Title: Marketplace Fairness Act of 2017
Policy area: Taxation

Summary:
Marketplace Fairness Act of 2017
This bill authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the agreement, but only if such agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing.
The bill defines "remote sale" as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this bill.
The bill also prohibits states from beginning to exercise the authority granted by this bill for a specified period after enactment.


[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 976 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                 S. 976

 To restore States' sovereign rights to enforce State and local sales 
               and use tax laws, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 27, 2017

  Mr. Enzi (for himself, Mr. Durbin, Mr. Alexander, Ms. Heitkamp, Ms. 
 Warren, Mr. Reed, Mr. Whitehouse, Mr. Warner, Mr. Cardin, Mr. Kaine, 
  Mr. Markey, Mr. Blunt, Mr. Rounds, Ms. Duckworth, and Ms. Collins) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To restore States' sovereign rights to enforce State and local sales 
               and use tax laws, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Marketplace Fairness Act of 2017''.

SEC. 2. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE TAXES.

    (a) Streamlined Sales and Use Tax Agreement.--Each Member State 
under the Streamlined Sales and Use Tax Agreement is authorized to 
require all sellers not qualifying for the small seller exception 
described in subsection (c) to collect and remit sales and use taxes 
with respect to remote sales sourced to that Member State pursuant to 
the provisions of the Streamlined Sales and Use Tax Agreement, but only 
if any changes to the Streamlined Sales and Use Tax Agreement made 
after the date of the enactment of this Act are not in conflict with 
the minimum simplification requirements in subsection (b)(2). Subject 
to section 3(h), a State may exercise authority under this Act 
beginning 180 days after the State publishes notice of the State's 
intent to exercise the authority under this Act, but no earlier than 
the first day of the calendar quarter that is at least 180 days after 
the date of the enactment of this Act.
    (b) Alternative.--A State that is not a Member State under the 
Streamlined Sales and Use Tax Agreement is authorized notwithstanding 
any other provision of law to require all sellers not qualifying for 
the small seller exception described in subsection (c) to collect and 
remit sales and use taxes with respect to remote sales sourced to that 
State, but only if the State adopts and implements the minimum 
simplification requirements in paragraph (2). Subject to section 3(h), 
such authority shall commence beginning no earlier than the first day 
of the calendar quarter that is at least 6 months after the date that 
the State--
            (1) enacts legislation to exercise the authority granted by 
        this Act--
                    (A) specifying the tax or taxes to which such 
                authority and the minimum simplification requirements 
                in paragraph (2) shall apply; and
                    (B) specifying the products and services otherwise 
                subject to the tax or taxes identified by the State 
                under subparagraph (A) to which the authority of this 
                Act shall not apply; and
            (2) implements each of the following minimum simplification 
        requirements:
                    (A) Provide--
                            (i) a single entity within the State 
                        responsible for all State and local sales and 
                        use tax administration, return processing, and 
                        audits for remote sales sourced to the State;
                            (ii) a single audit of a remote seller for 
                        all State and local taxing jurisdictions within 
                        that State; and
                            (iii) a single sales and use tax return to 
                        be used by remote sellers to be filed with the 
                        single entity responsible for tax 
                        administration.
                A State may not require a remote seller to file sales 
                and use tax returns any more frequently than returns 
                are required for nonremote sellers or impose 
                requirements on remote sellers that the State does not 
                impose on nonremote sellers with respect to the 
                collection of sales and use taxes under this Act. No 
                local jurisdiction may require a remote seller to 
                submit a sales and use tax return or to collect sales 
                and use taxes other than as provided by this paragraph.
                    (B) Provide a uniform sales and use tax base among 
                the State and the local taxing jurisdictions within the 
                State pursuant to paragraph (1).
                    (C) Source all remote sales in compliance with the 
                sourcing definition set forth in section 4(7).
                    (D) Provide--
                            (i) information indicating the taxability 
                        of products and services along with any product 
                        and service exemptions from sales and use tax 
                        in the State and a rates and boundary database;
                            (ii) software free of charge for remote 
                        sellers that calculates sales and use taxes due 
                        on each transaction at the time the transaction 
                        is completed, that files sales and use tax 
                        returns, and that is updated to reflect rate 
                        changes as described in subparagraph (H); and
                            (iii) certification procedures for persons 
                        to be approved as certified software providers.
                For purposes of clause (iii), the software provided by 
                certified software providers shall be capable of 
                calculating and filing sales and use taxes in all 
                States qualified under this Act.
                    (E) Relieve remote sellers from liability to the 
                State or locality for the incorrect collection, 
                remittance, or noncollection of sales and use taxes, 
                including any penalties or interest, if the liability 
                is the result of an error or omission made by a 
                certified software provider.
                    (F) Relieve certified software providers from 
                liability to the State or locality for the incorrect 
                collection, remittance, or noncollection of sales and 
                use taxes, including any penalties or interest, if the 
                liability is the result of misleading or inaccurate 
                information provided by a remote seller.
                    (G) Relieve remote sellers and certified software 
                providers from liability to the State or locality for 
                incorrect collection, remittance, or noncollection of 
                sales and use taxes, including any penalties or 
                interest, if the liability is the result of incorrect 
                information or software provided by the State.
                    (H) Provide remote sellers and certified software 
                providers with 90 days notice of a rate change by the 
                State or any locality in the State and update the 
                information described in subparagraph (D)(i) 
                accordingly and relieve any remote seller or certified 
                software provider from liability for collecting sales 
                and use taxes at the immediately preceding effective 
                rate during the 90-day notice period if the required 
                notice is not provided.
    (c) Small Seller Exception.--A State is authorized to require a 
remote seller to collect sales and use taxes under this Act only if the 
remote seller has gross annual receipts in total remote sales in the 
United States in the preceding calendar year exceeding $1,000,000. For 
purposes of determining whether the threshold in this section is met, 
the gross annual receipts from remote sales of two or more persons 
shall be aggregated if--
            (1) such persons are related to the remote seller within 
        the meaning of subsections (b) and (c) of section 267 or 
        section 707(b)(1) of the Internal Revenue Code of 1986; or
            (2) such persons have one or more ownership relationships 
        and such relationships were designed with a principal purpose 
        of avoiding the application of these rules.

SEC. 3. LIMITATIONS.

    (a) In General.--Nothing in this Act shall be construed as--
            (1) subjecting a seller or any other person to franchise, 
        income, occupation, or any other type of taxes, other than 
        sales and use taxes;
            (2) affecting the application of such taxes; or
            (3) enlarging or reducing State authority to impose such 
        taxes.
    (b) No Effect on Nexus.--This Act shall not be construed to create 
any nexus or alter the standards for determining nexus between a person 
and a State or locality.
    (c) No Effect on Seller Choice.--Nothing in this Act shall be 
construed to deny the ability of a remote seller to deploy and utilize 
a certified software provider of the seller's choice.
    (d) Licensing and Regulatory Requirements.--Nothing in this Act 
shall be construed as permitting or prohibiting a State from--
            (1) licensing or regulating any person;
            (2) requiring any person to qualify to transact intrastate 
        business;
            (3) subjecting any person to State or local taxes not 
        related to the sale of products or services; or
            (4) exercising authority over matters of interstate 
        commerce.
    (e) No New Taxes.--Nothing in this Act shall be construed as 
encouraging a State to impose sales and use taxes on any products or 
services not subject to taxation prior to the date of the enactment of 
this Act.
    (f) No Effect on Intrastate Sales.--The provisions of this Act 
shall apply only to remote sales and shall not apply to intrastate 
sales or intrastate sourcing rules. States granted authority under 
section 2(a) shall comply with all intrastate provisions of the 
Streamlined Sales and Use Tax Agreement.
    (g) No Effect on Mobile Telecommunications Sourcing Act.--Nothing 
in this Act shall be construed as altering in any manner or preempting 
the Mobile Telecommunications Sourcing Act (4 U.S.C. 116-126).
    (h) Limitation on Initial Collection of Sales and Use Taxes From 
Remote Sales.--A State may not begin to exercise the authority under 
this Act--
            (1) before the date that is 1 year after the date of the 
        enactment of this Act; and
            (2) during the period beginning October 1 and ending on 
        December 31 of the first calendar year beginning after the date 
        of the enactment of this Act.

SEC. 4. DEFINITIONS AND SPECIAL RULES.

    In this Act:
            (1) Certified software provider.--The term ``certified 
        software provider'' means a person that--
                    (A) provides software to remote sellers to 
                facilitate State and local sales and use tax compliance 
                pursuant to section 2(b)(2)(D)(ii); and
                    (B) is certified by a State to so provide such 
                software.
            (2) Locality; local.--The terms ``locality'' and ``local'' 
        refer to any political subdivision of a State.
            (3) Member state.--The term ``Member State''--
                    (A) means a Member State as that term is used under 
                the Streamlined Sales and Use Tax Agreement as in 
                effect on the date of the enactment of this Act; and
                    (B) does not include any associate member under the 
                Streamlined Sales and Use Tax Agreement.
            (4) Person.--The term ``person'' means an individual, 
        trust, estate, fiduciary, partnership, corporation, limited 
        liability company, or other legal entity, and a State or local 
        government.
            (5) Remote sale.--The term ``remote sale'' means a sale 
        into a State, as determined under the sourcing rules under 
        paragraph (7), in which the seller would not legally be 
        required to pay, collect, or remit State or local sales and use 
        taxes unless provided by this Act.
            (6) Remote seller.--The term ``remote seller'' means a 
        person that makes remote sales in the State.
            (7) Sourced.--For purposes of a State granted authority 
        under section 2(b), the location to which a remote sale is 
        sourced refers to the location where the product or service 
        sold is received by the purchaser, based on the location 
        indicated by instructions for delivery that the purchaser 
        furnishes to the seller. When no delivery location is 
        specified, the remote sale is sourced to the customer's address 
        that is either known to the seller or, if not known, obtained 
        by the seller during the consummation of the transaction, 
        including the address of the customer's payment instrument if 
        no other address is available. If an address is unknown and a 
        billing address cannot be obtained, the remote sale is sourced 
        to the address of the seller from which the remote sale was 
        made. A State granted authority under section 2(a) shall comply 
        with the sourcing provisions of the Streamlined Sales and Use 
        Tax Agreement.
            (8) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, Guam, American Samoa, the United States Virgin Islands, 
        the Commonwealth of the Northern Mariana Islands, and any other 
        territory or possession of the United States, and any tribal 
        organization (as defined in section 4 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b)).
            (9) Streamlined sales and use tax agreement.--The term 
        ``Streamlined Sales and Use Tax Agreement'' means the multi-
        State agreement with that title adopted on November 12, 2002, 
        as in effect on the date of the enactment of this Act and as 
        further amended from time to time.

SEC. 5. SEVERABILITY.

    If any provision of this Act or the application of such provision 
to any person or circumstance is held to be unconstitutional, the 
remainder of this Act and the application of the provisions of such to 
any person or circumstance shall not be affected thereby.

SEC. 6. PREEMPTION.

    Except as otherwise provided in this Act, this Act shall not be 
construed to preempt or limit any power exercised or to be exercised by 
a State or local jurisdiction under the law of such State or local 
jurisdiction or under any other Federal law.
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