such section 7(4)(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, unless 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 
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7(4)(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 
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 covered electronic good or 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 covered electronic good or service are billed to 
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the customer by such a home service provider; 
and 
(B) the covered electronic good or service 
is delivered, transferred, or provided electroni-
cally 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 covered electronic good or service, may 
presume that the customer’s place of primary use 
for such mobile telecommunications service is the 
customer tax address described in section 7(4)(A)(ii) 
with respect to the sale of such covered electronic 
good or 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 service, audio or 
video programming service, or VoIP service is sold 
to a customer and available for use by the customer 
in multiple locations simultaneously, the seller may 
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determine the customer tax addresses using a rea-
sonable and consistent method based on the address-
es of use as provided by the customer and deter-
mined in agreement with the customer at the time 
of sale or at a later time. 
(2) DIRECT CUSTOMER PAYMENT.— 
(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 covered electronic goods 
or 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 
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(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. 
SEC. 5. TREATMENT OF BUNDLED TRANSACTIONS, DIGITAL 
CODES, AND OTHER RULES. 
(a) BUNDLED TRANSACTION.—If a charge for a dis-
tinct and identifiable covered electronic good or 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 covered electronic goods 
or services, and any part of the aggregation is subject to 
taxation, then the entire aggregation may be subject to 
taxation, 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 covered electronic good or service to 
which the digital code relates. 
(c) APPLICATION
OF FIXED CHARGES
TO VOIP 
SERVICE.—With respect to VoIP service, if any tax is 
based on a fixed charge, such fixed charge shall be based 
on the number of simultaneous outbound calls the cus-
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tomer has purchased the right to place, regardless of ac-
tual usage or the number of the customer’s phone num-
bers. 
(d) 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 
from a customer based upon use of a covered electronic 
good or 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. 
(d) INTERNET TAX FREEDOM ACT.—Nothing in this 
Act modifies, impairs, supersedes, or authorizes the modi-
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fication, impairment, or supersession of the Internet Tax 
Freedom Act (47 U.S.C. 151 note). 
SEC. 7. DEFINITIONS. 
In this Act, the following definitions shall apply: 
(1) AUDIO
OR
VIDEO
PROGRAMMING
SERV-
ICE.—The term ‘‘audio or video programming serv-
ice’’ means programming provided by, or generally 
considered comparable to programming provided by, 
a radio or television broadcast station, regardless of 
the facilities used to deliver or provide such service. 
(2) COVERED
ELECTRONIC
GOOD
OR
SERV-
ICE.—The term ‘‘covered electronic good or service’’ 
means a digital good, digital service, audio or video 
programming service, or VoIP service. 
(3) CUSTOMER.—The term ‘‘customer’’ means 
a person that purchases a covered electronic good or 
service or digital code. 
(4) CUSTOMER TAX ADDRESS.— 
(A) IN
GENERAL.—The term ‘‘customer 
tax address’’ means— 
(i) with respect to the sale of a cov-
ered electronic good or service that is re-
ceived by the customer at a business loca-
tion of the seller, such business location; 
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(ii) if clause (i) does not apply and 
the primary use location of the covered 
electronic good or service is known by the 
seller, such location; 
(iii) if neither clause (i) nor clause (ii) 
applies, and if the location where the cov-
ered electronic good or 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-
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ment, when use of this address does not 
constitute bad faith; or 
(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, one of 
the following locations, as selected by the 
seller, provided that such location is con-
sistently used by the seller for all such 
sales to which this clause applies: 
(I) The location in the United 
States of the headquarters of the sell-
er’s business. 
(II) The location in the United 
States where the seller has the great-
est number of employees. 
(III) The location in the United 
States— 
(aa) from which the seller 
makes digital goods available for 
electronic delivery; or 
(bb) from which digital serv-
ices, VoIP services, or audio or 
video programming services are 
provided electronically. 
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(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. 
(5) DELIVERED OR TRANSFERRED ELECTRONI-
CALLY; 
PROVIDED
ELECTRONICALLY.—The term 
‘‘delivered or transferred electronically’’ means the 
delivery or transfer of a digital good by means other 
than tangible storage media, and the term ‘‘provided 
electronically’’ means the provision of a digital serv-
ice, audio or video programming service, or VoIP 
service remotely via electronic means. 
(6) DIGITAL CODE.—The term ‘‘digital code’’ 
means a code that conveys only the right to obtain 
a covered electronic good or service without making 
further payment. 
(7) 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 software or 
other good is the true object of the transaction, 
rather than the activity or service performed to cre-
ate such software or other good, that results in the 
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delivery to the customer of a complete copy of such 
software or other good, with the right to use perma-
nently or for a specified period, and includes, as an 
incidental component, charges for the delivery or 
transfer of such software or other good. 
(8) 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, audio or video 
programming service, or a hotel intermediary 
service. 
(C) CLARIFYING DEFINITIONS.—For pur-
poses of subparagraph (B)— 
(i) the term ‘‘ancillary service’’ means 
a service that is associated with or inci-
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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 ‘‘hotel intermediary serv-
ice’’— 
(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; 
(iii) the term ‘‘Internet access’’ means 
any service included within the definition 
of the term ‘‘internet access’’ under section 
1105(5) of the Internet Tax Freedom Act 
(47 U.S.C. 151 note); and 
(iv) the term ‘‘telecommunications 
service’’— 
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