Us Congress 2025-2026 Regular Session

Us Congress House Bill HB25 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	I
2	2	119THCONGRESS
3	3	1
4	4	STSESSION H. R. 25
5	5	To promote freedom, fairness, and economic opportunity by repealing the
6	6	income tax and other taxes, abolishing the Internal Revenue Service,
7	7	and enacting a national sales tax to be administered primarily by the
8	8	States.
9	9	IN THE HOUSE OF REPRESENTATIVES
10	10	JANUARY3, 2025
11	11	Mr. C
12	12	ARTERof Georgia (for himself, Mr. CLYDE, Mr. CARTERof Texas, Mr.
13	13	P
14	14	ERRY, Mr. BURLISON, Mr. RUTHERFORD, Mr. DAVIDSON, Mr. BIGGS
15	15	of Arizona, Mr. S
16	16	TRONG, and Mr. MCCORMICK) introduced the following
17	17	bill; which was referred to the Committee on Ways and Means
18	18	A BILL
19	19	To promote freedom, fairness, and economic opportunity by
20	20	repealing the income tax and other taxes, abolishing the
21	21	Internal Revenue Service, and enacting a national sales
22	22	tax to be administered primarily by the States.
23	23	Be it enacted by the Senate and House of Representa-1
24	24	tives of the United States of America in Congress assembled, 2
25	25	SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3
26	26	(a) S
27	27	HORTTITLE.—This Act may be cited as the 4
28	28	‘‘FairTax Act of 2025’’. 5
29	29	(b) T
30	30	ABLE OFCONTENTS.—The table of contents for 6
31	31	this Act is as follows: 7
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34	34	•HR 25 IH
35	35	Sec. 1. Short title; table of contents.
36	36	Sec. 2. Congressional findings.
37	37	TITLE I—REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND
38	38	ESTATE AND GIFT TAXES
39	39	Sec. 101. Income taxes repealed.
40	40	Sec. 102. Payroll taxes repealed.
41	41	Sec. 103. Estate and gift taxes repealed.
42	42	Sec. 104. Conforming amendments; effective date.
43	43	TITLE II—SALES TAX ENACTED
44	44	Sec. 201. Sales tax.
45	45	Sec. 202. Conforming and technical amendments.
46	46	TITLE III—OTHER MATTERS
47	47	Sec. 301. Phase-out of administration of repealed Federal taxes.
48	48	Sec. 302. Administration of other Federal taxes.
49	49	Sec. 303. Sales tax inclusive Social Security benefits indexation.
50	50	TITLE IV—SUNSET OF SALES TAX IF SIXTEENTH AMENDMENT
51	51	NOT REPEALED
52	52	Sec. 401. Elimination of sales tax if Sixteenth Amendment not repealed.
53	53	SEC. 2. CONGRESSIONAL FINDINGS.
54	54	1
55	55	(a) F
56	56	INDINGSRELATING TO FEDERALINCOME 2
57	57	T
58	58	AX.—Congress finds the Federal income tax— 3
59	59	(1) retards economic growth and has reduced 4
60	60	the standard of living of the American public; 5
61	61	(2) impedes the international competitiveness of 6
62	62	United States industry; 7
63	63	(3) reduces savings and investment in the 8
64	64	United States by taxing income multiple times; 9
65	65	(4) slows the capital formation necessary for 10
66	66	real wages to steadily increase; 11
67	67	(5) lowers productivity; 12
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71	71	(6) imposes unacceptable and unnecessary ad-1
72	72	ministrative and compliance costs on individual and 2
73	73	business taxpayers; 3
74	74	(7) is unfair and inequitable; 4
75	75	(8) unnecessarily intrudes upon the privacy and 5
76	76	civil rights of United States citizens; 6
77	77	(9) hides the true cost of government by embed-7
78	78	ding taxes in the costs of everything Americans buy; 8
79	79	(10) is not being complied with at satisfactory 9
80	80	levels and therefore raises the tax burden on law- 10
81	81	abiding citizens; and 11
82	82	(11) impedes upward social mobility. 12
83	83	(b) F
84	84	INDINGSRELATING TO FEDERALPAYROLL 13
85	85	T
86	86	AXES.—Congress finds further that the Social Security 14
87	87	and Medicare payroll taxes and self-employment taxes— 15
88	88	(1) raise the cost of employment; 16
89	89	(2) destroy jobs and cause unemployment; and 17
90	90	(3) have a disproportionately adverse impact on 18
91	91	lower income Americans. 19
92	92	(c) F
93	93	INDINGSRELATING TOFEDERALESTATE AND 20
94	94	G
95	95	IFTTAXES.—Congress finds further that the Federal es-21
96	96	tate and gift taxes— 22
97	97	(1) force family businesses and farms to be sold 23
98	98	by the family to pay such taxes; 24
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101	101	•HR 25 IH
102	102	(2) discourage capital formation and entrepre-1
103	103	neurship; 2
104	104	(3) foster the continued dominance of large en-3
105	105	terprises over small family-owned companies and 4
106	106	farms; and 5
107	107	(4) impose unacceptably high tax planning costs 6
108	108	on small businesses and farms. 7
109	109	(d) F
110	110	INDINGSRELATING TO NATIONALSALES 8
111	111	T
112	112	AX.—Congress finds further that a broad-based national 9
113	113	sales tax on goods and services purchased for final con-10
114	114	sumption— 11
115	115	(1) is similar in many respects to the sales and 12
116	116	use taxes in place in 45 of the 50 States; 13
117	117	(2) will promote savings and investment; 14
118	118	(3) will promote fairness; 15
119	119	(4) will promote economic growth; 16
120	120	(5) will raise the standard of living; 17
121	121	(6) will increase investment; 18
122	122	(7) will enhance productivity and international 19
123	123	competitiveness; 20
124	124	(8) will reduce administrative burdens on the 21
125	125	American taxpayer; 22
126	126	(9) will improve upward social mobility; and 23
127	127	(10) will respect the privacy interests and civil 24
128	128	rights of taxpayers. 25
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131	131	•HR 25 IH
132	132	(e) FINDINGSRELATING TOADMINISTRATION OF 1
133	133	N
134	134	ATIONALSALESTAX.—Congress further finds that— 2
135	135	(1) most of the practical experience admin-3
136	136	istering sales taxes is found at the State govern-4
137	137	mental level; 5
138	138	(2) it is desirable to harmonize Federal and 6
139	139	State collection and enforcement efforts to the max-7
140	140	imum extent possible; 8
141	141	(3) it is sound tax administration policy to fos-9
142	142	ter administration and collection of the Federal sales 10
143	143	tax at the State level in return for a reasonable ad-11
144	144	ministration fee to the States; and 12
145	145	(4) businesses that must collect and remit taxes 13
146	146	should receive reasonable compensation for the cost 14
147	147	of doing so. 15
148	148	(f) F
149	149	INDINGSRELATING TOREPEAL OFPRESENT 16
150	150	F
151	151	EDERALTAXSYSTEM.—Congress further finds that the 17
152	152	16th Amendment to the United States Constitution should 18
153	153	be repealed. 19
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156	156	•HR 25 IH
157	157	TITLE I—REPEAL OF THE IN-1
158	158	COME TAX, PAYROLL TAXES, 2
159	159	AND ESTATE AND GIFT TAXES 3
160	160	SEC. 101. INCOME TAXES REPEALED. 4
161	161	Subtitle A of the Internal Revenue Code of 1986 (re-5
162	162	lating to income taxes and self-employment taxes) is re-6
163	163	pealed. 7
164	164	SEC. 102. PAYROLL TAXES REPEALED. 8
165	165	(a) I
166	166	NGENERAL.—Subtitle C of the Internal Rev-9
167	167	enue Code of 1986 (relating to payroll taxes and with-10
168	168	holding of income taxes) is repealed. 11
169	169	(b) F
170	170	UNDING OFSOCIALSECURITY.—For funding of 12
171	171	the Social Security Trust Funds from general revenue, see 13
172	172	section 201 of the Social Security Act (42 U.S.C. 401). 14
173	173	SEC. 103. ESTATE AND GIFT TAXES REPEALED. 15
174	174	Subtitle B of the Internal Revenue Code of 1986 (re-16
175	175	lating to estate and gift taxes) is repealed. 17
176	176	SEC. 104. CONFORMING AMENDMENTS; EFFECTIVE DATE. 18
177	177	(a) C
178	178	ONFORMINGAMENDMENTS.—The Internal Rev-19
179	179	enue Code of 1986 is amended— 20
180	180	(1) by striking subtitle H (relating to financing 21
181	181	of Presidential election campaigns); and 22
182	182	(2) by redesignating— 23
183	183	(A) subtitle D (relating to miscellaneous 24
184	184	excise taxes) as subtitle B; 25
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187	187	•HR 25 IH
188	188	(B) subtitle E (relating to alcohol, tobacco, 1
189	189	and certain other excise taxes) as subtitle C; 2
190	190	(C) subtitle F (relating to procedure and 3
191	191	administration) as subtitle D; 4
192	192	(D) subtitle G (relating to the Joint Com-5
193	193	mittee on Taxation) as subtitle E; 6
194	194	(E) subtitle I (relating to the Trust Fund 7
195	195	Code) as subtitle F; 8
196	196	(F) subtitle J (relating to coal industry 9
197	197	health benefits) as subtitle G; and 10
198	198	(G) subtitle K (relating to group health 11
199	199	plan portability, access, and renewability re-12
200	200	quirements) as subtitle H. 13
201	201	(b) R
202	202	EDESIGNATION OF1986 CODE.— 14
203	203	(1) I
204	204	N GENERAL.—The Internal Revenue Code 15
205	205	of 1986 enacted on October 22, 1986, as heretofore, 16
206	206	hereby, or hereafter amended, may be cited as the 17
207	207	Internal Revenue Code of 2025. 18
208	208	(2) R
209	209	EFERENCES IN LAWS , ETC.—Except when 19
210	210	inappropriate, any reference in any law, Executive 20
211	211	order, or other document— 21
212	212	(A) to the Internal Revenue Code of 1986 22
213	213	shall include a reference to the Internal Rev-23
214	214	enue Code of 2025; and 24
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217	217	•HR 25 IH
218	218	(B) to the Internal Revenue Code of 2025 1
219	219	shall include a reference to the provisions of law 2
220	220	formerly known as the Internal Revenue Code 3
221	221	of 1986. 4
222	222	(c) A
223	223	DDITIONALAMENDMENTS.—For additional con-5
224	224	forming amendments, see section 202 of this Act. 6
225	225	(d) E
226	226	FFECTIVEDATE.—Except as otherwise pro-7
227	227	vided in this Act, the amendments made by this Act shall 8
228	228	take effect on January 1, 2027. 9
229	229	TITLE II—SALES TAX ENACTED 10
230	230	SEC. 201. SALES TAX. 11
231	231	(a) I
232	232	NGENERAL.—The Internal Revenue Code of 12
233	233	2025 is amended by inserting before subtitle B (as redes-13
234	234	ignated by section 104(a)(2)(A)) the following new sub-14
235	235	title: 15
236	236	‘‘Subtitle A—Sales Tax 16
237	237	‘‘Sec. 1. Principles of interpretation.
238	238	‘‘Sec. 2. Definitions.
239	239	‘‘C
240	240	HAPTER1. INTERPRETATION; DEFINITIONS; IMPOSITION OFTAX; ETC.
241	241	‘‘C
242	242	HAPTER2. CREDITS; REFUNDS
243	243	‘‘C
244	244	HAPTER3. FAMILYCONSUMPTIONALLOWANCE
245	245	‘‘C
246	246	HAPTER4. FEDERAL ANDSTATECOOPERATIVETAXADMINISTRATION
247	247	‘‘C
248	248	HAPTER5. OTHERADMINISTRATIVEPROVISIONS
249	249	‘‘C
250	250	HAPTER6. COLLECTIONS; APPEALS; TAXPAYERRIGHTS
251	251	‘‘C
252	252	HAPTER7. SPECIALRULES
253	253	‘‘C
254	254	HAPTER8. FINANCIALINTERMEDIATION SERVICES
255	255	‘‘C
256	256	HAPTER9. ADDITIONALMATTERS
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259	259	•HR 25 IH
260	260	‘‘SEC. 1. PRINCIPLES OF INTERPRETATION. 1
261	261	‘‘(a) I
262	262	NGENERAL.—Any court, the Secretary, and 2
263	263	any sales tax administering authority shall consider the 3
264	264	purposes of this subtitle (as set forth in subsection (b)) 4
265	265	as the primary aid in statutory construction. 5
266	266	‘‘(b) P
267	267	URPOSES.—The purposes of this subtitle are 6
268	268	as follows: 7
269	269	‘‘(1) To raise revenue needed by the Federal 8
270	270	Government in a manner consistent with the other 9
271	271	purposes of this subtitle. 10
272	272	‘‘(2) To tax all consumption of goods and serv-11
273	273	ices in the United States once, without exception, 12
274	274	but only once. 13
275	275	‘‘(3) To prevent double, multiple, or cascading 14
276	276	taxation. 15
277	277	‘‘(4) To simplify the tax law and reduce the ad-16
278	278	ministration costs of, and the costs of compliance 17
279	279	with, the tax law. 18
280	280	‘‘(5) To provide for the administration of the 19
281	281	tax law in a manner that respects privacy, due proc-20
282	282	ess, individual rights when interacting with the gov-21
283	283	ernment, the presumption of innocence in criminal 22
284	284	proceedings, and the presumption of lawful behavior 23
285	285	in civil proceedings. 24
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289	289	‘‘(6) To increase the role of State governments 1
290	290	in Federal tax administration because of State gov-2
291	291	ernment expertise in sales tax administration. 3
292	292	‘‘(7) To enhance generally cooperation and co-4
293	293	ordination among State tax administrators; and to 5
294	294	enhance cooperation and coordination among Fed-6
295	295	eral and State tax administrators, consistent with 7
296	296	the principle of intergovernmental tax immunity. 8
297	297	‘‘(c) S
298	298	ECONDARYAIDS TOSTATUTORYCONSTRUC-9
299	299	TION.—As a secondary aid in statutory construction, any 10
300	300	court, the Secretary, and any sales tax administering au-11
301	301	thority shall consider— 12
302	302	‘‘(1) the common law canons of statutory con-13
303	303	struction, 14
304	304	‘‘(2) the meaning and construction of concepts 15
305	305	and terms used in the Internal Revenue Code of 16
306	306	1986 as in effect before the effective date of this 17
307	307	subtitle, and 18
308	308	‘‘(3) construe any ambiguities in this Act in 19
309	309	favor of reserving powers to the States respectively, 20
310	310	or to the people. 21
311	311	‘‘SEC. 2. DEFINITIONS. 22
312	312	‘‘(a) I
313	313	NGENERAL.—For purposes of this subtitle— 23
314	314	‘‘(1) A
315	315	FFILIATED FIRMS.—A firm is affiliated 24
316	316	with another if 1 firm owns 50 percent or more of— 25
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319	319	•HR 25 IH
320	320	‘‘(A) the voting shares in a corporation, or 1
321	321	‘‘(B) the capital interests of a business 2
322	322	firm that is not a corporation. 3
323	323	‘‘(2) C
324	324	ONFORMING STATE SALES TAX .—The 4
325	325	term ‘conforming State sales tax’ means a sales tax 5
326	326	imposed by a State that adopts the same definition 6
327	327	of taxable property and services as adopted by this 7
328	328	subtitle. 8
329	329	‘‘(3) D
330	330	ESIGNATED COMMERCIAL PRIVATE COU -9
331	331	RIER SERVICE.—The term ‘designated commercial 10
332	332	private courier service’ means a firm designated as 11
333	333	such by the Secretary or any sales tax administering 12
334	334	authority, upon application of the firm, if the firm— 13
335	335	‘‘(A) provides its services to the general 14
336	336	public, 15
337	337	‘‘(B) records electronically to its data base 16
338	338	kept in the regular course of its business the 17
339	339	date on which an item was given to such firm 18
340	340	for delivery, and 19
341	341	‘‘(C) has been operating for at least 1 20
342	342	year. 21
343	343	‘‘(4) E
344	344	DUCATION AND TRAINING .—The term 22
345	345	‘education and training’ means tuition for primary, 23
346	346	secondary, or postsecondary level education, and job- 24
347	347	related training courses. Such term does not include 25
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350	350	•HR 25 IH
351	351	room, board, sports activities, recreational activities, 1
352	352	hobbies, games, arts or crafts or cultural activities. 2
353	353	‘‘(5) G
354	354	ROSS PAYMENTS.—The term ‘gross pay-3
355	355	ments’ means payments for taxable property or serv-4
356	356	ices, including Federal taxes imposed by this title. 5
357	357	‘‘(6) I
358	358	NTANGIBLE PROPERTY .— 6
359	359	‘‘(A) I
360	360	N GENERAL.—The term ‘intangible 7
361	361	property’ includes copyrights, trademarks, pat-8
362	362	ents, goodwill, financial instruments, securities, 9
363	363	commercial paper, debts, notes and bonds, and 10
364	364	other property deemed intangible at common 11
365	365	law. The Secretary shall, by regulation resolve 12
366	366	differences among the provisions of common 13
367	367	law of the several States. 14
368	368	‘‘(B) C
369	369	ERTAIN TYPES OF PROPERTY .— 15
370	370	Such term does not include tangible personal 16
371	371	property (or rents or leaseholds of any term 17
372	372	thereon), real property (or rents or leaseholds 18
373	373	of any term thereon) and computer software. 19
374	374	‘‘(7) P
375	375	ERSON.—The term ‘person’ means any 20
376	376	natural person, and unless the context clearly does 21
377	377	not allow it, any corporation, partnership, limited li-22
378	378	ability company, trust, estate, government, agency, 23
379	379	administration, organization, association, or other 24
380	380	legal entity (foreign or domestic). 25
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383	383	•HR 25 IH
384	384	‘‘(8) PRODUCE, PROVIDE, RENDER, OR SELL 1
385	385	TAXABLE PROPERTY OR SERVICES .— 2
386	386	‘‘(A) I
387	387	N GENERAL.—A taxable property or 3
388	388	service is used to produce, provide, render, or 4
389	389	sell a taxable property or service if such prop-5
390	390	erty or service is purchased by a person en-6
391	391	gaged in a trade or business for the purpose of 7
392	392	employing or using such taxable property or 8
393	393	service in the production, provision, rendering, 9
394	394	or sale of other taxable property or services in 10
395	395	the ordinary course of that trade or business. 11
396	396	‘‘(B) R
397	397	ESEARCH, EXPERIMENTATION, 12
398	398	TESTING, AND DEVELOPMENT .—Taxable prop-13
399	399	erty or services used in a trade or business for 14
400	400	the purpose of research, experimentation, test-15
401	401	ing, and development shall be treated as used to 16
402	402	produce, provide, render, or sell taxable prop-17
403	403	erty or services. 18
404	404	‘‘(C) I
405	405	NSURANCE PAYMENTS .—Taxable 19
406	406	property or services purchased by an insurer on 20
407	407	behalf of an insured shall be treated as used to 21
408	408	produce, provide, render, or sell taxable prop-22
409	409	erty or services if the premium for the insur-23
410	410	ance contract giving rise to the insurer’s obliga-24
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413	413	•HR 25 IH
414	414	tion was subject to tax pursuant to section 801 1
415	415	(relating to financial intermediation services). 2
416	416	‘‘(D) E
417	417	DUCATION AND TRAINING .—Edu-3
418	418	cation and training shall be treated as services 4
419	419	used to produce, provide, render, or sell taxable 5
420	420	property or services. 6
421	421	‘‘(9) R
422	422	EGISTERED SELLER .—The term ‘reg-7
423	423	istered seller’ means a person registered pursuant to 8
424	424	section 502. 9
425	425	‘‘(10) S
426	426	ALES TAX ADMINISTERING AUTHOR -10
427	427	ITY.—The term ‘sales tax administering authority’ 11
428	428	means— 12
429	429	‘‘(A) the State agency designated to collect 13
430	430	and administer the sales tax imposed by this 14
431	431	subtitle, in an administering State, or 15
432	432	‘‘(B) the Secretary, in a State that is nei-16
433	433	ther— 17
434	434	‘‘(i) an administering State, nor 18
435	435	‘‘(ii) a State that has elected to have 19
436	436	its sales tax administered by an admin-20
437	437	istering State. 21
438	438	‘‘(11) S
439	439	ECRETARY.—The term ‘Secretary’ 22
440	440	means the Secretary of the Treasury. 23
441	441	‘‘(12) T
442	442	AXABLE EMPLOYER .— 24
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445	445	•HR 25 IH
446	446	‘‘(A) IN GENERAL.—The term ‘taxable em-1
447	447	ployer’ includes— 2
448	448	‘‘(i) any household employing domes-3
449	449	tic servants, and 4
450	450	‘‘(ii) any government except for gov-5
451	451	ernment enterprises (as defined in section 6
452	452	704). 7
453	453	‘‘(B) E
454	454	XCEPTIONS.—The term ‘taxable 8
455	455	employer’ does not include any employer which 9
456	456	is— 10
457	457	‘‘(i) engaged in a trade or business, 11
458	458	‘‘(ii) a not-for-profit organization (as 12
459	459	defined in section 706), or 13
460	460	‘‘(iii) a government enterprise (as de-14
461	461	fined in section 704). 15
462	462	‘‘(C) C
463	463	ROSS REFERENCE.—For rules relat-16
464	464	ing to collection and remittance of tax on wages 17
465	465	by taxable employers, see section 103(b)(2). 18
466	466	‘‘(13) T
467	467	AX INCLUSIVE FAIR MARKET VALUE .— 19
468	468	The term ‘tax inclusive fair market value’ means the 20
469	469	fair market value of taxable property or services plus 21
470	470	the tax imposed by this subtitle. 22
471	471	‘‘(14) T
472	472	AXABLE PROPERTY OR SERVICE .— 23
473	473	‘‘(A) G
474	474	ENERAL RULE.—The term ‘taxable 24
475	475	property or service’ means— 25
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478	478	•HR 25 IH
479	479	‘‘(i) any property (including leaseholds 1
480	480	of any term or rents with respect to such 2
481	481	property) but excluding— 3
482	482	‘‘(I) intangible property, and 4
483	483	‘‘(II) used property, and 5
484	484	‘‘(ii) any service (including any finan-6
485	485	cial intermediation services as determined 7
486	486	by section 801). 8
487	487	‘‘(B) S
488	488	ERVICE.—For purposes of subpara-9
489	489	graph (A), the term ‘service’— 10
490	490	‘‘(i) shall include any service per-11
491	491	formed by an employee for which the em-12
492	492	ployee is paid wages or a salary by a tax-13
493	493	able employer, and 14
494	494	‘‘(ii) shall not include any service per-15
495	495	formed by an employee for which the em-16
496	496	ployee is paid wages or a salary— 17
497	497	‘‘(I) by an employer in the reg-18
498	498	ular course of the employer’s trade or 19
499	499	business, 20
500	500	‘‘(II) by an employer that is a 21
501	501	not-for-profit organization (as defined 22
502	502	in section 706), 23
503	503	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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505	505	•HR 25 IH
506	506	‘‘(III) by an employer that is a 1
507	507	government enterprise (as defined in 2
508	508	section 704), and 3
509	509	‘‘(IV) by taxable employers to 4
510	510	employees directly providing education 5
511	511	and training. 6
512	512	‘‘(15) U
513	513	NITED STATES.—The term ‘United 7
514	514	States’, when used in the geographical sense, means 8
515	515	each of the 50 States, the District of Columbia, and 9
516	516	any commonwealth, territory, or possession of the 10
517	517	United States. 11
518	518	‘‘(16) U
519	519	SED PROPERTY.—The term ‘used prop-12
520	520	erty’ means— 13
521	521	‘‘(A) property on which the tax imposed by 14
522	522	section 101 has been collected and for which no 15
523	523	credit has been allowed under section 202, 203, 16
524	524	or 205, or 17
525	525	‘‘(B) property that was held other than for 18
526	526	a business purpose (as defined in section 19
527	527	102(b)) on December 31, 2026. 20
528	528	‘‘(17) W
529	529	AGES AND SALARY.—The terms ‘wage’ 21
530	530	and ‘salary’ mean all compensation paid for employ-22
531	531	ment service including cash compensation, employee 23
532	532	benefits, disability insurance, or wage replacement 24
533	533	insurance payments, unemployment compensation 25
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535	535	kjohnson on DSK7ZCZBW3PROD with $$_JOB 18
536	536	•HR 25 IH
537	537	insurance, workers’ compensation insurance, and the 1
538	538	fair market value of any other consideration paid by 2
539	539	an employer to an employee in consideration for em-3
540	540	ployment services rendered. 4
541	541	‘‘(b) C
542	542	ROSSREFERENCES.— 5
543	543	‘‘(1) For the definition of business purposes, 6
544	544	see section 102(b). 7
545	545	‘‘(2) For the definition of insurance contract, 8
546	546	see section 206(e). 9
547	547	‘‘(3) For the definition of qualified family, see 10
548	548	section 302. 11
549	549	‘‘(4) For the definition of monthly poverty level, 12
550	550	see section 303. 13
551	551	‘‘(5) For the definition of large seller, see sec-14
552	552	tion 501(e)(3). 15
553	553	‘‘(6) For the definition of hobby activities, see 16
554	554	section 701. 17
555	555	‘‘(7) For the definition of gaming sponsor, see 18
556	556	section 701(a). 19
557	557	‘‘(8) For the definition of a chance, see section 20
558	558	701(b). 21
559	559	‘‘(9) For the definition of government enter-22
560	560	prise, see section 704(b). 23
561	561	‘‘(10) For the definition of mixed use property, 24
562	562	see section 705. 25
563	563	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
564	564	kjohnson on DSK7ZCZBW3PROD with $$_JOB 19
565	565	•HR 25 IH
566	566	‘‘(11) For the definition of qualified not-for- 1
567	567	profit organization, see section 706. 2
568	568	‘‘(12) For the definition of financial intermedi-3
569	569	ation services, see section 801. 4
570	570	‘‘CHAPTER 1—INTERPRETATION; 5
571	571	DEFINITIONS; IMPOSITION OF TAX; ETC. 6
572	572	‘‘Sec. 101. Imposition of sales tax.
573	573	‘‘Sec. 102. Intermediate and export sales.
574	574	‘‘Sec. 103. Rules relating to collection and remittance of tax.
575	575	‘‘SEC. 101. IMPOSITION OF SALES TAX.
576	576	7
577	577	‘‘(a) I
578	578	NGENERAL.—There is hereby imposed a tax 8
579	579	on the use or consumption in the United States of taxable 9
580	580	property or services. 10
581	581	‘‘(b) R
582	582	ATE.— 11
583	583	‘‘(1) F
584	584	OR 2027.—In the calendar year 2027, the 12
585	585	rate of tax is 23 percent of the gross payments for 13
586	586	the taxable property or service. 14
587	587	‘‘(2) F
588	588	OR YEARS AFTER 2027.—For years after 15
589	589	the calendar year 2027, the rate of tax is the com-16
590	590	bined Federal tax rate percentage (as defined in 17
591	591	paragraph (3)) of the gross payments for the taxable 18
592	592	property or service. 19
593	593	‘‘(3) C
594	594	OMBINED FEDERAL TAX RATE PERCENT -20
595	595	AGE.—The combined Federal tax rate percentage is 21
596	596	the sum of— 22
597	597	‘‘(A) the general revenue rate (as defined 23
598	598	in paragraph (4)), 24
599	599	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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601	601	•HR 25 IH
602	602	‘‘(B) the old-age, survivors and disability 1
603	603	insurance rate, and 2
604	604	‘‘(C) the hospital insurance rate. 3
605	605	‘‘(4) G
606	606	ENERAL REVENUE RATE .—The general 4
607	607	revenue rate shall be 14.91 percent. 5
608	608	‘‘(c) C
609	609	OORDINATIONWITHIMPORTDUTIES.—The 6
610	610	tax imposed by this section is in addition to any import 7
611	611	duties imposed by chapter 4 of title 19, United States 8
612	612	Code. The Secretary shall provide by regulation that, to 9
613	613	the maximum extent practicable, the tax imposed by this 10
614	614	section on imported taxable property and services is col-11
615	615	lected and administered in conjunction with any applicable 12
616	616	import duties imposed by the United States. 13
617	617	‘‘(d) L
618	618	IABILITY FORTAX.— 14
619	619	‘‘(1) I
620	620	N GENERAL.—The person using or con-15
621	621	suming taxable property or services in the United 16
622	622	States is liable for the tax imposed by this section, 17
623	623	except as provided in paragraph (2) of this sub-18
624	624	section. 19
625	625	‘‘(2) E
626	626	XCEPTION WHERE TAX PAID TO SELL -20
627	627	ER.—A person using or consuming a taxable prop-21
628	628	erty or service in the United States is not liable for 22
629	629	the tax imposed by this section if the person pays 23
630	630	the tax to a person selling the taxable property or 24
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632	632	kjohnson on DSK7ZCZBW3PROD with $$_JOB 21
633	633	•HR 25 IH
634	634	service and receives from such person a purchaser’s 1
635	635	receipt within the meaning of section 509. 2
636	636	‘‘SEC. 102. INTERMEDIATE AND EXPORT SALES. 3
637	637	‘‘(a) I
638	638	NGENERAL.—For purposes of this subtitle— 4
639	639	‘‘(1) B
640	640	USINESS AND EXPORT PURPOSES .—No 5
641	641	tax shall be imposed under section 101 on any tax-6
642	642	able property or service purchased for a business 7
643	643	purpose in a trade or business. 8
644	644	‘‘(2) I
645	645	NVESTMENT PURPOSE .—No tax shall be 9
646	646	imposed under section 101 on any taxable property 10
647	647	or service purchased for an investment purpose and 11
648	648	held exclusively for an investment purpose. 12
649	649	‘‘(3) S
650	650	TATE GOVERNMENT FUNCTIONS .—No tax 13
651	651	shall be imposed under section 101 on State govern-14
652	652	ment functions that do not constitute the final con-15
653	653	sumption of property or services. 16
654	654	‘‘(b) B
655	655	USINESSPURPOSES.—For purposes of this 17
656	656	section, the term ‘purchased for a business purpose in a 18
657	657	trade or business’ means purchased by a person engaged 19
658	658	in a trade or business and used in that trade or business— 20
659	659	‘‘(1) for resale, 21
660	660	‘‘(2) to produce, provide, render, or sell taxable 22
661	661	property or services, or 23
662	662	‘‘(3) in furtherance of other bona fide business 24
663	663	purposes. 25
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666	666	•HR 25 IH
667	667	‘‘(c) INVESTMENTPURPOSES.—For purposes of this 1
668	668	section, the term ‘purchased for an investment purpose’ 2
669	669	means property purchased exclusively for purposes of ap-3
670	670	preciation or the production of income but not entailing 4
671	671	more than minor personal efforts. 5
672	672	‘‘SEC. 103. RULES RELATING TO COLLECTION AND REMIT-6
673	673	TANCE OF TAX. 7
674	674	‘‘(a) L
675	675	IABILITY FORCOLLECTION ANDREMITTANCE 8
676	676	OF THETAX.—Except as provided otherwise by this sec-9
677	677	tion, any tax imposed by this subtitle shall be collected 10
678	678	and remitted by the seller of taxable property or services 11
679	679	(including financial intermediation services). 12
680	680	‘‘(b) T
681	681	AXTOBEREMITTED BYPURCHASER INCER-13
682	682	TAINCIRCUMSTANCES.— 14
683	683	‘‘(1) I
684	684	N GENERAL.—In the case of taxable prop-15
685	685	erty or services purchased outside of the United 16
686	686	States and imported into the United States for use 17
687	687	or consumption in the United States, the purchaser 18
688	688	shall remit the tax imposed by section 101. 19
689	689	‘‘(2) C
690	690	ERTAIN WAGES OR SALARY .—In the case 20
691	691	of wages or salary paid by a taxable employer which 21
692	692	are taxable services, the employer shall remit the tax 22
693	693	imposed by section 101. 23
694	694	‘‘(c) C
695	695	ONVERSION OFBUSINESS OREXPORTPROP-24
696	696	ERTY ORSERVICES.—Property or services purchased for 25
697	697	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
698	698	kjohnson on DSK7ZCZBW3PROD with $$_JOB 23
699	699	•HR 25 IH
700	700	a business purpose in a trade or business or for export 1
701	701	(sold untaxed pursuant to section 102(a)) that is subse-2
702	702	quently converted to personal use shall be deemed pur-3
703	703	chased at the time of conversion and shall be subject to 4
704	704	the tax imposed by section 101 at the fair market value 5
705	705	of the converted property as of the date of conversion. The 6
706	706	tax shall be due as if the property had been sold at the 7
707	707	fair market value during the month of conversion. The 8
708	708	person using or consuming the converted property is liable 9
709	709	for and shall remit the tax. 10
710	710	‘‘(d) B
711	711	ARTERTRANSACTIONS.—If gross payment for 11
712	712	taxable property or services is made in other than money, 12
713	713	then the person responsible for collecting and remitting 13
714	714	the tax shall remit the tax to the sales tax administering 14
715	715	authority in money as if gross payment had been made 15
716	716	in money at the tax inclusive fair market value of the tax-16
717	717	able property or services purchased. 17
718	718	‘‘CHAPTER 2—CREDITS; REFUNDS 18
719	719	‘‘Sec. 201. Credits and refunds.
720	720	‘‘Sec. 202. Business use conversion credit.
721	721	‘‘Sec. 203. Intermediate and export sales credit.
722	722	‘‘Sec. 204. Administration credit.
723	723	‘‘Sec. 205. Bad debt credit.
724	724	‘‘Sec. 206. Insurance proceeds credit.
725	725	‘‘Sec. 207. Refunds.
726	726	‘‘SEC. 201. CREDITS AND REFUNDS.
727	727	19
728	728	‘‘(a) I
729	729	NGENERAL.—Each person shall be allowed a 20
730	730	credit with respect to the taxes imposed by section 101 21
731	731	for each month in an amount equal to the sum of— 22
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734	734	•HR 25 IH
735	735	‘‘(1) such person’s business use conversion 1
736	736	credit pursuant to section 202 for such month, 2
737	737	‘‘(2) such person’s intermediate and export 3
738	738	sales credit pursuant to section 203 for such month, 4
739	739	‘‘(3) the administration credit pursuant to sec-5
740	740	tion 204 for such month, 6
741	741	‘‘(4) the bad debt credit pursuant to section 7
742	742	205 for such month, 8
743	743	‘‘(5) the insurance proceeds credit pursuant to 9
744	744	section 206 for such month, 10
745	745	‘‘(6) the transitional inventory credit pursuant 11
746	746	to section 902, and 12
747	747	‘‘(7) any amount paid in excess of the amount 13
748	748	due. 14
749	749	‘‘(b) C
750	750	REDITSNOTADDITIVE.—Only one credit al-15
751	751	lowed by chapter 2 may be taken with respect to any par-16
752	752	ticular gross payment. 17
753	753	‘‘SEC. 202. BUSINESS USE CONVERSION CREDIT. 18
754	754	‘‘(a) I
755	755	NGENERAL.—For purposes of section 201, a 19
756	756	person’s business use conversion credit for any month is 20
757	757	the aggregate of the amounts determined under subsection 21
758	758	(b) with respect to taxable property and services— 22
759	759	‘‘(1) on which tax was imposed by section 101 23
760	760	(and actually paid), and 24
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763	763	•HR 25 IH
764	764	‘‘(2) which commenced to be 95 percent or 1
765	765	more used during such month for business purposes 2
766	766	(within the meaning of section 102(b)). 3
767	767	‘‘(b) A
768	768	MOUNT OFCREDIT.—The amount determined 4
769	769	under this paragraph with respect to any taxable property 5
770	770	or service is the lesser of— 6
771	771	‘‘(1) the product of— 7
772	772	‘‘(A) the rate imposed by section 101, and 8
773	773	‘‘(B) the quotient that is— 9
774	774	‘‘(i) the fair market value of the prop-10
775	775	erty or service when its use is converted, 11
776	776	divided by 12
777	777	‘‘(ii) the quantity that is one minus 13
778	778	the tax rate imposed by section 101, or 14
779	779	‘‘(2) the amount of tax paid with respect to 15
780	780	such taxable property or service, including the 16
781	781	amount, if any, determined in accordance with sec-17
782	782	tion 705 (relating to mixed use property). 18
783	783	‘‘SEC. 203. INTERMEDIATE AND EXPORT SALES CREDIT. 19
784	784	‘‘For purposes of section 201, a person’s intermediate 20
785	785	and export sales credit is the amount of sales tax paid 21
786	786	on the purchase of any taxable property or service pur-22
787	787	chased for— 23
788	788	‘‘(1) a business purpose in a trade or business 24
789	789	(as defined in section 102(b)), or 25
790	790	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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792	792	•HR 25 IH
793	793	‘‘(2) export from the United States for use or 1
794	794	consumption outside the United States. 2
795	795	‘‘SEC. 204. ADMINISTRATION CREDIT. 3
796	796	‘‘(a) I
797	797	NGENERAL.—Every person filing a timely 4
798	798	monthly report (with regard to extensions) in compliance 5
799	799	with section 501 shall be entitled to a taxpayer adminis-6
800	800	trative credit equal to the greater of— 7
801	801	‘‘(1) $200, or 8
802	802	‘‘(2) one-quarter of 1 percent of the tax remit-9
803	803	ted. 10
804	804	‘‘(b) L
805	805	IMITATION.—The credit allowed under this sec-11
806	806	tion shall not exceed 20 percent of the tax due to be remit-12
807	807	ted prior to the application of any credit or credits per-13
808	808	mitted by section 201. 14
809	809	‘‘SEC. 205. BAD DEBT CREDIT. 15
810	810	‘‘(a) F
811	811	INANCIALINTERMEDIATION SERVICES.—Any 16
812	812	person who has experienced a bad debt (other than unpaid 17
813	813	invoices within the meaning of subsection (b)) shall be en-18
814	814	titled to a credit equal to the product of— 19
815	815	‘‘(1) the rate imposed by section 101, and 20
816	816	‘‘(2) the quotient that is— 21
817	817	‘‘(A) the amount of the bad debt (as de-22
818	818	fined in section 802), divided by 23
819	819	‘‘(B) the quantity that is one minus the 24
820	820	rate imposed by section 101. 25
821	821	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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823	823	•HR 25 IH
824	824	‘‘(b) UNPAIDINVOICES.—Any person electing the ac-1
825	825	crual method pursuant to section 503 that has with re-2
826	826	spect to a transaction— 3
827	827	‘‘(1) invoiced the tax imposed by section 101, 4
828	828	‘‘(2) remitted the invoiced tax, 5
829	829	‘‘(3) actually delivered the taxable property or 6
830	830	performed the taxable services invoiced, and 7
831	831	‘‘(4) not been paid 180 days after date the in-8
832	832	voice was due to be paid, 9
833	833	shall be entitled to a credit equal to the amount of tax 10
834	834	remitted and unpaid by the purchaser. 11
835	835	‘‘(c) S
836	836	UBSEQUENTPAYMENT.—Any payment made 12
837	837	with respect to a transaction subsequent to a section 205 13
838	838	credit being taken with respect to that transaction shall 14
839	839	be subject to tax in the month the payment was received 15
840	840	as if a tax inclusive sale of taxable property and services 16
841	841	in the amount of the payment had been made. 17
842	842	‘‘(d) P
843	843	ARTIALPAYMENTS.—Partial payments shall 18
844	844	be treated as pro rata payments of the underlying obliga-19
845	845	tion and shall be allocated proportionately— 20
846	846	‘‘(1) for fully taxable payments, between pay-21
847	847	ment for the taxable property and service and tax, 22
848	848	and 23
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851	851	•HR 25 IH
852	852	‘‘(2) for partially taxable payments, among pay-1
853	853	ment for the taxable property and service, tax and 2
854	854	other payment. 3
855	855	‘‘(e) R
856	856	ELATEDPARTIES.—The credit provided by this 4
857	857	section shall not be available with respect to sales made 5
858	858	to related parties. For purposes of this section, related 6
859	859	party means affiliated firms and family members (as de-7
860	860	fined in section 302(b)). 8
861	861	‘‘SEC. 206. INSURANCE PROCEEDS CREDIT. 9
862	862	‘‘(a) I
863	863	NGENERAL.—A person receiving a payment 10
864	864	from an insurer by virtue of an insurance contract shall 11
865	865	be entitled to a credit in an amount determined by sub-12
866	866	section (b), less any amount paid to the insured by the 13
867	867	insurer pursuant to subsection (c), if the entire premium 14
868	868	(except that portion allocable to the investment account 15
869	869	of the underlying policy) for the insurance contract giving 16
870	870	rise to the insurer’s obligation to make a payment to the 17
871	871	insured was subject to the tax imposed by section 101 and 18
872	872	said tax was paid. 19
873	873	‘‘(b) C
874	874	REDITAMOUNT.—The amount of the credit 20
875	875	shall be the product of— 21
876	876	‘‘(1) the rate imposed by section 101, and 22
877	877	‘‘(2) the quotient that is— 23
878	878	‘‘(A) the amount of the payment made by 24
879	879	the insurer to the insured, divided by 25
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882	882	•HR 25 IH
883	883	‘‘(B) the quantity that is one minus the 1
884	884	rate imposed by section 101. 2
885	885	‘‘(c) A
886	886	DMINISTRATIVEOPTION.—The credit deter-3
887	887	mined in accordance with subsection (b) shall be paid by 4
888	888	the insurer to the insured and the insurer shall be entitled 5
889	889	to the credit in lieu of the insured, except that the insurer 6
890	890	may elect, in a form prescribed by the Secretary, to not 7
891	891	pay the credit and require the insured to make application 8
892	892	for the credit. In the event of such election, the insurer 9
893	893	shall provide to the Secretary and the insured the name 10
894	894	and tax identification number of the insurer and of the 11
895	895	insured and indicate the proper amount of the credit. 12
896	896	‘‘(d) C
897	897	OORDINATIONWITHRESPECT TOEXEMP-13
898	898	TION.—If taxable property or services purchased by an in-14
899	899	surer on behalf of an insured are purchased free of tax 15
900	900	by virtue of section 2(a)(8)(C), then the credit provided 16
901	901	by this section shall not be available with respect to that 17
902	902	purchase. 18
903	903	‘‘(e) I
904	904	NSURANCECONTRACT.—For purposes of sub-19
905	905	section (a), the term ‘insurance contract’ shall include a 20
906	906	life insurance contract, a health insurance contract, a 21
907	907	property and casualty loss insurance contract, a general 22
908	908	liability insurance contract, a marine insurance contract, 23
909	909	a fire insurance contract, an accident insurance contract, 24
910	910	a disability insurance contract, a long-term care insurance 25
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913	913	•HR 25 IH
914	914	contract, and an insurance contract that provides a com-1
915	915	bination of these types of insurance. 2
916	916	‘‘SEC. 207. REFUNDS. 3
917	917	‘‘(a) R
918	918	EGISTEREDSELLERS.—If a registered seller 4
919	919	files a monthly tax report with an overpayment, then, 5
920	920	upon application by the registered seller in a form pre-6
921	921	scribed by the sales tax administering authority, the over-7
922	922	payment shown on the report shall be refunded to the reg-8
923	923	istered seller within 60 days of receipt of said application. 9
924	924	In the absence of such application, the overpayment may 10
925	925	be carried forward, without interest, by the person entitled 11
926	926	to the credit. 12
927	927	‘‘(b) O
928	928	THERPERSONS.—If a person other than a reg-13
929	929	istered seller has an overpayment for any month, then, 14
930	930	upon application by the person in a form prescribed by 15
931	931	the sales tax administering authority, the credit balance 16
932	932	due shall be refunded to the person within 60 days of re-17
933	933	ceipt of said application. 18
934	934	‘‘(c) I
935	935	NTEREST.—No interest shall be paid on any 19
936	936	balance due from the sales tax administering authority 20
937	937	under this subsection for any month if such balance due 21
938	938	is paid within 60 days after the application for refund is 22
939	939	received. Balances due not paid within 60 days after the 23
940	940	application for refund is received shall bear interest from 24
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943	943	•HR 25 IH
944	944	the date of application. Interest shall be paid at the Fed-1
945	945	eral short-term rate (as defined in section 511). 2
946	946	‘‘(d) S
947	947	USPENSION OF PERIODTOPAYREFUND 3
948	948	O
949	949	NLY IFFEDERAL ORSTATECOURTRULING.—The 60- 4
950	950	day periods under subsections (a) and (b) shall be sus-5
951	951	pended with respect to a purported overpayment (or por-6
952	952	tion thereof) only during any period that there is in effect 7
953	953	a preliminary, temporary, or final ruling from a Federal 8
954	954	or State court that there is reasonable cause to believe 9
955	955	that such overpayment may not actually be due. 10
956	956	‘‘CHAPTER 3—FAMILY CONSUMPTION 11
957	957	ALLOWANCE 12
958	958	‘‘Sec. 301. Family consumption allowance.
959	959	‘‘Sec. 302. Qualified family.
960	960	‘‘Sec. 303. Monthly poverty level.
961	961	‘‘Sec. 304. Rebate mechanism.
962	962	‘‘Sec. 305. Change in family circumstances.
963	963	‘‘SEC. 301. FAMILY CONSUMPTION ALLOWANCE.
964	964	13
965	965	‘‘Each qualified family shall be eligible to receive a 14
966	966	sales tax rebate each month. The sales tax rebate shall 15
967	967	be in an amount equal to the product of— 16
968	968	‘‘(1) the rate of tax imposed by section 101, 17
969	969	and 18
970	970	‘‘(2) the monthly poverty level. 19
971	971	‘‘SEC. 302. QUALIFIED FAMILY. 20
972	972	‘‘(a) G
973	973	ENERALRULE.—For purposes of this chapter, 21
974	974	the term ‘qualified family’ shall mean one or more family 22
975	975	members sharing a common residence. All family members 23
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978	978	•HR 25 IH
979	979	sharing a common residence shall be considered as part 1
980	980	of one qualified family. 2
981	981	‘‘(b) F
982	982	AMILYSIZEDETERMINATION.— 3
983	983	‘‘(1) I
984	984	N GENERAL.—To determine the size of a 4
985	985	qualified family for purposes of this chapter, family 5
986	986	members shall mean— 6
987	987	‘‘(A) an individual, 7
988	988	‘‘(B) the individual’s spouse, 8
989	989	‘‘(C) all lineal ancestors and descendants 9
990	990	of said individual (and such individual’s 10
991	991	spouse), 11
992	992	‘‘(D) all legally adopted children of such 12
993	993	individual (and such individual’s spouse), and 13
994	994	‘‘(E) all children under legal guardianship 14
995	995	of such individual (or such individual’s spouse). 15
996	996	‘‘(2) I
997	997	DENTIFICATION REQUIREMENTS .—In 16
998	998	order for a person to be counted as a member of the 17
999	999	family for purposes of determining the size of the 18
1000	1000	qualified family, such person must— 19
1001	1001	‘‘(A) have a bona fide Social Security num-20
1002	1002	ber, and 21
1003	1003	‘‘(B) be a lawful resident of the United 22
1004	1004	States. 23
1005	1005	‘‘(c) C
1006	1006	HILDRENLIVINGAWAYFROMHOME.— 24
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1009	1009	•HR 25 IH
1010	1010	‘‘(1) STUDENTS LIVING AWAY FROM HOME .— 1
1011	1011	Any person who was a registered student during not 2
1012	1012	fewer than 5 months in a calendar year while living 3
1013	1013	away from the common residence of a qualified fam-4
1014	1014	ily but who receives over 50 percent of such person’s 5
1015	1015	support during a calendar year from members of the 6
1016	1016	qualified family shall be included as part of the fam-7
1017	1017	ily unit whose members provided said support for 8
1018	1018	purposes of this chapter. 9
1019	1019	‘‘(2) C
1020	1020	HILDREN OF DIVORCED OR SEPARATED 10
1021	1021	PARENTS.—If a child’s parents are divorced or le-11
1022	1022	gally separated, a child for purposes of this chapter 12
1023	1023	shall be treated as part of the qualified family of the 13
1024	1024	custodial parent. In cases of joint custody, the custo-14
1025	1025	dial parent for purposes of this chapter shall be the 15
1026	1026	parent that has custody of the child for more than 16
1027	1027	one-half of the time during a given calendar year. A 17
1028	1028	parent entitled to be treated as the custodial parent 18
1029	1029	pursuant to this paragraph may release this claim to 19
1030	1030	the other parent if said release is in writing. 20
1031	1031	‘‘(d) A
1032	1032	NNUALREGISTRATION.—In order to receive 21
1033	1033	the family consumption allowance provided by section 301, 22
1034	1034	a qualified family must register with the sales tax admin-23
1035	1035	istering authority in a form prescribed by the Secretary. 24
1036	1036	The annual registration form shall provide— 25
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1039	1039	•HR 25 IH
1040	1040	‘‘(1) the name of each family member who 1
1041	1041	shared the qualified family’s residence on the family 2
1042	1042	determination date, 3
1043	1043	‘‘(2) the Social Security number of each family 4
1044	1044	member on the family determination date who 5
1045	1045	shared the qualified family’s residence on the family 6
1046	1046	determination date, 7
1047	1047	‘‘(3) the family member or family members to 8
1048	1048	whom the family consumption allowance should be 9
1049	1049	paid, 10
1050	1050	‘‘(4) a certification that all listed family mem-11
1051	1051	bers are lawful residents of the United States, 12
1052	1052	‘‘(5) a certification that all family members 13
1053	1053	sharing the common residence are listed, 14
1054	1054	‘‘(6) a certification that no family members 15
1055	1055	were incarcerated on the family determination date 16
1056	1056	(within the meaning of subsection (l)), and 17
1057	1057	‘‘(7) the address of the qualified family. 18
1058	1058	Said registration shall be signed by all members of the 19
1059	1059	qualified family that have attained the age of 21 years 20
1060	1060	as of the date of filing. 21
1061	1061	‘‘(e) R
1062	1062	EGISTRATIONNOTMANDATORY.—Registra-22
1063	1063	tion is not mandatory for any qualified family. 23
1064	1064	‘‘(f) E
1065	1065	FFECT OFFAILURETOPROVIDEANNUAL 24
1066	1066	R
1067	1067	EGISTRATION.—Any qualified family that fails to reg-25
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1070	1070	•HR 25 IH
1071	1071	ister in accordance with this section within 30 days of the 1
1072	1072	family determination date, shall cease receiving the 2
1073	1073	monthly family consumption allowance in the month be-3
1074	1074	ginning 90 days after the family determination date. 4
1075	1075	‘‘(g) E
1076	1076	FFECT OFCURINGFAILURETOPROVIDEAN-5
1077	1077	NUALREGISTRATION.—Any qualified family that failed to 6
1078	1078	timely make its annual registration in accordance with this 7
1079	1079	section but subsequently cures its failure to register, shall 8
1080	1080	be entitled to up to 6 months of lapsed sales tax rebate 9
1081	1081	payments. No interest on lapsed payment amount shall be 10
1082	1082	paid. 11
1083	1083	‘‘(h) E
1084	1084	FFECTIVEDATE OFANNUALREGISTRA-12
1085	1085	TIONS.—Annual registrations shall take effect for the 13
1086	1086	month beginning 90 days after the family registration 14
1087	1087	date. 15
1088	1088	‘‘(i) E
1089	1089	FFECTIVEDATE OFREVISEDREGISTRA-16
1090	1090	TIONS.—A revised registration made pursuant to section 17
1091	1091	305 shall take effect for the first month beginning 60 days 18
1092	1092	after the revised registration was filed. The existing reg-19
1093	1093	istration shall remain in effect until the effective date of 20
1094	1094	the revised registration. 21
1095	1095	‘‘(j) D
1096	1096	ETERMINATION OF REGISTRATIONFILING 22
1097	1097	D
1098	1098	ATE.—An annual or revised registration shall be deemed 23
1099	1099	filed when— 24
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1102	1102	•HR 25 IH
1103	1103	‘‘(1) deposited in the United States mail, post-1
1104	1104	age prepaid, to the address of the sales tax admin-2
1105	1105	istering authority, 3
1106	1106	‘‘(2) delivered and accepted at the offices of the 4
1107	1107	sales tax administering authority, or 5
1108	1108	‘‘(3) provided to a designated commercial pri-6
1109	1109	vate courier service for delivery within 2 days to the 7
1110	1110	sales tax administering authority at the address of 8
1111	1111	the sales tax administering authority. 9
1112	1112	‘‘(k) P
1113	1113	ROPOSEDREGISTRATIONTOBEPROVIDED.— 10
1114	1114	Thirty or more days before the family registration date, 11
1115	1115	the sales tax administering authority shall mail to the ad-12
1116	1116	dress shown on the most recent rebate registration or 13
1117	1117	change of address notice filed pursuant to section 305(d) 14
1118	1118	a proposed registration that may be simply signed by the 15
1119	1119	appropriate family members if family circumstances have 16
1120	1120	not changed. 17
1121	1121	‘‘(l) I
1122	1122	NCARCERATED INDIVIDUALS.—An individual 18
1123	1123	shall not be eligible under this chapter to be included as 19
1124	1124	a member of any qualified family if that individual— 20
1125	1125	‘‘(1) is incarcerated in a local, State, or Federal 21
1126	1126	jail, prison, mental hospital, or other institution on 22
1127	1127	the family determination date, and 23
1128	1128	‘‘(2) is scheduled to be incarcerated for 6 24
1129	1129	months or more in the 12-month period following 25
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1132	1132	•HR 25 IH
1133	1133	the effective date of the annual registration or the 1
1134	1134	revised registration of said qualified family. 2
1135	1135	‘‘(m) F
1136	1136	AMILYDETERMINATIONDATE.—The family 3
1137	1137	determination date is a date assigned to each family by 4
1138	1138	the Secretary for purposes of determining qualified family 5
1139	1139	size and other information necessary for the administra-6
1140	1140	tion of this chapter. The Secretary shall promulgate regu-7
1141	1141	lations regarding the issuance of family determination 8
1142	1142	dates. In the absence of any regulations, the family deter-9
1143	1143	mination date for all families shall be October 1. The Sec-10
1144	1144	retary may assign family determination dates for adminis-11
1145	1145	trative convenience. Permissible means of assigning family 12
1146	1146	determination dates include a method based on the birth 13
1147	1147	dates of family members. 14
1148	1148	‘‘(n) C
1149	1149	ROSSREFERENCE.—For penalty for filing 15
1150	1150	false rebate claim, see section 504(i). 16
1151	1151	‘‘SEC. 303. MONTHLY POVERTY LEVEL. 17
1152	1152	‘‘(a) I
1153	1153	NGENERAL.—The monthly poverty level for 18
1154	1154	any particular month shall be one-twelfth of the ‘annual 19
1155	1155	poverty level’. For purposes of this section the ‘annual 20
1156	1156	poverty level’ shall be the sum of— 21
1157	1157	‘‘(1) the annual level determined by the Depart-22
1158	1158	ment of Health and Human Services poverty guide-23
1159	1159	lines required by sections 652 and 673(2) of the 24
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1162	1162	•HR 25 IH
1163	1163	Omnibus Reconciliation Act of 1981 for a particular 1
1164	1164	family size, and 2
1165	1165	‘‘(2) in case of families that include a married 3
1166	1166	couple, the ‘annual marriage penalty elimination 4
1167	1167	amount’. 5
1168	1168	‘‘(b) A
1169	1169	NNUALMARRIAGEPENALTYELIMINATION 6
1170	1170	A
1171	1171	MOUNT.—The annual marriage penalty elimination 7
1172	1172	amount shall be the amount that is— 8
1173	1173	‘‘(1) the amount that is two times the annual 9
1174	1174	level determined by the Department of Health and 10
1175	1175	Human Services poverty guidelines required by sec-11
1176	1176	tions 652 and 673(2) of the Omnibus Reconciliation 12
1177	1177	Act of 1981 for a family of one, less 13
1178	1178	‘‘(2) the annual level determined by the Depart-14
1179	1179	ment of Health and Human Services poverty guide-15
1180	1180	lines required by sections 652 and 673(2) of the 16
1181	1181	Omnibus Reconciliation Act of 1981 for a family of 17
1182	1182	two. 18
1183	1183	‘‘SEC. 304. REBATE MECHANISM. 19
1184	1184	‘‘(a) G
1185	1185	ENERALRULE.—The Social Security Adminis-20
1186	1186	tration shall provide a monthly sales tax rebate to duly 21
1187	1187	registered qualified families in an amount determined in 22
1188	1188	accordance with section 301. 23
1189	1189	‘‘(b) P
1190	1190	ERSONSRECEIVINGREBATE.—The payments 24
1191	1191	shall be made to the persons designated by the qualifying 25
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1194	1194	•HR 25 IH
1195	1195	family in the annual or revised registration for each quali-1
1196	1196	fied family in effect with respect to the month for which 2
1197	1197	payment is being made. Payments may only be made to 3
1198	1198	persons 18 years or older. If more than 1 person is des-4
1199	1199	ignated in a registration to receive the rebate, then the 5
1200	1200	rebate payment shall be divided evenly between or among 6
1201	1201	those persons designated. 7
1202	1202	‘‘(c) W
1203	1203	HENREBATESMAILED.—Rebates shall be 8
1204	1204	mailed on or before the first business day of the month 9
1205	1205	for which the rebate is being provided. 10
1206	1206	‘‘(d) S
1207	1207	MARTCARDS ANDDIRECTELECTRONICDE-11
1208	1208	POSITPERMISSIBLE.—The Social Security Administration 12
1209	1209	may provide rebates in the form of smart cards that carry 13
1210	1210	cash balances in their memory for use in making pur-14
1211	1211	chases at retail establishments or by direct electronic de-15
1212	1212	posit. 16
1213	1213	‘‘SEC. 305. CHANGE IN FAMILY CIRCUMSTANCES. 17
1214	1214	‘‘(a) G
1215	1215	ENERALRULE.—In the absence of the filing 18
1216	1216	of a revised registration in accordance with this chapter, 19
1217	1217	the common residence of the qualified family, marital sta-20
1218	1218	tus and number of persons in a qualified family on the 21
1219	1219	family registration date shall govern determinations re-22
1220	1220	quired to be made under this chapter for purposes of the 23
1221	1221	following calendar year. 24
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1224	1224	•HR 25 IH
1225	1225	‘‘(b) NODOUBLECOUNTING.—In no event shall any 1
1226	1226	person be considered part of more than one qualified fam-2
1227	1227	ily. 3
1228	1228	‘‘(c) R
1229	1229	EVISEDREGISTRATION PERMISSIBLE.—A 4
1230	1230	qualified family may file a revised registration for pur-5
1231	1231	poses of section 302(d) to reflect a change in family cir-6
1232	1232	cumstances. A revised registration form shall provide— 7
1233	1233	‘‘(1) the name of each family member who 8
1234	1234	shared the qualified family’s residence on the filing 9
1235	1235	date of the revised registration, 10
1236	1236	‘‘(2) the Social Security number of each family 11
1237	1237	member who shared the qualified family’s residence 12
1238	1238	on the filing date of the revised registration, 13
1239	1239	‘‘(3) the family member or family members to 14
1240	1240	whom the family consumption allowance should be 15
1241	1241	paid, 16
1242	1242	‘‘(4) a certification that all listed family mem-17
1243	1243	bers are lawful residents of the United States, 18
1244	1244	‘‘(5) a certification that all family members 19
1245	1245	sharing the commoner residence are listed, 20
1246	1246	‘‘(6) a certification that no family members 21
1247	1247	were incarcerated on the family determination date 22
1248	1248	(within the meaning of section 302(1)), and 23
1249	1249	‘‘(7) the address of the qualified family. 24
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1252	1252	•HR 25 IH
1253	1253	Said revised registration shall be signed by all members 1
1254	1254	of the qualified family that have attained the age of 21 2
1255	1255	years as of the filing date of the revised registration. 3
1256	1256	‘‘(d) C
1257	1257	HANGE OFADDRESS.—A change of address for 4
1258	1258	a qualified family may be filed with the sales tax admin-5
1259	1259	istering authority at any time and shall not constitute a 6
1260	1260	revised registration. 7
1261	1261	‘‘(e) R
1262	1262	EVISEDREGISTRATIONNOTMANDATORY.— 8
1263	1263	Revised registrations reflecting changes in family status 9
1264	1264	are not mandatory. 10
1265	1265	‘‘CHAPTER 4—FEDERAL AND STATE 11
1266	1266	COOPERATIVE TAX ADMINISTRATION 12
1267	1267	‘‘Sec. 401. Authority for States to collect tax.
1268	1268	‘‘Sec. 402. Federal administrative support for States.
1269	1269	‘‘Sec. 403. Federal-State tax conferences.
1270	1270	‘‘Sec. 404. Federal administration in certain States.
1271	1271	‘‘Sec. 405. Interstate allocation and destination determination.
1272	1272	‘‘Sec. 406. General administrative matters.
1273	1273	‘‘Sec. 407. Jurisdiction.
1274	1274	‘‘SEC. 401. AUTHORITY FOR STATES TO COLLECT TAX.
1275	1275	13
1276	1276	‘‘(a) I
1277	1277	NGENERAL.—The tax imposed by section 101 14
1278	1278	on gross payments for the use or consumption of taxable 15
1279	1279	property or services within a State shall be administered, 16
1280	1280	collected, and remitted to the United States Treasury by 17
1281	1281	such State if the State is an administering State. 18
1282	1282	‘‘(b) A
1283	1283	DMINISTERINGSTATE.—For purposes of this 19
1284	1284	section, the term ‘administering State’ means any State— 20
1285	1285	‘‘(1) which maintains a sales tax, and 21
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1288	1288	•HR 25 IH
1289	1289	‘‘(2) which enters into a cooperative agreement 1
1290	1290	with the Secretary containing reasonable provisions 2
1291	1291	governing the administration by such State of the 3
1292	1292	taxes imposed by the subtitle and the remittance to 4
1293	1293	the United States in a timely manner of taxes col-5
1294	1294	lected under this chapter. 6
1295	1295	‘‘(c) C
1296	1296	OOPERATIVEAGREEMENTS.—The agreement 7
1297	1297	under subsection (b)(2) shall include provisions for the ex-8
1298	1298	peditious transfer of funds, contact officers, dispute reso-9
1299	1299	lution, information exchange, confidentiality, taxpayer 10
1300	1300	rights, and other matters of importance. The agreement 11
1301	1301	shall not contain extraneous matters. 12
1302	1302	‘‘(d) T
1303	1303	IMELYREMITTANCE OFTAX.— 13
1304	1304	‘‘(1) I
1305	1305	N GENERAL.—Administering States shall 14
1306	1306	remit and pay over taxes collected under this subtitle 15
1307	1307	on behalf of the United States (less the administra-16
1308	1308	tion fee allowable under paragraph (2)) not later 17
1309	1309	than 5 days after receipt. Interest at 150 percent of 18
1310	1310	the Federal short-term rate shall be paid with re-19
1311	1311	spect to amounts remitted after the due date. 20
1312	1312	‘‘(2) A
1313	1313	DMINISTRATION FEE.—An administering 21
1314	1314	State may retain an administration fee equal to one- 22
1315	1315	quarter of 1 percent of the amounts otherwise re-23
1316	1316	quired to be remitted to the United States under 24
1317	1317	this chapter by the administering State. 25
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1320	1320	•HR 25 IH
1321	1321	‘‘(e) LIMITATION ONADMINISTRATION OF TAX BY 1
1322	1322	U
1323	1323	NITEDSTATES.—The Secretary may administer the tax 2
1324	1324	imposed by this subtitle in an administering State only 3
1325	1325	if— 4
1326	1326	‘‘(1)(A) such State has failed on a regular basis 5
1327	1327	to timely remit to the United States taxes collected 6
1328	1328	under this chapter on behalf of the United States, 7
1329	1329	or 8
1330	1330	‘‘(B) such State has on a regular basis other-9
1331	1331	wise materially breached the agreement referred to 10
1332	1332	in subsection (b)(2), 11
1333	1333	‘‘(2) the State has failed to cure such alleged 12
1334	1334	failures and breaches within a reasonable time, 13
1335	1335	‘‘(3) the Secretary provides such State with 14
1336	1336	written notice of such alleged failures and breaches, 15
1337	1337	and 16
1338	1338	‘‘(4) a District Court of the United States with-17
1339	1339	in such State, upon application of the Secretary, has 18
1340	1340	rendered a decision— 19
1341	1341	‘‘(A) making findings of fact that— 20
1342	1342	‘‘(i) such State has failed on a regular 21
1343	1343	basis to timely remit to the United States 22
1344	1344	taxes collected under this chapter on behalf 23
1345	1345	of the United States, or such State has on 24
1346	1346	a regular basis otherwise materially 25
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1349	1349	•HR 25 IH
1350	1350	breached the agreement referred to in sub-1
1351	1351	section (b)(2), 2
1352	1352	‘‘(ii) the Secretary has provided such 3
1353	1353	State with written notice of such alleged 4
1354	1354	failures and breaches, and 5
1355	1355	‘‘(iii) the State has failed to cure such 6
1356	1356	alleged failures and breaches within a rea-7
1357	1357	sonable time, and 8
1358	1358	‘‘(B) making a determination that it is in 9
1359	1359	the best interest of the citizens of the United 10
1360	1360	States that the administering State’s authority 11
1361	1361	to administer the tax imposed by this subtitle 12
1362	1362	be revoked and said tax be administered di-13
1363	1363	rectly by the Secretary. 14
1364	1364	The order of the District Court revoking the author-15
1365	1365	ity of an Administering State shall contain provi-16
1366	1366	sions governing the orderly transfer of authority to 17
1367	1367	the Secretary. 18
1368	1368	‘‘(f) R
1369	1369	EINSTITUTION.—A State that has had its au-19
1370	1370	thority revoked pursuant to subsection (e) shall not be an 20
1371	1371	administering State for a period of not less than 5 years 21
1372	1372	after the date of the order of revocation. For the first cal-22
1373	1373	endar year commencing 8 years after the date of the order 23
1374	1374	of revocation, the State shall be regarded without preju-24
1375	1375	dice as eligible to become an administering State. 25
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1378	1378	•HR 25 IH
1379	1379	‘‘(g) THIRDSTATEADMINISTRATION PERMIS-1
1380	1380	SIBLE.—It shall be permissible for a State to contract with 2
1381	1381	an administering State to administer the State’s sales tax 3
1382	1382	for an agreed fee. In this case, the agreement con-4
1383	1383	templated by subsection (c) shall have both the State and 5
1384	1384	the Federal Government as parties. 6
1385	1385	‘‘(h) I
1386	1386	NVESTIGATIONS AND AUDITS.—Administering 7
1387	1387	States shall not conduct investigations or audits at facili-8
1388	1388	ties in other administering States in connection with the 9
1389	1389	tax imposed by section 101 or conforming State sales tax 10
1390	1390	but shall instead cooperate with other administering 11
1391	1391	States using the mechanisms established by section 402, 12
1392	1392	by compact or by other agreement. 13
1393	1393	‘‘SEC. 402. FEDERAL ADMINISTRATIVE SUPPORT FOR 14
1394	1394	STATES. 15
1395	1395	‘‘(a) I
1396	1396	NGENERAL.—The Secretary shall administer 16
1397	1397	a program to facilitate information sharing among States. 17
1398	1398	‘‘(b) S
1399	1399	TATECOMPACTS.—The Secretary shall facili-18
1400	1400	tate, and may be a party to a compact among States for 19
1401	1401	purposes of facilitating the taxation of interstate pur-20
1402	1402	chases and for other purposes that may facilitate imple-21
1403	1403	mentation of this subtitle. 22
1404	1404	‘‘(c) A
1405	1405	GREEMENTWITHCONFORMINGSTATES.—The 23
1406	1406	Secretary is authorized to enter into and shall enter into 24
1407	1407	an agreement among conforming States enabling con-25
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1410	1410	•HR 25 IH
1411	1411	forming States to collect conforming State sales tax on 1
1412	1412	sales made by sellers without a particular conforming 2
1413	1413	State to a destination within that particular conforming 3
1414	1414	State. 4
1415	1415	‘‘(d) S
1416	1416	ECRETARY’SAUTHORITY.—The Secretary shall 5
1417	1417	have the authority to promulgate regulations, to provide 6
1418	1418	guidelines, to assist States in administering the national 7
1419	1419	sales tax, to provide for uniformity in the administration 8
1420	1420	of the tax and to provide guidance to the public. 9
1421	1421	‘‘SEC. 403. FEDERAL-STATE TAX CONFERENCES. 10
1422	1422	‘‘Not less than once annually, the Secretary shall host 11
1423	1423	a conference with the sales tax administrators from the 12
1424	1424	various administering States to evaluate the state of the 13
1425	1425	national sales tax system, to address issues of mutual con-14
1426	1426	cern and to develop and consider legislative, regulatory, 15
1427	1427	and administrative proposals to improve the tax system. 16
1428	1428	‘‘SEC. 404. FEDERAL ADMINISTRATION IN CERTAIN STATES. 17
1429	1429	‘‘The Secretary shall administer the tax imposed by 18
1430	1430	this subtitle in any State or other United States jurisdic-19
1431	1431	tion that— 20
1432	1432	‘‘(1) is not an administering State, or 21
1433	1433	‘‘(2) elected to have another State administer 22
1434	1434	its tax in accordance with section 401(g). 23
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1437	1437	•HR 25 IH
1438	1438	‘‘SEC. 405. INTERSTATE ALLOCATION AND DESTINATION 1
1439	1439	DETERMINATION. 2
1440	1440	‘‘(a) D
1441	1441	ESTINATIONGENERALLY.—The tax imposed 3
1442	1442	by this subtitle is a destination principle tax. This section 4
1443	1443	shall govern for purposes of determining— 5
1444	1444	‘‘(1) whether the destination of taxable property 6
1445	1445	and services is within or without the United States, 7
1446	1446	and 8
1447	1447	‘‘(2) which State or territory within the United 9
1448	1448	States is the destination of taxable property and 10
1449	1449	services. 11
1450	1450	‘‘(b) T
1451	1451	ANGIBLEPERSONALPROPERTY.—Except as 12
1452	1452	provided in subsection (g) (relating to certain leases), the 13
1453	1453	destination of tangible personal property shall be the State 14
1454	1454	or territory in which the property was first delivered to 15
1455	1455	the purchaser (including agents and authorized represent-16
1456	1456	atives). 17
1457	1457	‘‘(c) R
1458	1458	EALPROPERTY.—The destination of real prop-18
1459	1459	erty, or rents or leaseholds on real property, shall be the 19
1460	1460	State or territory in which the real property is located. 20
1461	1461	‘‘(d) O
1462	1462	THERPROPERTY.—The destination of any 21
1463	1463	other taxable property shall be the residence of the pur-22
1464	1464	chaser. 23
1465	1465	‘‘(e) S
1466	1466	ERVICES.— 24
1467	1467	‘‘(1) G
1468	1468	ENERAL RULE.—The destination of serv-25
1469	1469	ices shall be the State or territory in which the use 26
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1472	1472	•HR 25 IH
1473	1473	or consumption of the services occurred. Allocation 1
1474	1474	of service invoices relating to more than 1 jurisdic-2
1475	1475	tion shall be on the basis of time or another method 3
1476	1476	determined by regulation. 4
1477	1477	‘‘(2) T
1478	1478	ELECOMMUNICATIONS SERVICES .—The 5
1479	1479	destination of telecommunications services shall be 6
1480	1480	the residence of the purchaser. Telecommunications 7
1481	1481	services include telephone, telegraph, beeper, radio, 8
1482	1482	cable television, satellite, and computer on-line or 9
1483	1483	network services. 10
1484	1484	‘‘(3) D
1485	1485	OMESTIC TRANSPORTATION SERVICES .— 11
1486	1486	For transportation services where all of the final 12
1487	1487	destinations are within the United States, the des-13
1488	1488	tination of transportation services shall be the final 14
1489	1489	destination of the trip (in the case of round or mul-15
1490	1490	tiple trip fares, the services amount shall be equally 16
1491	1491	allocated among each final destination). 17
1492	1492	‘‘(4) I
1493	1493	NTERNATIONAL TRANSPORTATION SERV -18
1494	1494	ICES.—For transportation services where the final 19
1495	1495	destination or origin of the trip is without the 20
1496	1496	United States, the service amount shall be deemed 21
1497	1497	50 percent attributable to the United States destina-22
1498	1498	tion or origin. 23
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1501	1501	•HR 25 IH
1502	1502	‘‘(5) ELECTRICAL SERVICE.—The destination of 1
1503	1503	electrical services shall be the residence of the pur-2
1504	1504	chaser. 3
1505	1505	‘‘(f) F
1506	1506	INANCIALINTERMEDIATION SERVICES.—The 4
1507	1507	destination of financial intermediation services shall be the 5
1508	1508	residence of the purchaser. 6
1509	1509	‘‘(g) R
1510	1510	ENTSPAID FOR THE LEASE OFTANGIBLE 7
1511	1511	P
1512	1512	ROPERTY.— 8
1513	1513	‘‘(1) G
1514	1514	ENERAL RULE.—Except as provided in 9
1515	1515	paragraph (2), the destination of rents paid for the 10
1516	1516	lease of tangible property and leaseholds on such 11
1517	1517	property shall be where the property is located while 12
1518	1518	in use. 13
1519	1519	‘‘(2) L
1520	1520	AND VEHICLES ; AIRCRAFT, WATER 14
1521	1521	CRAFT.—The destination of rental and lease pay-15
1522	1522	ments on land vehicles, aircraft and water craft shall 16
1523	1523	be— 17
1524	1524	‘‘(A) in the case of rentals and leases of a 18
1525	1525	term of 1 month or less, the location where the 19
1526	1526	land vehicle, aircraft, or water craft was origi-20
1527	1527	nally delivered to the renter or lessee, and 21
1528	1528	‘‘(B) in the case of rentals and leases of a 22
1529	1529	term greater than 1 month, the residence of the 23
1530	1530	renter or lessee. 24
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1533	1533	•HR 25 IH
1534	1534	‘‘(h) ALLOCATIONRULES.—For purposes of allo-1
1535	1535	cating revenue— 2
1536	1536	‘‘(1) between or among administering States 3
1537	1537	from taxes imposed by this subtitle or from State 4
1538	1538	sales taxes administered by third-party admin-5
1539	1539	istering States, or 6
1540	1540	‘‘(2) between or among States imposing con-7
1541	1541	forming State sales taxes, 8
1542	1542	the revenue shall be allocated to those States that are the 9
1543	1543	destination of the taxable property or service. 10
1544	1544	‘‘(i) F
1545	1545	EDERALOFFICE OFREVENUEALLOCATION.— 11
1546	1546	The Secretary shall establish an Office of Revenue Alloca-12
1547	1547	tion to arbitrate any claims or disputes among admin-13
1548	1548	istering States as to the destination of taxable property 14
1549	1549	and services for purposes of allocating revenue between or 15
1550	1550	among the States from taxes imposed by this subtitle. The 16
1551	1551	determination of the Administrator of the Office of Rev-17
1552	1552	enue Allocation shall be subject to judicial review in any 18
1553	1553	Federal court with competent jurisdiction. The standard 19
1554	1554	of review shall be abuse of discretion. 20
1555	1555	‘‘SEC. 406. GENERAL ADMINISTRATIVE MATTERS. 21
1556	1556	‘‘(a) I
1557	1557	NGENERAL.—The Secretary and each sales tax 22
1558	1558	administering authority may employ such persons as may 23
1559	1559	be necessary for the administration of this subtitle and 24
1560	1560	may delegate to employees the authority to conduct inter-25
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1563	1563	•HR 25 IH
1564	1564	views, hearings, prescribe rules, promulgate regulations, 1
1565	1565	and perform such other duties as are required by this sub-2
1566	1566	title. 3
1567	1567	‘‘(b) R
1568	1568	ESOLUTION OF ANYINCONSISTENTRULES 4
1569	1569	ANDREGULATIONS.—In the event that the Secretary and 5
1570	1570	any sales tax administering authority have issued incon-6
1571	1571	sistent rules or regulations, any lawful rule or regulation 7
1572	1572	issued by the Secretary shall govern. 8
1573	1573	‘‘(c) A
1574	1574	DEQUATENOTICETOBEPROVIDED.—Except 9
1575	1575	in the case of an emergency declared by the Secretary (and 10
1576	1576	not his designee), no rule or regulation issued by the Sec-11
1577	1577	retary with respect to any internal revenue law shall take 12
1578	1578	effect before 90 days have elapsed after its publication in 13
1579	1579	the Federal Register. Upon issuance, the Secretary shall 14
1580	1580	provide copies of all rules or regulations issued under this 15
1581	1581	title to each sales tax administering authority. 16
1582	1582	‘‘(d) N
1583	1583	ORULES, RULINGS, ORREGULATIONSWITH 17
1584	1584	R
1585	1585	ETROACTIVEEFFECT.—No rule, ruling, or regulation 18
1586	1586	issued or promulgated by the Secretary relating to any in-19
1587	1587	ternal revenue law or by a sales tax administering author-20
1588	1588	ity shall apply to a period prior to its publication in the 21
1589	1589	Federal Register (or State equivalent) except that a regu-22
1590	1590	lation may take retroactive effect to prevent abuse. 23
1591	1591	‘‘(e) R
1592	1592	EVIEW OFIMPACT OFREGULATIONS, RULES, 24
1593	1593	ANDRULINGS ONSMALLBUSINESS.— 25
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1596	1596	•HR 25 IH
1597	1597	‘‘(1) SUBMISSION TO SMALL BUSINESS ADMIN -1
1598	1598	ISTRATION.—After publication of any proposed or 2
1599	1599	temporary regulation by the Secretary relating to in-3
1600	1600	ternal revenue laws, the Secretary shall submit such 4
1601	1601	regulation to the Chief Counsel for Advocacy of the 5
1602	1602	Small Business Administration for comment on the 6
1603	1603	impact of such regulation on small businesses. Not 7
1604	1604	later than the date 30 days after the date of such 8
1605	1605	submission, the Chief Counsel for Advocacy of the 9
1606	1606	Small Business Administration shall submit com-10
1607	1607	ments on such regulation to the Secretary. 11
1608	1608	‘‘(2) C
1609	1609	ONSIDERATION OF COMMENTS .—In pre-12
1610	1610	scribing any final regulation which supersedes a pro-13
1611	1611	posed or temporary regulation which had been sub-14
1612	1612	mitted under this subsection to the Chief Counsel 15
1613	1613	for Advocacy of the Small Business Administration, 16
1614	1614	the Secretary shall— 17
1615	1615	‘‘(A) consider the comments of the Chief 18
1616	1616	Counsel for Advocacy of the Small Business 19
1617	1617	Administration on such proposed or temporary 20
1618	1618	regulation, and 21
1619	1619	‘‘(B) in promulgating such final regulation, 22
1620	1620	include a narrative that describes the response 23
1621	1621	to such comments. 24
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1624	1624	•HR 25 IH
1625	1625	‘‘(3) SUBMISSION OF CERTAIN FINAL REGULA -1
1626	1626	TION.—In the case of promulgation by the Secretary 2
1627	1627	of any final regulations (other than a temporary reg-3
1628	1628	ulation) which do not supersede a proposed regula-4
1629	1629	tion, the requirements of paragraphs (1) and (2) 5
1630	1630	shall apply, except that the submission under para-6
1631	1631	graph (1) shall be made at least 30 days before the 7
1632	1632	date of such promulgation, and the consideration 8
1633	1633	and discussion required under paragraph (2) shall 9
1634	1634	be made in connection with the promulgation of such 10
1635	1635	final regulation. 11
1636	1636	‘‘(f) S
1637	1637	MALLBUSINESSREGULATORYSAFEGUARDS.— 12
1638	1638	The Small Business Regulatory Enforcement Fairness Act 13
1639	1639	(Public Law 104–121; 110 Stat. 857 (‘SBREFA’)) and 14
1640	1640	the Regulatory Flexibility Act (5 U.S.C. 601–612 15
1641	1641	(‘RFA’)) shall apply to regulations promulgated under this 16
1642	1642	subtitle. 17
1643	1643	‘‘SEC. 407. JURISDICTION. 18
1644	1644	‘‘(a) S
1645	1645	TATEJURISDICTION.—A sales tax admin-19
1646	1646	istering authority shall have jurisdiction over any gross 20
1647	1647	payments made which have a destination (as determined 21
1648	1648	in accordance with section 405) within the State of said 22
1649	1649	sales tax administering authority. This grant of jurisdic-23
1650	1650	tion is not exclusive of any other jurisdiction that such 24
1651	1651	sales tax administering authority may have. 25
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1654	1654	•HR 25 IH
1655	1655	‘‘(b) FEDERALJURISDICTION.—The grant of juris-1
1656	1656	diction in subsection (a) shall not be in derogation of Fed-2
1657	1657	eral jurisdiction over the same matter. The Federal Gov-3
1658	1658	ernment shall have the right to exercise preemptive juris-4
1659	1659	diction over matters relating to the taxes imposed by this 5
1660	1660	subtitle. 6
1661	1661	‘‘CHAPTER 5—OTHER ADMINISTRATIVE 7
1662	1662	PROVISIONS 8
1663	1663	‘‘Sec. 501. Monthly reports and payments.
1664	1664	‘‘Sec. 502. Registration.
1665	1665	‘‘Sec. 503. Accounting.
1666	1666	‘‘Sec. 504. Penalties.
1667	1667	‘‘Sec. 505. Burden of persuasion and burden of production.
1668	1668	‘‘Sec. 506. Attorneys’ and accountancy fees.
1669	1669	‘‘Sec. 507. Summons, examinations, audits, etc.
1670	1670	‘‘Sec. 508. Records.
1671	1671	‘‘Sec. 509. Tax to be separately stated and charged.
1672	1672	‘‘Sec. 510. Coordination with title 11.
1673	1673	‘‘Sec. 511. Applicable interest rate.
1674	1674	‘‘SEC. 501. MONTHLY REPORTS AND PAYMENTS.
1675	1675	9
1676	1676	‘‘(a) T
1677	1677	AXREPORTS ANDFILINGDATES.— 10
1678	1678	‘‘(1) I
1679	1679	N GENERAL.—On or before the 15th day 11
1680	1680	of each month, each person who is— 12
1681	1681	‘‘(A) liable to collect and remit the tax im-13
1682	1682	posed by this subtitle by reason of section 14
1683	1683	103(a), or 15
1684	1684	‘‘(B) liable to pay tax imposed by this sub-16
1685	1685	title which is not collected pursuant to section 17
1686	1686	103(a), 18
1687	1687	shall submit to the appropriate sales tax admin-19
1688	1688	istering authority (in a form prescribed by the Sec-20
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1691	1691	•HR 25 IH
1692	1692	retary) a report relating to the previous calendar 1
1693	1693	month. 2
1694	1694	‘‘(2) C
1695	1695	ONTENTS OF REPORT .—The report re-3
1696	1696	quired under paragraph (1) shall set forth— 4
1697	1697	‘‘(A) the gross payments referred to in sec-5
1698	1698	tion 101, 6
1699	1699	‘‘(B) the tax collected under chapter 4 in 7
1700	1700	connection with such payments, 8
1701	1701	‘‘(C) the amount and type of any credit 9
1702	1702	claimed, and 10
1703	1703	‘‘(D) other information reasonably required 11
1704	1704	by the Secretary or the sales tax administering 12
1705	1705	authority for the administration, collection, and 13
1706	1706	remittance of the tax imposed by this subtitle. 14
1707	1707	‘‘(b) T
1708	1708	AXPAYMENTSDATE.— 15
1709	1709	‘‘(1) G
1710	1710	ENERAL RULE.—The tax imposed by this 16
1711	1711	subtitle during any calendar month is due and shall 17
1712	1712	be paid to the appropriate sales tax administering 18
1713	1713	authority on or before the 15th day of the suc-19
1714	1714	ceeding month. Both Federal tax imposed by this 20
1715	1715	subtitle and conforming State sales tax (if any) shall 21
1716	1716	be paid in 1 aggregate payment. 22
1717	1717	‘‘(2) C
1718	1718	ROSS REFERENCE .—See subsection (e) 23
1719	1719	relating to remitting of separate segregated funds 24
1720	1720	for sellers that are not small sellers. 25
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1723	1723	•HR 25 IH
1724	1724	‘‘(c) EXTENSIONS FORFILINGREPORTS.— 1
1725	1725	‘‘(1) A
1726	1726	UTOMATIC EXTENSIONS FOR NOT MORE 2
1727	1727	THAN 30 DAYS.—On application, an extension of not 3
1728	1728	more than 30 days to file reports under subsection 4
1729	1729	(a) shall be automatically granted. 5
1730	1730	‘‘(2) O
1731	1731	THER EXTENSIONS.—On application, ex-6
1732	1732	tensions of 30 to 60 days to file such reports shall 7
1733	1733	be liberally granted by the sales tax administering 8
1734	1734	authority for reasonable cause. Extensions greater 9
1735	1735	than 60 days may be granted by the sales tax ad-10
1736	1736	ministering authority to avoid hardship. 11
1737	1737	‘‘(3) N
1738	1738	O EXTENSION FOR PAYMENT OF 12
1739	1739	TAXES.—Notwithstanding paragraphs (1) and (2), 13
1740	1740	no extension shall be granted with respect to the 14
1741	1741	time for paying or remitting the taxes under this 15
1742	1742	subtitle. 16
1743	1743	‘‘(d) T
1744	1744	ELEPHONEREPORTING OFVIOLATIONS.—The 17
1745	1745	Secretary shall establish a system under which a violation 18
1746	1746	of this subtitle can be brought to the attention of the sales 19
1747	1747	tax administering authority for investigation through the 20
1748	1748	use of a toll-free telephone number and otherwise. 21
1749	1749	‘‘(e) S
1750	1750	EPARATESEGREGATEDACCOUNTS.— 22
1751	1751	‘‘(1) I
1752	1752	N GENERAL.—Any registered seller that 23
1753	1753	is not a small seller shall deposit all sales taxes col-24
1754	1754	lected pursuant to section 103 in a particular week 25
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1757	1757	•HR 25 IH
1758	1758	in a separate segregated account maintained at a 1
1759	1759	bank or other financial institution within 3 business 2
1760	1760	days of the end of such week. Said registered seller 3
1761	1761	shall also maintain in that account sufficient funds 4
1762	1762	to meet the bank or financial institution minimum 5
1763	1763	balance requirements, if any, and to pay account 6
1764	1764	fees and costs. 7
1765	1765	‘‘(2) S
1766	1766	MALL SELLER.—For purposes of this 8
1767	1767	subsection, a small seller is any person that has not 9
1768	1768	collected $20,000 or more of the taxes imposed by 10
1769	1769	this subtitle in any of the previous 12 months. 11
1770	1770	‘‘(3) L
1771	1771	ARGE SELLERS.—Any seller that has col-12
1772	1772	lected $100,000 or more of the taxes imposed by 13
1773	1773	this subtitle in any of the previous 12 months is a 14
1774	1774	large seller. A large seller shall remit to the sales tax 15
1775	1775	administering authority the entire balance of depos-16
1776	1776	ited taxes in its separate segregated account on the 17
1777	1777	first business day following the end of the calendar 18
1778	1778	week. The Secretary may by regulation require the 19
1779	1779	electronic transfer of funds due from large sellers. 20
1780	1780	‘‘(4) W
1781	1781	EEK.—For purposes of this subsection, 21
1782	1782	the term ‘week’ shall mean the 7-day period ending 22
1783	1783	on a Friday. 23
1784	1784	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00057 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
1785	1785	kjohnson on DSK7ZCZBW3PROD with $$_JOB 58
1786	1786	•HR 25 IH
1787	1787	‘‘(f) DETERMINATION OF REPORTFILINGDATE.— 1
1788	1788	A report filed pursuant to subsection (a) shall be deemed 2
1789	1789	filed when— 3
1790	1790	‘‘(1) deposited in the United States mail, post-4
1791	1791	age prepaid, addressed to the sales tax administering 5
1792	1792	authority, 6
1793	1793	‘‘(2) delivered and accepted at the offices of the 7
1794	1794	sales tax administering authority, 8
1795	1795	‘‘(3) provided to a designated commercial pri-9
1796	1796	vate courier service for delivery within 2 days to the 10
1797	1797	sales tax administering authority at the address of 11
1798	1798	the sales tax administering authority, or 12
1799	1799	‘‘(4) by other means permitted by the Sec-13
1800	1800	retary. 14
1801	1801	‘‘(g) S
1802	1802	ECURITYREQUIREMENTS.—A large seller 15
1803	1803	(within the meaning of subsection (e)(3)) shall be required 16
1804	1804	to provide security in an amount equal to the greater of 17
1805	1805	$100,000 or one and one-half times the seller’s average 18
1806	1806	monthly tax liability during the previous 6 calendar 19
1807	1807	months. Security may be a cash bond, a bond from a sur-20
1808	1808	ety company approved by the Secretary, a certificate of 21
1809	1809	deposit, or a State or United States Treasury bond. A 22
1810	1810	bond qualifying under this subsection must be a con-23
1811	1811	tinuing instrument for each calendar year (or portion 24
1812	1812	thereof) that the bond is in effect. The bond must remain 25
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1814	1814	kjohnson on DSK7ZCZBW3PROD with $$_JOB 59
1815	1815	•HR 25 IH
1816	1816	in effect until the surety or sureties are released and dis-1
1817	1817	charged. Failure to provide security in accordance with 2
1818	1818	this section shall result in revocation of the seller’s section 3
1819	1819	502 registration. If a person who has provided security 4
1820	1820	pursuant to this subsection— 5
1821	1821	‘‘(1) fails to pay an amount indicated in a final 6
1822	1822	notice of amount due under this subtitle (within the 7
1823	1823	meaning of section 605(d)), 8
1824	1824	‘‘(2) no Taxpayer Assistance Order is in effect 9
1825	1825	relating to the amount due, 10
1826	1826	‘‘(3) either the time for filing an appeal pursu-11
1827	1827	ant to section 604 has passed or the appeal was de-12
1828	1828	nied, and 13
1829	1829	‘‘(4) the amount due is not being litigated in 14
1830	1830	any judicial forum, 15
1831	1831	then the security or part of the security, as the case may 16
1832	1832	be, may be forfeited in favor of the Secretary to the extent 17
1833	1833	of such tax due (plus interest if any). 18
1834	1834	‘‘(h) R
1835	1835	EWARDSPROGRAM.—The Secretary is author-19
1836	1836	ized to maintain a program of awards wherein individuals 20
1837	1837	that assist the Secretary or sales tax administering au-21
1838	1838	thorities in discovering or prosecuting tax fraud may be 22
1839	1839	remunerated. 23
1840	1840	‘‘(i) C
1841	1841	ROSSREFERENCE.—For interest due on taxes 24
1842	1842	remitted late, see section 6601. 25
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1844	1844	kjohnson on DSK7ZCZBW3PROD with $$_JOB 60
1845	1845	•HR 25 IH
1846	1846	‘‘SEC. 502. REGISTRATION. 1
1847	1847	‘‘(a) I
1848	1848	NGENERAL.—Any person liable to collect and 2
1849	1849	remit taxes pursuant to section 103(a) who is engaged in 3
1850	1850	a trade or business shall register as a seller with the sales 4
1851	1851	tax administering authority administering the taxes im-5
1852	1852	posed by this subtitle. 6
1853	1853	‘‘(b) A
1854	1854	FFILIATEDFIRMS.—Affiliated firms shall be 7
1855	1855	treated as 1 person for purposes of this section. Affiliated 8
1856	1856	firms may elect, upon giving notice to the Secretary in 9
1857	1857	a form prescribed by the Secretary, to treat separate firms 10
1858	1858	as separate persons for purposes of this subtitle. 11
1859	1859	‘‘(c) D
1860	1860	ESIGNATION OF TAXMATTERSPERSON.— 12
1861	1861	Every person registered pursuant to subsection (a) shall 13
1862	1862	designate a tax matters person who shall be an individual 14
1863	1863	whom the sales tax administering authority may contact 15
1864	1864	regarding tax matters. Each person registered must pro-16
1865	1865	vide notice of a change in the identity of the tax matters 17
1866	1866	person within 30 days of said change. 18
1867	1867	‘‘(d) E
1868	1868	FFECT OFFAILURETOREGISTER.—Any per-19
1869	1869	son that is required to register and who fails to do so is 20
1870	1870	prohibited from selling taxable property or services. The 21
1871	1871	Secretary or a sales tax administering authority may bring 22
1872	1872	an action seeking a temporary restraining order, an in-23
1873	1873	junction, or such other order as may be appropriate to 24
1874	1874	enforce this section. 25
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1877	1877	•HR 25 IH
1878	1878	‘‘SEC. 503. ACCOUNTING. 1
1879	1879	‘‘(a) C
1880	1880	ASHMETHODTOBEUSEDGENERALLY.— 2
1881	1881	Registered sellers and other persons shall report trans-3
1882	1882	actions using the cash method of accounting unless an 4
1883	1883	election to use the accrual method of accounting is made 5
1884	1884	pursuant to subsection (b). 6
1885	1885	‘‘(b) E
1886	1886	LECTIONTOUSEACCRUALMETHOD.—A per-7
1887	1887	son may elect with respect to a calender year to remit 8
1888	1888	taxes and report transactions with respect to the month 9
1889	1889	where a sale was invoiced and accrued. 10
1890	1890	‘‘(c) C
1891	1891	ROSSREFERENCE.—See section 205 for rules 11
1892	1892	relating to bad debts for sellers electing the accrual meth-12
1893	1893	od. 13
1894	1894	‘‘SEC. 504. PENALTIES. 14
1895	1895	‘‘(a) F
1896	1896	AILURETOREGISTER.—Each person who is 15
1897	1897	required to register pursuant to section 502 but fails to 16
1898	1898	do so prior to notification by the sales tax administering 17
1899	1899	authority shall be liable for a penalty of $500. 18
1900	1900	‘‘(b) R
1901	1901	ECKLESS ORWILLFULFAILURETOCOLLECT 19
1902	1902	T
1903	1903	AX.— 20
1904	1904	‘‘(1) C
1905	1905	IVIL PENALTY; FRAUD.—Each person 21
1906	1906	who is required to and recklessly or willfully fails to 22
1907	1907	collect taxes imposed by this subtitle shall be liable 23
1908	1908	for a penalty equal to the greater of $500 or 20 per-24
1909	1909	cent of tax not collected. 25
1910	1910	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00061 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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1912	1912	•HR 25 IH
1913	1913	‘‘(2) CRIMINAL PENALTY.—Each person who is 1
1914	1914	required to and willfully fails as part of a trade or 2
1915	1915	business to collect taxes imposed by this subtitle 3
1916	1916	may be fined an amount up to the amount deter-4
1917	1917	mined in accordance with paragraph (1) or impris-5
1918	1918	oned for a period of not more than 1 year or both. 6
1919	1919	‘‘(c) R
1920	1920	ECKLESS ORWILLFULASSERTION OFINVALID 7
1921	1921	E
1922	1922	XEMPTION.— 8
1923	1923	‘‘(1) C
1924	1924	IVIL PENALTY; FRAUD.—Each person 9
1925	1925	who recklessly or willfully asserts an invalid inter-10
1926	1926	mediate or export sales exemption from the taxes 11
1927	1927	imposed by this subtitle shall be liable for a penalty 12
1928	1928	equal to the greater of $500 or 20 percent of the tax 13
1929	1929	not collected or remitted. 14
1930	1930	‘‘(2) C
1931	1931	RIMINAL PENALTY.—Each person who 15
1932	1932	willfully asserts an invalid intermediate or export 16
1933	1933	sales exemption from the taxes imposed by this sub-17
1934	1934	title may be fined an amount up to the amount de-18
1935	1935	termined in accordance with paragraph (1) or im-19
1936	1936	prisoned for a period of not more than 1 year or 20
1937	1937	both. 21
1938	1938	‘‘(d) R
1939	1939	ECKLESS ORWILLFULFAILURETOREMIT 22
1940	1940	T
1941	1941	AXCOLLECTED.— 23
1942	1942	‘‘(1) C
1943	1943	IVIL PENALTY; FRAUD.—Each person 24
1944	1944	who is required to and recklessly or willfully fails to 25
1945	1945	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00062 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
1946	1946	kjohnson on DSK7ZCZBW3PROD with $$_JOB 63
1947	1947	•HR 25 IH
1948	1948	remit taxes imposed by this subtitle and collected 1
1949	1949	from purchasers shall be liable for a penalty equal 2
1950	1950	to the greater of $1,000 or 50 percent of the tax not 3
1951	1951	remitted. 4
1952	1952	‘‘(2) C
1953	1953	RIMINAL PENALTY.—Each person who 5
1954	1954	willfully fails to remit taxes imposed by this subtitle 6
1955	1955	and collected from purchasers may be fined an 7
1956	1956	amount up to the amount determined in accordance 8
1957	1957	with paragraph (1) or imprisoned for a period of not 9
1958	1958	more than 2 years or both. 10
1959	1959	‘‘(e) R
1960	1960	ECKLESS OR WILLFULFAILURETOPAY 11
1961	1961	T
1962	1962	AX.—Each person who is required to and recklessly or 12
1963	1963	willfully fails to pay taxes imposed by this subtitle shall 13
1964	1964	be liable for a penalty equal to the greater of $500 or 14
1965	1965	20 percent of the tax not paid. 15
1966	1966	‘‘(f) P
1967	1967	ENALTY FORLATEFILING.— 16
1968	1968	‘‘(1) I
1969	1969	N GENERAL.—In the case of a failure by 17
1970	1970	any person who is required to and fails to file a re-18
1971	1971	port required by section 501 on or before the due 19
1972	1972	date (determined with regard to any extension) for 20
1973	1973	such report, such person shall pay a penalty for each 21
1974	1974	month or fraction thereof that said report is late 22
1975	1975	equal to the greater of— 23
1976	1976	‘‘(A) $50, or 24
1977	1977	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
1978	1978	kjohnson on DSK7ZCZBW3PROD with $$_JOB 64
1979	1979	•HR 25 IH
1980	1980	‘‘(B) 0.5 percent of the gross payments re-1
1981	1981	quired to be shown on the report. 2
1982	1982	‘‘(2) I
1983	1983	NCREASED PENALTY ON RETURNS FILED 3
1984	1984	AFTER WRITTEN INQUIRY .—The amount of the pen-4
1985	1985	alty under paragraph (1) shall be doubled with re-5
1986	1986	spect to any report filed after a written inquiry with 6
1987	1987	respect to such report is received by the taxpayer 7
1988	1988	from the sales tax administering authority. 8
1989	1989	‘‘(3) L
1990	1990	IMITATION.—The penalty imposed under 9
1991	1991	this subsection shall not exceed 12 percent. 10
1992	1992	‘‘(4) E
1993	1993	XCEPTIONS.— 11
1994	1994	‘‘(A) R
1995	1995	EASONABLE CAUSE .—No penalty 12
1996	1996	shall be imposed under this subsection with re-13
1997	1997	spect to any failure if it is shown that such fail-14
1998	1998	ure is due to reasonable cause. 15
1999	1999	‘‘(B) O
2000	2000	THER WAIVER AUTHORITY .—In ad-16
2001	2001	dition to penalties not imposed by reason of 17
2002	2002	subparagraph (A), the sales tax administering 18
2003	2003	authority, on application, shall waive the pen-19
2004	2004	alty imposed by paragraph (1) once per reg-20
2005	2005	istered person per 24-month period. The pre-21
2006	2006	ceding sentence shall not apply to a penalty de-22
2007	2007	termined under paragraph (2). 23
2008	2008	‘‘(g) P
2009	2009	ENALTY FORWILLFULLY ORRECKLESSLYAC-24
2010	2010	CEPTING AFALSEINTERMEDIATE OR EXPORTSALES 25
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2012	2012	kjohnson on DSK7ZCZBW3PROD with $$_JOB 65
2013	2013	•HR 25 IH
2014	2014	CERTIFICATE.—A person who willingly or recklessly ac-1
2015	2015	cepts a false intermediate or export sales certificate shall 2
2016	2016	pay a penalty equal to 20 percent of the tax not collected 3
2017	2017	by reason of said acceptance. 4
2018	2018	‘‘(h) P
2019	2019	ENALTY FORLATEREMITTANCE OFTAXES.— 5
2020	2020	‘‘(1) I
2021	2021	N GENERAL.—A person who is required 6
2022	2022	to timely remit taxes imposed by this subtitle and 7
2023	2023	remits taxes more than 1 month after such taxes are 8
2024	2024	due shall pay a penalty equal to 1 percent per month 9
2025	2025	(or fraction thereof) from the due date. 10
2026	2026	‘‘(2) L
2027	2027	IMITATION.—The penalty imposed under 11
2028	2028	this subsection shall not exceed 24 percent. 12
2029	2029	‘‘(3) E
2030	2030	XCEPTIONS FOR REASONABLE CAUSE .— 13
2031	2031	No penalty shall be imposed under paragraph (1) 14
2032	2032	with respect to any late remittance if it is shown 15
2033	2033	that such late remittance is due to reasonable cause. 16
2034	2034	‘‘(i) P
2035	2035	ENALTY FORFILINGFALSEREBATECLAIM.— 17
2036	2036	‘‘(1) C
2037	2037	IVIL PENALTY; FRAUD.—A person who 18
2038	2038	willingly or recklessly files a false claim for a family 19
2039	2039	consumption allowance rebate (within the meaning 20
2040	2040	of chapter 3) shall— 21
2041	2041	‘‘(A) pay a penalty equal to the greater of 22
2042	2042	$500 or 50 percent of the claimed annual re-23
2043	2043	bate amount not actually due, and 24
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2045	2045	kjohnson on DSK7ZCZBW3PROD with $$_JOB 66
2046	2046	•HR 25 IH
2047	2047	‘‘(B) repay any rebates received as a result 1
2048	2048	of the false rebate claim (together with inter-2
2049	2049	est). 3
2050	2050	‘‘(2) C
2051	2051	RIMINAL PENALTY.—A person who will-4
2052	2052	ingly files a false claim for a family consumption al-5
2053	2053	lowance rebate (within the meaning of chapter 3) 6
2054	2054	may be fined an amount up to the amount deter-7
2055	2055	mined in accordance with paragraph (1) or impris-8
2056	2056	oned for a period not more than 1 year or both. 9
2057	2057	‘‘(j) P
2058	2058	ENALTY FORBADCHECK.—If any check or 10
2059	2059	money order in payment of any amount receivable under 11
2060	2060	this subtitle is not duly paid, in addition to other penalties 12
2061	2061	provided by law, the person who tendered such check shall 13
2062	2062	pay a penalty equal to the greater of— 14
2063	2063	‘‘(1) $25, or 15
2064	2064	‘‘(2) two percent of the amount of such check. 16
2065	2065	‘‘(k) P
2066	2066	ENALTY FORFAILURETOMAINTAIN ASEPA-17
2067	2067	RATESEGREGATEDACCOUNT.—Any person required to 18
2068	2068	maintain a separate segregated account pursuant to sec-19
2069	2069	tion 501(e) that fails to maintain such a separate seg-20
2070	2070	regated account shall pay a penalty of $1,000. 21
2071	2071	‘‘(l) P
2072	2072	ENALTY FOR FAILURETODEPOSITCOL-22
2073	2073	LECTEDTAXES IN A SEPARATESEGREGATED AC-23
2074	2074	COUNT.—Any person required to deposit collected taxes 24
2075	2075	into a separate segregated account maintained pursuant 25
2076	2076	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00066 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
2077	2077	kjohnson on DSK7ZCZBW3PROD with $$_JOB 67
2078	2078	•HR 25 IH
2079	2079	to section 501(e) that fails to timely deposit said taxes 1
2080	2080	into the separate segregated account shall pay a penalty 2
2081	2081	equal to 1 percent of the amount required to be deposited. 3
2082	2082	The penalty imposed by the previous sentence shall be tri-4
2083	2083	pled unless said taxes have been deposited in the separate 5
2084	2084	segregated account or remitted to the sales tax admin-6
2085	2085	istering authority within 16 days of the date said deposit 7
2086	2086	was due. 8
2087	2087	‘‘(m) J
2088	2088	OINT ANDSEVERALLIABILITY FORTAXMAT-9
2089	2089	TERSPERSON ANDRESPONSIBLEOFFICERS.—The tax 10
2090	2090	matters person (designated pursuant to section 502(c)) 11
2091	2091	and responsible officers or partners of a firm shall be 12
2092	2092	jointly and severally liable for the tax imposed by this sub-13
2093	2093	title and penalties imposed by this subtitle. 14
2094	2094	‘‘(n) R
2095	2095	IGHT OFCONTRIBUTION.—If more than 1 per-15
2096	2096	son is liable with respect to any tax or penalty imposed 16
2097	2097	by this subtitle, each person who paid such tax or penalty 17
2098	2098	shall be entitled to recover from other persons who are 18
2099	2099	liable for such tax or penalty an amount equal to the ex-19
2100	2100	cess of the amount paid by such person over such person’s 20
2101	2101	proportionate share of the tax or penalty. 21
2102	2102	‘‘(o) C
2103	2103	IVILPENALTIES ANDCRIMINALFINESNOT 22
2104	2104	E
2105	2105	XCLUSIVE.— 23
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2107	2107	kjohnson on DSK7ZCZBW3PROD with $$_JOB 68
2108	2108	•HR 25 IH
2109	2109	‘‘(1) CIVIL PENALTY.—The fact that a civil 1
2110	2110	penalty has been imposed shall not prevent the im-2
2111	2111	position of a criminal fine. 3
2112	2112	‘‘(2) C
2113	2113	RIMINAL FINE.—The fact that a criminal 4
2114	2114	fine has been imposed shall not prevent the imposi-5
2115	2115	tion of a civil penalty. 6
2116	2116	‘‘(p) C
2117	2117	ONFIDENTIALITY.—Any person who violates 7
2118	2118	the requirements relating to confidentiality of tax informa-8
2119	2119	tion (as provided in section 605(e)) may be fined up to 9
2120	2120	$10,000 or imprisoned for a period of not more than 1 10
2121	2121	year, or both. 11
2122	2122	‘‘(q) C
2123	2123	ROSSREFERENCE.—For interest due on late 12
2124	2124	payments, see section 6601. 13
2125	2125	‘‘SEC. 505. BURDEN OF PERSUASION AND BURDEN OF PRO-14
2126	2126	DUCTION. 15
2127	2127	‘‘In all disputes concerning taxes imposed by this sub-16
2128	2128	title, the person engaged in a dispute with the sales tax 17
2129	2129	administering authority or the Secretary, as the case may 18
2130	2130	be, shall have the burden of production of documents and 19
2131	2131	records but the sales tax administering authority or the 20
2132	2132	Secretary shall have the burden of persuasion. In all dis-21
2133	2133	putes concerning an exemption claimed by a purchaser, 22
2134	2134	if the seller has on file an intermediate sale or export sale 23
2135	2135	certificate from the purchaser and did not have reasonable 24
2136	2136	cause to believe that the certificate was improperly pro-25
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2138	2138	kjohnson on DSK7ZCZBW3PROD with $$_JOB 69
2139	2139	•HR 25 IH
2140	2140	vided by the purchaser with respect to such purchase 1
2141	2141	(within the meaning of section 103), then the burden of 2
2142	2142	production of documents and records relating to that ex-3
2143	2143	emption shall rest with the purchaser and not with the 4
2144	2144	seller. 5
2145	2145	‘‘SEC. 506. ATTORNEYS’ AND ACCOUNTANCY FEES. 6
2146	2146	‘‘In all disputes concerning taxes imposed by this sub-7
2147	2147	title, the person engaged in a dispute with the sales tax 8
2148	2148	administering authority or the Secretary, as the case may 9
2149	2149	be, shall be entitled to reasonable attorneys’ fees, account-10
2150	2150	ancy fees, and other reasonable professional fees incurred 11
2151	2151	in direct relation to the dispute unless the sales tax admin-12
2152	2152	istering authority or the Secretary establishes that its po-13
2153	2153	sition was substantially justified. 14
2154	2154	‘‘SEC. 507. SUMMONS, EXAMINATIONS, AUDITS, ETC. 15
2155	2155	‘‘(a) S
2156	2156	UMMONS.—Persons are subject to administra-16
2157	2157	tive summons by the sales tax administering authority for 17
2158	2158	records, documents, and testimony required by the sales 18
2159	2159	tax administering authority to accurately determine liabil-19
2160	2160	ity for tax under this subtitle. A summons shall be served 20
2161	2161	by the sales tax administering authority by an attested 21
2162	2162	copy delivered in hand to the person to whom it is directed 22
2163	2163	or left at his last known address. The summons shall de-23
2164	2164	scribe with reasonable certainty what is sought. 24
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2166	2166	kjohnson on DSK7ZCZBW3PROD with $$_JOB 70
2167	2167	•HR 25 IH
2168	2168	‘‘(b) EXAMINATIONS ANDAUDITS.—The sales tax ad-1
2169	2169	ministering authority has the authority to conduct at a 2
2170	2170	reasonable time and place examinations and audits of per-3
2171	2171	sons who are or may be liable to collect and remit tax 4
2172	2172	imposed by this subtitle and to examine the books, papers, 5
2173	2173	records, or other data of such persons which may be rel-6
2174	2174	evant or material to the determination of tax due. 7
2175	2175	‘‘(c) L
2176	2176	IMITATION ONAUTHORITY INCASE OFREFER-8
2177	2177	RAL.—No administrative summons may be issued by the 9
2178	2178	sales tax administering authority and no action be com-10
2179	2179	menced to enforce an administrative summons with re-11
2180	2180	spect to any person if a Justice Department referral or 12
2181	2181	referral to a State Attorney General’s Office is in effect 13
2182	2182	with respect to such person relating to a tax imposed by 14
2183	2183	this subtitle. Such referral is in effect with respect to any 15
2184	2184	person if the sales tax administering authority or the Sec-16
2185	2185	retary has recommended to the Justice Department or a 17
2186	2186	State Attorney General’s Office a grand jury investigation 18
2187	2187	of such person or a criminal prosecution of such person 19
2188	2188	that contemplates criminal sanctions under this title. A 20
2189	2189	referral shall be terminated when— 21
2190	2190	‘‘(1) the Justice Department or a State Attor-22
2191	2191	ney General’s Office notifies the sales tax admin-23
2192	2192	istering authority or the Secretary that he will not— 24
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2194	2194	kjohnson on DSK7ZCZBW3PROD with $$_JOB 71
2195	2195	•HR 25 IH
2196	2196	‘‘(A) prosecute such person for any offense 1
2197	2197	connected with the internal revenue laws, 2
2198	2198	‘‘(B) authorize a grand jury investigation 3
2199	2199	of such person with respect to such offense, or 4
2200	2200	‘‘(C) continue such a grand jury investiga-5
2201	2201	tion, or 6
2202	2202	‘‘(2) a final disposition has been made of any 7
2203	2203	criminal proceeding connected with the internal rev-8
2204	2204	enue laws, or conforming State sales tax, against 9
2205	2205	such person. 10
2206	2206	‘‘SEC. 508. RECORDS. 11
2207	2207	‘‘Any person liable to remit taxes pursuant to this 12
2208	2208	subtitle shall keep records (including a record of all section 13
2209	2209	509 receipts provided, complete records of intermediate 14
2210	2210	and export sales, including purchaser’s intermediate and 15
2211	2211	export sales certificates and tax number and the net of 16
2212	2212	tax amount of purchase) sufficient to determine the 17
2213	2213	amounts reported, collected, and remitted for a period of 18
2214	2214	6 years after the latter of the filing of the report for which 19
2215	2215	the records formed the basis or when the report was due 20
2216	2216	to be filed. Any purchaser who purchased taxable property 21
2217	2217	or services but did not pay tax by reason of asserting an 22
2218	2218	intermediate and export sales exemption shall keep records 23
2219	2219	sufficient to determine whether said exemption was valid 24
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2221	2221	kjohnson on DSK7ZCZBW3PROD with $$_JOB 72
2222	2222	•HR 25 IH
2223	2223	for a period of 7 years after the purchase of taxable prop-1
2224	2224	erty or services. 2
2225	2225	‘‘SEC. 509. TAX TO BE SEPARATELY STATED AND CHARGED. 3
2226	2226	‘‘(a) I
2227	2227	NGENERAL.—For each purchase of taxable 4
2228	2228	property or services for which a tax is imposed by section 5
2229	2229	101, the seller shall charge the tax imposed by section 101 6
2230	2230	separately from the purchase. For purchase of taxable 7
2231	2231	property or services for which a tax is imposed by section 8
2232	2232	101, the seller shall provide to the purchaser a receipt for 9
2233	2233	each transaction that includes— 10
2234	2234	‘‘(1) the property or services price exclusive of 11
2235	2235	tax, 12
2236	2236	‘‘(2) the amount of tax paid, 13
2237	2237	‘‘(3) the property or service price inclusive of 14
2238	2238	tax, 15
2239	2239	‘‘(4) the tax rate (the amount of tax paid (per 16
2240	2240	paragraph (2))) divided by the property or service 17
2241	2241	price inclusive of tax (per paragraph (3)), 18
2242	2242	‘‘(5) the date that the good or service was sold, 19
2243	2243	‘‘(6) the name of the vendor, and 20
2244	2244	‘‘(7) the vendor registration number. 21
2245	2245	‘‘(b) V
2246	2246	ENDINGMACHINEEXCEPTION.—The require-22
2247	2247	ments of subsection (a) shall be inapplicable in the case 23
2248	2248	of sales by vending machines. Vending machines for pur-24
2249	2249	poses of this subsection are machines— 25
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2251	2251	kjohnson on DSK7ZCZBW3PROD with $$_JOB 73
2252	2252	•HR 25 IH
2253	2253	‘‘(1) that dispense taxable property in exchange 1
2254	2254	for coins or currency, and 2
2255	2255	‘‘(2) that sell no single item exceeding $10 per 3
2256	2256	unit in price. 4
2257	2257	‘‘(c) F
2258	2258	INANCIALINTERMEDIATION SERVICESEXCEP-5
2259	2259	TION.—The requirements of subsection (a) shall be inap-6
2260	2260	plicable in the case of sales financial intermediation serv-7
2261	2261	ice. Receipts shall be issued when the tax is imposed (in 8
2262	2262	accordance with section 803 (relating to timing of tax on 9
2263	2263	financial intermediation services)). 10
2264	2264	‘‘SEC. 510. COORDINATION WITH TITLE 11. 11
2265	2265	‘‘No addition to tax shall be made under section 504 12
2266	2266	with respect to a period during which a case is pending 13
2267	2267	under title 11, United States Code— 14
2268	2268	‘‘(1) if such tax was incurred by the estate and 15
2269	2269	the failure occurred pursuant to an order of the 16
2270	2270	court finding probable insufficiency of funds of the 17
2271	2271	estate to pay administrative expenses, or 18
2272	2272	‘‘(2) if— 19
2273	2273	‘‘(A) such tax was incurred by the debtor 20
2274	2274	before the earlier of the order for relief or (in 21
2275	2275	the involuntary case) the appointment of a 22
2276	2276	trustee, and 23
2277	2277	‘‘(B) the petition was filed before the due 24
2278	2278	date prescribed by law (including extensions) 25
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2280	2280	kjohnson on DSK7ZCZBW3PROD with $$_JOB 74
2281	2281	•HR 25 IH
2282	2282	for filing a return of such tax, or the date for 1
2283	2283	making the addition to tax occurs on or after 2
2284	2284	the date the petition was filed. 3
2285	2285	‘‘SEC. 511. APPLICABLE INTEREST RATE. 4
2286	2286	‘‘(a) I
2287	2287	NGENERAL.— 5
2288	2288	‘‘(1) F
2289	2289	EDERAL SHORT -TERM RATE.—In the 6
2290	2290	case of a debt instrument, investment, financing 7
2291	2291	lease, or account with a term of not over 3 years, 8
2292	2292	the applicable interest rate is the Federal short-term 9
2293	2293	rate. 10
2294	2294	‘‘(2) F
2295	2295	EDERAL MID-TERM RATE.—In the case 11
2296	2296	of a debt instrument, investment, financing lease, or 12
2297	2297	account with a term of over 3 years but not over 9 13
2298	2298	years, the applicable interest rate is the Federal 14
2299	2299	mid-term rate. 15
2300	2300	‘‘(3) F
2301	2301	EDERAL LONG-TERM RATE.—In the case 16
2302	2302	of a debt instrument, investment, financing lease, or 17
2303	2303	account with a term of over 9 years, the applicable 18
2304	2304	interest rate is the Federal long-term rate. 19
2305	2305	‘‘(b) F
2306	2306	EDERALSHORT-TERMRATE.—The Federal 20
2307	2307	short-term rate shall be the rate determined by the Sec-21
2308	2308	retary based on the average market yield (selected by the 22
2309	2309	Secretary and ending in the calendar month in which the 23
2310	2310	determination is made during any one month) on out-24
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2312	2312	kjohnson on DSK7ZCZBW3PROD with $$_JOB 75
2313	2313	•HR 25 IH
2314	2314	standing marketable obligations of the United States with 1
2315	2315	remaining periods to maturity of 3 years or fewer. 2
2316	2316	‘‘(c) F
2317	2317	EDERALMID-TERMRATE.—The Federal mid- 3
2318	2318	term rate shall be the rate determined by the Secretary 4
2319	2319	based on the average market yield (selected by the Sec-5
2320	2320	retary and ending in the calendar month in which the de-6
2321	2321	termination is made during any 1 month) on outstanding 7
2322	2322	marketable obligations of the United States with remain-8
2323	2323	ing periods to maturity of more than 3 years and not over 9
2324	2324	9 years. 10
2325	2325	‘‘(d) F
2326	2326	EDERALLONG-TERMRATE.—The Federal 11
2327	2327	long-term rate shall be the rate determined by the Sec-12
2328	2328	retary based on the average market yield (selected by the 13
2329	2329	Secretary and ending in the calendar month in which the 14
2330	2330	determination is made during any 1 month) on out-15
2331	2331	standing marketable obligations of the United States with 16
2332	2332	remaining periods to maturity of over 9 years. 17
2333	2333	‘‘(e) D
2334	2334	ETERMINATION OF RATES.—During each cal-18
2335	2335	endar month, the Secretary shall determine the Federal 19
2336	2336	short-term rate, the Federal mid-term rate and the Fed-20
2337	2337	eral long-term rate which shall apply during the following 21
2338	2338	calendar month. 22
2339	2339	‘‘CHAPTER 6—COLLECTIONS; APPEALS; 23
2340	2340	TAXPAYER RIGHTS 24
2341	2341	‘‘Sec. 601. Collections.
2342	2342	‘‘Sec. 602. Power to levy, etc.
2343	2343	‘‘Sec. 603. Problem resolution offices.
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2345	2345	kjohnson on DSK7ZCZBW3PROD with $$_JOB 76
2346	2346	•HR 25 IH
2347	2347	‘‘Sec. 604. Appeals.
2348	2348	‘‘Sec. 605. Taxpayer rights.
2349	2349	‘‘Sec. 606. Installment agreements compromises.
2350	2350	‘‘SEC. 601. COLLECTIONS.
2351	2351	1
2352	2352	‘‘The sales tax administering authority shall collect 2
2353	2353	the taxes imposed by this subtitle, except as provided in 3
2354	2354	section 404 (relating to Federal administration in certain 4
2355	2355	States). 5
2356	2356	‘‘SEC. 602. POWER TO LEVY, ETC. 6
2357	2357	‘‘(a) I
2358	2358	NGENERAL.—The sales tax administering au-7
2359	2359	thority may levy and seize property, garnish wages or sal-8
2360	2360	ary and file liens to collect amounts due under this sub-9
2361	2361	title, pursuant to enforcement of— 10
2362	2362	‘‘(1) a judgment duly rendered by a court of 11
2363	2363	law, 12
2364	2364	‘‘(2) an amount due if the taxpayer has failed 13
2365	2365	to exercise his appeals rights under section 604, or 14
2366	2366	‘‘(3) an amount due if the appeals process de-15
2367	2367	termined that an amount remained due and the tax-16
2368	2368	payer has failed to timely petition the Tax Court for 17
2369	2369	relief. 18
2370	2370	‘‘(b) E
2371	2371	XEMPTIONFROMLEVY, SEIZURE, ANDGAR-19
2372	2372	NISHMENTS.—There shall be exempt from levy, seizure, 20
2373	2373	and garnishment or penalty in connection with any tax 21
2374	2374	imposed by this subtitle— 22
2375	2375	‘‘(1) wearing apparel, school books, fuel, provi-23
2376	2376	sions, furniture, personal effects, tools of a trade or 24
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2378	2378	kjohnson on DSK7ZCZBW3PROD with $$_JOB 77
2379	2379	•HR 25 IH
2380	2380	profession, livestock in a household up to an aggre-1
2381	2381	gate value of $15,000, and 2
2382	2382	‘‘(2) monthly money income equal to 150 per-3
2383	2383	cent of the monthly poverty level (as defined in sec-4
2384	2384	tion 303). 5
2385	2385	‘‘(c) L
2386	2386	IENSTOBETIMELYRELEASED.—Subject to 6
2387	2387	such reasonable regulations as the Secretary may provide, 7
2388	2388	any lien imposed with respect to a tax imposed by this 8
2389	2389	title shall be released not later than 30 days after— 9
2390	2390	‘‘(1) the liability was satisfied or became unen-10
2391	2391	forceable, or 11
2392	2392	‘‘(2) a bond was accepted as security. 12
2393	2393	‘‘SEC. 603. PROBLEM RESOLUTION OFFICES. 13
2394	2394	‘‘(a) P
2395	2395	ROBLEMRESOLUTIONOFFICETOBEESTAB-14
2396	2396	LISHED.—Each sales tax administering authority shall es-15
2397	2397	tablish an independent Problem Resolution Office and ap-16
2398	2398	point an adequate number of problem resolution officers. 17
2399	2399	The head of the problem resolution office must be ap-18
2400	2400	pointed by, and serve at the pleasure of either the State 19
2401	2401	Governor (in the case of an administering State) or the 20
2402	2402	President of the United States. 21
2403	2403	‘‘(b) A
2404	2404	UTHORITY OFPROBLEMRESOLUTIONOFFI-22
2405	2405	CERS.—Problem resolution officers shall have the author-23
2406	2406	ity to investigate complaints and issue a Taxpayer Assist-24
2407	2407	ance Order to administratively enjoin any collection activ-25
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2409	2409	kjohnson on DSK7ZCZBW3PROD with $$_JOB 78
2410	2410	•HR 25 IH
2411	2411	ity if, in the opinion of the problem resolution officer, said 1
2412	2412	collection activity is reasonably likely to not be in compli-2
2413	2413	ance with law or to prevent hardship (other than by reason 3
2414	2414	of having to pay taxes lawfully due). Problem resolution 4
2415	2415	officers shall also have the authority to issue Taxpayer As-5
2416	2416	sistance Orders releasing or returning property that has 6
2417	2417	been levied upon or seized, ordering that a lien be released 7
2418	2418	and that garnished wages be returned. A Taxpayer Assist-8
2419	2419	ance Order may only be rescinded or modified by the prob-9
2420	2420	lem resolution officer that issued it, by the highest official 10
2421	2421	in the relevant sales tax administering authority or by its 11
2422	2422	general counsel upon a finding that the collection activity 12
2423	2423	is justified by clear and convincing evidence. The authority 13
2424	2424	to reverse this Taxpayer Assistance Order may not be del-14
2425	2425	egated. 15
2426	2426	‘‘(c) F
2427	2427	ORM OFREQUEST FORTAXPAYERASSISTANCE 16
2428	2428	O
2429	2429	RDER.—The Secretary shall establish a form and proce-17
2430	2430	dure to aid persons requesting the assistance of the Prob-18
2431	2431	lem Resolution Office and to aid the Problem Resolution 19
2432	2432	Office in understanding the needs of the person seeking 20
2433	2433	assistance. The use of this form, however, shall not be a 21
2434	2434	prerequisite to a problem resolution officer taking action, 22
2435	2435	including issuing a Taxpayer Assistance Order. 23
2436	2436	‘‘(d) C
2437	2437	ONTENT OFTAXPAYERASSISTANCEORDER.— 24
2438	2438	A Taxpayer Assistance Order shall contain the name of 25
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2440	2440	kjohnson on DSK7ZCZBW3PROD with $$_JOB 79
2441	2441	•HR 25 IH
2442	2442	the problem resolution officer, any provision relating to 1
2443	2443	the running of any applicable period of limitation, the 2
2444	2444	name of the person that the Taxpayer Assistance Order 3
2445	2445	assists, the government office (or employee or officer of 4
2446	2446	said government office) to whom it is directed and the ac-5
2447	2447	tion or cessation of action that the Taxpayer Assistance 6
2448	2448	Order requires of said government officer (or employee or 7
2449	2449	officer of said government office). The Taxpayer Assist-8
2450	2450	ance Order need not contain findings of fact or its legal 9
2451	2451	basis; however, the problem resolution officer must provide 10
2452	2452	findings of fact and the legal basis for the issuance of the 11
2453	2453	Taxpayer Assistance Order to the sales tax administering 12
2454	2454	authority upon the request of an officer of said authority 13
2455	2455	within 2 weeks of the receipt of such request. 14
2456	2456	‘‘(e) I
2457	2457	NDEPENDENCE PROTECTED.—Problem resolu-15
2458	2458	tion officers shall not be disciplined or adversely affected 16
2459	2459	for the issuance of administrative injunctions unless a pat-17
2460	2460	tern of issuing injunctions that are manifestly unreason-18
2461	2461	able is proven in an administrative hearing by a prepon-19
2462	2462	derance of the evidence. 20
2463	2463	‘‘(f) O
2464	2464	THERRIGHTSNOTLIMITED.—Nothing in this 21
2465	2465	section shall limit the authority of the sales tax admin-22
2466	2466	istering authority, the registered person or other person 23
2467	2467	from pursuing any legal remedy in any court with jurisdic-24
2468	2468	tion over the dispute at issue. 25
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2471	2471	•HR 25 IH
2472	2472	‘‘(g) LIMITATIONS.—The running of any applicable 1
2473	2473	period of limitation shall be suspended for a period of 8 2
2474	2474	weeks following the issuance of a Taxpayer Assistance 3
2475	2475	Order or, if specified, for a longer period set forth in the 4
2476	2476	Taxpayer Assistance Order provided the suspension does 5
2477	2477	not exceed 6 months. 6
2478	2478	‘‘SEC. 604. APPEALS. 7
2479	2479	‘‘(a) A
2480	2480	DMINISTRATIVEAPPEALS.—The sales tax ad-8
2481	2481	ministering authority shall establish an administrative ap-9
2482	2482	peals process wherein the registered person or other per-10
2483	2483	son in disagreement with a decision of the sales tax admin-11
2484	2484	istering authority asserting liability for tax is provided a 12
2485	2485	full and fair hearing in connection with any disputes said 13
2486	2486	person has with the sales tax administering authority. 14
2487	2487	‘‘(b) T
2488	2488	IMING OFADMINISTRATIVEAPPEALS.—Said 15
2489	2489	administrative appeal must be made within 60 days of re-16
2490	2490	ceiving a final notice of amount due pursuant to section 17
2491	2491	605(d) unless leave for an extension is granted by the ap-18
2492	2492	peals officer in a form prescribed by the Secretary. Leave 19
2493	2493	shall be granted to avoid hardship. 20
2494	2494	‘‘SEC. 605. TAXPAYER RIGHTS. 21
2495	2495	‘‘(a) R
2496	2496	IGHTSTOBEDISCLOSED.—The sales tax ad-22
2497	2497	ministering authority shall provide to any person against 23
2498	2498	whom it has— 24
2499	2499	‘‘(1) commenced an audit or investigation, 25
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2501	2501	kjohnson on DSK7ZCZBW3PROD with $$_JOB 81
2502	2502	•HR 25 IH
2503	2503	‘‘(2) issued a final notice of amount due, 1
2504	2504	‘‘(3) filed an administrative lien, levy, or gar-2
2505	2505	nishment, 3
2506	2506	‘‘(4) commenced other collection action, 4
2507	2507	‘‘(5) commenced an action for civil penalties, or 5
2508	2508	‘‘(6) any other legal action, 6
2509	2509	a document setting forth in plain English the rights of 7
2510	2510	the person. The document shall explain the administrative 8
2511	2511	appeals process, the authority of the Problem Resolution 9
2512	2512	Office (established pursuant to section 603) and how to 10
2513	2513	contact that Office, the burden of production and persua-11
2514	2514	sion that the person and the sales tax administering au-12
2515	2515	thority bear (pursuant to section 505), the right of the 13
2516	2516	person to professional fees (pursuant to section 506), the 14
2517	2517	right to record interviews and such other rights as the per-15
2518	2518	son may possess under this subtitle. Said document will 16
2519	2519	also set forth the procedures for entering into an install-17
2520	2520	ment agreement. 18
2521	2521	‘‘(b) R
2522	2522	IGHT TOPROFESSIONALASSISTANCE.—In all 19
2523	2523	dealings with the sales tax administering authority, a per-20
2524	2524	son shall have the right to assistance, at their own ex-21
2525	2525	pense, of one or more professional advisors. 22
2526	2526	‘‘(c) R
2527	2527	IGHTTORECORDINTERVIEWS.—Any person 23
2528	2528	who is interviewed by an agent of the sales tax admin-24
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2530	2530	kjohnson on DSK7ZCZBW3PROD with $$_JOB 82
2531	2531	•HR 25 IH
2532	2532	istering authority shall have the right to video or audio 1
2533	2533	tape the interview at the person’s own expense. 2
2534	2534	‘‘(d) R
2535	2535	IGHT TOFINALNOTICE OFAMOUNTDUE.— 3
2536	2536	No collection or enforcement action will be commenced 4
2537	2537	against a person until 30 days after they have been pro-5
2538	2538	vided with a final notice of amount due under this subtitle 6
2539	2539	by the sales tax administering authority. The final notice 7
2540	2540	of amount due shall set forth the amount of tax due (along 8
2541	2541	with any interest and penalties due) and the factual and 9
2542	2542	legal basis for such amounts being due with sufficient 10
2543	2543	specificity that such basis can be understood by a reason-11
2544	2544	able person who is not a tax professional reading the no-12
2545	2545	tice. The final notice shall be sent by certified mail, return 13
2546	2546	receipt requested, to— 14
2547	2547	‘‘(1) the address last provided by a registered 15
2548	2548	seller, or 16
2549	2549	‘‘(2) the best available address to a person who 17
2550	2550	is not a registered seller. 18
2551	2551	‘‘(e) C
2552	2552	ONFIDENTIALITY OFTAXINFORMATION.— 19
2553	2553	‘‘(1) I
2554	2554	N GENERAL.—All reports and report in-20
2555	2555	formation (related to any internal revenue law) shall 21
2556	2556	be confidential and except as authorized by this 22
2557	2557	title— 23
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2560	2560	•HR 25 IH
2561	2561	‘‘(A) no officer or employee (including 1
2562	2562	former officers and employees) of the United 2
2563	2563	States, 3
2564	2564	‘‘(B) no officer or employee (including 4
2565	2565	former officers and employees) of any State or 5
2566	2566	local agency who has had access to returns or 6
2567	2567	return information, and 7
2568	2568	‘‘(C) no other person who has had access 8
2569	2569	to returns or return information, 9
2570	2570	shall disclose any report or report information ob-10
2571	2571	tained by him in any manner in connection with his 11
2572	2572	service as such officer or employee or otherwise. 12
2573	2573	‘‘(2) D
2574	2574	ESIGNEES.—The sales tax administering 13
2575	2575	authority may, subject to such requirements as the 14
2576	2576	Secretary may impose, disclose the report and report 15
2577	2577	information of a person to that person or persons as 16
2578	2578	that person may designate to receive said informa-17
2579	2579	tion or return. 18
2580	2580	‘‘(3) O
2581	2581	THER SALES TAX ADMINISTERING AU -19
2582	2582	THORITIES.—A sales tax administering authority 20
2583	2583	may impose, disclose the report and report informa-21
2584	2584	tion to another sales tax administering authority. 22
2585	2585	‘‘(4) I
2586	2586	NCOMPETENCY.—A sales tax admin-23
2587	2587	istering authority may, subject to such requirements 24
2588	2588	as the Secretary may impose, disclose the report and 25
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2591	2591	•HR 25 IH
2592	2592	report information to the committee, trustee, or 1
2593	2593	guardian of a person who is incompetent. 2
2594	2594	‘‘(5) D
2595	2595	ECEASED PERSONS.—A sales tax admin-3
2596	2596	istering authority may, subject to such requirements 4
2597	2597	as the Secretary may impose, disclose the report and 5
2598	2598	report information to the decedent’s— 6
2599	2599	‘‘(A) administrator, executor, estate trust-7
2600	2600	ee, or 8
2601	2601	‘‘(B) heir at law, next of kin, or beneficiary 9
2602	2602	under a will who has a material interest that 10
2603	2603	will be affected by the information. 11
2604	2604	‘‘(6) B
2605	2605	ANKRUPTCY.—A sales tax administering 12
2606	2606	authority may, subject to such requirements as the 13
2607	2607	Secretary may impose, disclose the report and report 14
2608	2608	information to a person’s trustee in bankruptcy. 15
2609	2609	‘‘(7) C
2610	2610	ONGRESS.—Upon written request from 16
2611	2611	the Chairman of the Committee on Ways and 17
2612	2612	Means, the Chairman of the Committee on Finance 18
2613	2613	of the Senate, or the Chairman or Chief of Staff of 19
2614	2614	the Joint Committee on Taxation, a sales tax admin-20
2615	2615	istering authority shall disclose the report and report 21
2616	2616	information, except that any report or report infor-22
2617	2617	mation that can be associated with or otherwise 23
2618	2618	identify a particular person shall be furnished to 24
2619	2619	such committee only when sitting in closed executive 25
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2622	2622	•HR 25 IH
2623	2623	session unless such person otherwise consents in 1
2624	2624	writing to such disclosure. 2
2625	2625	‘‘(8) W
2626	2626	AIVER OF PRIVACY RIGHTS .—A person 3
2627	2627	may waive confidentiality rights provided by this sec-4
2628	2628	tion. Such waiver must be in writing. 5
2629	2629	‘‘(9) I
2630	2630	NTERNAL USE.—Disclosure of the report 6
2631	2631	or report information by officers or employees of a 7
2632	2632	sales tax administering authority to other officers or 8
2633	2633	employees of a sales tax administering authority in 9
2634	2634	the ordinary course of tax administration activities 10
2635	2635	shall not constitute unlawful disclosure of the report 11
2636	2636	or report information. 12
2637	2637	‘‘(10) S
2638	2638	TATISTICAL USE.—Upon request in 13
2639	2639	writing by the Secretary of Commerce, the Secretary 14
2640	2640	shall furnish such reports and report information to 15
2641	2641	officers and employees of the Department of Com-16
2642	2642	merce as the Secretary may prescribe by regulation 17
2643	2643	for the purposes of, and only to the extent necessary 18
2644	2644	in, the structuring of censuses and national eco-19
2645	2645	nomic accounts and conducting related statistical ac-20
2646	2646	tivities authorized by law. 21
2647	2647	‘‘(11) D
2648	2648	EPARTMENT OF THE TREASURY .—Re-22
2649	2649	turns and return information shall be open for in-23
2650	2650	spection by officers and employees of the Depart-24
2651	2651	ment of the Treasury whose official duties require 25
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2654	2654	•HR 25 IH
2655	2655	such inspection or disclosure for the purpose of, and 1
2656	2656	only to the extent necessary for, preparing economic 2
2657	2657	or financial forecasts, projections, analyses, or esti-3
2658	2658	mates. Such inspection or disclosure shall be per-4
2659	2659	mitted only upon written request that sets forth the 5
2660	2660	reasons why such inspection or disclosure is nec-6
2661	2661	essary and is signed by the head of the bureau or 7
2662	2662	office of the Department of the Treasury requesting 8
2663	2663	the inspection or disclosure. 9
2664	2664	‘‘SEC. 606. INSTALLMENT AGREEMENTS; COMPROMISES. 10
2665	2665	‘‘The sales tax administering authority is authorized 11
2666	2666	to enter into written agreements with any person under 12
2667	2667	which the person is allowed to satisfy liability for payment 13
2668	2668	of any tax under this subtitle (and penalties and interest 14
2669	2669	relating thereto) in installment payments if the sales tax 15
2670	2670	administering authority determines that such agreement 16
2671	2671	will facilitate the collection of such liability. The agree-17
2672	2672	ment shall remain in effect for the term of the agreement 18
2673	2673	unless the information that the person provided to the 19
2674	2674	sales tax administering authority was materially inac-20
2675	2675	curate or incomplete. The sales tax administering author-21
2676	2676	ity may compromise any amounts alleged to be due. 22
2677	2677	‘‘CHAPTER 7—SPECIAL RULES 23
2678	2678	‘‘Sec. 701. Hobby activities.
2679	2679	‘‘Sec. 702. Gaming activities.
2680	2680	‘‘Sec. 703. Government purchases.
2681	2681	‘‘Sec. 704. Government enterprises.
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2684	2684	•HR 25 IH
2685	2685	‘‘Sec. 705. Mixed use property.
2686	2686	‘‘Sec. 706. Not-for-profit organizations.
2687	2687	‘‘SEC. 701. HOBBY ACTIVITIES.
2688	2688	1
2689	2689	‘‘(a) H
2690	2690	OBBYACTIVITIES.—Neither the exemption af-2
2691	2691	forded by section 102 for intermediate sales nor the cred-3
2692	2692	its available pursuant to section 202 or 203 shall be avail-4
2693	2693	able for any taxable property or service purchased for use 5
2694	2694	in an activity if that activity is not engaged in for-profit. 6
2695	2695	‘‘(b) S
2696	2696	TATUSDEEMED.—If the activity has received 7
2697	2697	gross payments for the sale of taxable property or services 8
2698	2698	that exceed the sum of— 9
2699	2699	‘‘(1) taxable property and services purchased, 10
2700	2700	‘‘(2) wages and salary paid, and 11
2701	2701	‘‘(3) taxes (of any type) paid, 12
2702	2702	in two or more of the most recent 3 calendar years during 13
2703	2703	which it operated then the business activity shall be con-14
2704	2704	clusively deemed to be engaged in for profit. 15
2705	2705	‘‘SEC. 702. GAMING ACTIVITIES. 16
2706	2706	‘‘(a) R
2707	2707	EGISTRATION.—Any person selling one or 17
2708	2708	more chances is a gaming sponsor and shall register, in 18
2709	2709	a form prescribed by the Secretary, with the sales tax ad-19
2710	2710	ministering authority as a gaming sponsor. 20
2711	2711	‘‘(b) C
2712	2712	HANCEDEFINED.—For purposes of this sec-21
2713	2713	tion, the term ‘chance’ means a lottery ticket, a raffle tick-22
2714	2714	et, chips, other tokens, a bet or bets placed, a wager or 23
2715	2715	wagers placed, or any similar device where the purchase 24
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2719	2719	of the right gives rise to an obligation by the gaming spon-1
2720	2720	sor to pay upon the occurrence of— 2
2721	2721	‘‘(1) a random or unpredictable event, or 3
2722	2722	‘‘(2) an event over which neither the gaming 4
2723	2723	sponsor nor the person purchasing the chance has 5
2724	2724	control over the outcome. 6
2725	2725	‘‘(c) C
2726	2726	HANCESNOTTAXABLEPROPERTY ORSERV-7
2727	2727	ICE.—Notwithstanding any other provision in this sub-8
2728	2728	title, a chance is not taxable property or services for pur-9
2729	2729	poses of section 101. 10
2730	2730	‘‘(d) T
2731	2731	AX ONGAMINGSERVICESIMPOSED.—A 23- 11
2732	2732	percent tax is hereby imposed on the taxable gaming serv-12
2733	2733	ices of a gaming sponsor. This tax shall be paid and remit-13
2734	2734	ted by the gaming sponsor. The tax shall be remitted by 14
2735	2735	the 15th day of each month with respect to taxable gaming 15
2736	2736	services during the previous calendar month. 16
2737	2737	‘‘(e) T
2738	2738	AXABLEGAMINGSERVICESDEFINED.—For 17
2739	2739	purposes of this section, the term ‘taxable gaming services’ 18
2740	2740	means— 19
2741	2741	‘‘(1) gross receipts of the gaming sponsor from 20
2742	2742	the sale of chances, minus 21
2743	2743	‘‘(2) the sum of— 22
2744	2744	‘‘(A) total gaming payoffs to chance pur-23
2745	2745	chasers (or their designees), and 24
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2748	2748	•HR 25 IH
2749	2749	‘‘(B) gaming specific taxes (other than the 1
2750	2750	tax imposed by this section) imposed by the 2
2751	2751	Federal, State, or local government. 3
2752	2752	‘‘SEC. 703. GOVERNMENT PURCHASES. 4
2753	2753	‘‘(a) G
2754	2754	OVERNMENTPURCHASES.— 5
2755	2755	‘‘(1) P
2756	2756	URCHASES BY THE FEDERAL GOVERN -6
2757	2757	MENT.—Purchases by the Federal Government of 7
2758	2758	taxable property and services shall be subject to the 8
2759	2759	tax imposed by section 101. 9
2760	2760	‘‘(2) P
2761	2761	URCHASE BY STATE GOVERNMENTS AND 10
2762	2762	THEIR POLITICAL SUBDIVISIONS .—Purchases by 11
2763	2763	State governments and their political subdivisions of 12
2764	2764	taxable property and services shall be subject to the 13
2765	2765	tax imposed by section 101. 14
2766	2766	‘‘(b) C
2767	2767	ROSSREFERENCES.—For purchases by gov-15
2768	2768	ernment enterprises see section 704. 16
2769	2769	‘‘SEC. 704. GOVERNMENT ENTERPRISES. 17
2770	2770	‘‘(a) G
2771	2771	OVERNMENTENTERPRISESTOCOLLECT AND 18
2772	2772	R
2773	2773	EMITTAXES ONSALES.—Nothing in this subtitle shall 19
2774	2774	be construed to exempt any Federal, State, or local gov-20
2775	2775	ernmental unit or political subdivision (whether or not the 21
2776	2776	State is an administering State) operating a government 22
2777	2777	enterprise from collecting and remitting tax imposed by 23
2778	2778	this subtitle on any sale of taxable property or services. 24
2779	2779	Government enterprises shall comply with all duties im-25
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2782	2782	•HR 25 IH
2783	2783	posed by this subtitle and shall be liable for penalties and 1
2784	2784	subject to enforcement action in the same manner as pri-2
2785	2785	vate persons that are not government enterprises. 3
2786	2786	‘‘(b) G
2787	2787	OVERNMENTENTERPRISE.—Any entity owned 4
2788	2788	or operated by a Federal, State, or local governmental unit 5
2789	2789	or political subdivision that receives gross payments from 6
2790	2790	private persons is a government enterprise, except that a 7
2791	2791	government-owned entity shall not become a government 8
2792	2792	enterprise for purposes of this section unless in any quar-9
2793	2793	ter it has revenues from selling taxable property or serv-10
2794	2794	ices that exceed $2,500. 11
2795	2795	‘‘(c) G
2796	2796	OVERNMENT ENTERPRISESINTERMEDIATE 12
2797	2797	S
2798	2798	ALES.— 13
2799	2799	‘‘(1) I
2800	2800	N GENERAL.—Government enterprises 14
2801	2801	shall not be subject to tax on purchases that would 15
2802	2802	not be subject to tax pursuant to section 102(b) if 16
2803	2803	the government enterprise were a private enterprise. 17
2804	2804	‘‘(2) E
2805	2805	XCEPTION.—Government enterprises 18
2806	2806	may not use the exemption afforded by section 19
2807	2807	102(b) to serve as a conduit for tax-free purchases 20
2808	2808	by government units that would otherwise be subject 21
2809	2809	to taxation on purchases pursuant to section 703. 22
2810	2810	Transfers of taxable property or services purchased 23
2811	2811	exempt from tax from a government enterprise to 24
2812	2812	such government unit shall be taxable. 25
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2815	2815	•HR 25 IH
2816	2816	‘‘(d) SEPARATEBOOKS OFACCOUNT.—Any govern-1
2817	2817	ment enterprise must maintain books of account, separate 2
2818	2818	from the nonenterprise government accounts, maintained 3
2819	2819	in accordance with generally accepted accounting prin-4
2820	2820	ciples. 5
2821	2821	‘‘(e) T
2822	2822	RADE ORBUSINESS.—A government enterprise 6
2823	2823	shall be treated as a trade or business for purposes of this 7
2824	2824	subtitle. 8
2825	2825	‘‘(f) E
2826	2826	NTERPRISESUBSIDIESCONSTITUTETAXABLE 9
2827	2827	P
2828	2828	URCHASE.—A transfer of funds to a government enter-10
2829	2829	prise by a government entity without full consideration 11
2830	2830	shall constitute a taxable government purchase with the 12
2831	2831	meaning of section 703 to the extent that the transfer of 13
2832	2832	funds exceeds the fair market value of the consideration. 14
2833	2833	‘‘SEC. 705. MIXED USE PROPERTY. 15
2834	2834	‘‘(a) M
2835	2835	IXEDUSEPROPERTY ORSERVICE.— 16
2836	2836	‘‘(1) M
2837	2837	IXED USE PROPERTY OR SERVICE DE -17
2838	2838	FINED.—For purposes of this section, the term 18
2839	2839	‘mixed use property or service’ is a taxable property 19
2840	2840	or taxable service used for both taxable use or con-20
2841	2841	sumption and for a purpose that would not be sub-21
2842	2842	ject to tax pursuant to section 102(a)(1). 22
2843	2843	‘‘(2) T
2844	2844	AXABLE THRESHOLD .—Mixed use prop-23
2845	2845	erty or service shall be subject to tax notwith-24
2846	2846	standing section 102(a)(1) unless such property or 25
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2849	2849	•HR 25 IH
2850	2850	service is used more than 95 percent for purposes 1
2851	2851	that would give rise to an exemption pursuant to 2
2852	2852	section 102(a)(1) during each calendar year (or por-3
2853	2853	tions thereof) it is owned. 4
2854	2854	‘‘(3) M
2855	2855	IXED USE PROPERTY OR SERVICES 5
2856	2856	CREDIT.—A person registered pursuant to section 6
2857	2857	502 is entitled to a business use conversion credit 7
2858	2858	(pursuant to section 202) equal to the product of— 8
2859	2859	‘‘(A) the mixed use property amount, 9
2860	2860	‘‘(B) the business use ratio, and 10
2861	2861	‘‘(C) the rate of tax imposed by section 11
2862	2862	101. 12
2863	2863	‘‘(4) M
2864	2864	IXED USE PROPERTY AMOUNT .—The 13
2865	2865	mixed use property amount for each month (or frac-14
2866	2866	tion thereof) in which the property was owned shall 15
2867	2867	be— 16
2868	2868	‘‘(A) one-three-hundred-sixtieth of the 17
2869	2869	gross payments for real property for 360 18
2870	2870	months or until the property is sold, 19
2871	2871	‘‘(B) one-eighty-fourth of the gross pay-20
2872	2872	ments for tangible personal property for 84 21
2873	2873	months or until the property is sold, 22
2874	2874	‘‘(C) one-sixtieth of the gross payments for 23
2875	2875	vehicles for 60 months or until the property is 24
2876	2876	sold, or 25
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2879	2879	•HR 25 IH
2880	2880	‘‘(D) for other types of taxable property or 1
2881	2881	services, a reasonable amount or in accordance 2
2882	2882	with regulations prescribed by the Secretary. 3
2883	2883	‘‘(5) B
2884	2884	USINESS USE RATIO.—For purposes of 4
2885	2885	this section, the term ‘business use ratio’ means the 5
2886	2886	ratio of business use to total use for a particular cal-6
2887	2887	endar month (or portion thereof if the property was 7
2888	2888	owned for only part of said calendar month). For ve-8
2889	2889	hicles, the business use ratio will be the ratio of 9
2890	2890	business purpose miles to total miles in a particular 10
2891	2891	calendar month. For real property, the business use 11
2892	2892	ratio is the ratio of floor space used primarily for 12
2893	2893	business purposes to total floor space in a particular 13
2894	2894	calendar month. For tangible personal property (ex-14
2895	2895	cept for vehicles), the business use ratio is the ratio 15
2896	2896	of total time used for business purposes to total time 16
2897	2897	used in a particular calendar year. For other prop-17
2898	2898	erty or services, the business ratio shall be cal-18
2899	2899	culated using a reasonable method. Reasonable 19
2900	2900	records must be maintained to support a person’s 20
2901	2901	business use of the mixed use property or service. 21
2902	2902	‘‘(b) T
2903	2903	IMING OFBUSINESSUSECONVERSIONCRED-22
2904	2904	ITARISINGOUT OFOWNERSHIP OFMIXEDUSEPROP-23
2905	2905	ERTY.—A person entitled to a credit pursuant to sub-24
2906	2906	section (a)(3) arising out of the ownership of mixed use 25
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2909	2909	•HR 25 IH
2910	2910	property must account for the mixed use on a calendar 1
2911	2911	year basis, and may file for the credit with respect to 2
2912	2912	mixed use property in any month following the calendar 3
2913	2913	year giving rise to the credit. 4
2914	2914	‘‘(c) C
2915	2915	ROSSREFERENCE.—For business use conver-5
2916	2916	sion credit, see section 202. 6
2917	2917	‘‘SEC. 706. NOT-FOR-PROFIT ORGANIZATIONS. 7
2918	2918	‘‘(a) N
2919	2919	OT-FOR-PROFITORGANIZATIONS.—Dues, con-8
2920	2920	tributions, and similar payments to qualified not-for-profit 9
2921	2921	organizations shall not be considered gross payments for 10
2922	2922	taxable property or services for purposes of this subtitle. 11
2923	2923	‘‘(b) D
2924	2924	EFINITION.—For purposes of this section, the 12
2925	2925	term ‘qualified not-for-profit organization’ means a not- 13
2926	2926	for-profit organization organized and operated exclu-14
2927	2927	sively— 15
2928	2928	‘‘(1) for religious, charitable, scientific, testing 16
2929	2929	for public safety, literary, or educational purposes, 17
2930	2930	‘‘(2) as civic leagues or social welfare organiza-18
2931	2931	tions, 19
2932	2932	‘‘(3) as labor, agricultural, or horticultural or-20
2933	2933	ganizations, 21
2934	2934	‘‘(4) as chambers of commerce, business 22
2935	2935	leagues, or trade associations, or 23
2936	2936	‘‘(5) as fraternal beneficiary societies, orders, or 24
2937	2937	associations, 25
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2941	2941	no part of the net earnings of which inures to the benefit 1
2942	2942	of any private shareholder or individual. 2
2943	2943	‘‘(c) Q
2944	2944	UALIFICATIONCERTIFICATES.—Upon applica-3
2945	2945	tion in a form prescribed by the Secretary, the sales tax 4
2946	2946	administering authority shall provide qualification certifi-5
2947	2947	cates to qualified not-for-profit organizations. 6
2948	2948	‘‘(d) T
2949	2949	AXABLETRANSACTIONS.—If a qualified not- 7
2950	2950	for-profit organization provides taxable property or serv-8
2951	2951	ices in connection with contributions, dues, or similar pay-9
2952	2952	ments to the organization, then it shall be required to 10
2953	2953	treat the provision of said taxable property or services as 11
2954	2954	a purchase taxable pursuant to this subtitle at the fair 12
2955	2955	market value of said taxable property or services. 13
2956	2956	‘‘(e) E
2957	2957	XEMPTIONS.—Taxable property and services 14
2958	2958	purchased by a qualified not-for-profit organization shall 15
2959	2959	be eligible for the exemptions provided in section 102. 16
2960	2960	‘‘CHAPTER 8—FINANCIAL 17
2961	2961	INTERMEDIATION SERVICES 18
2962	2962	‘‘Sec. 801. Determination of financial intermediation services amount.
2963	2963	‘‘Sec. 802. Bad debts.
2964	2964	‘‘Sec. 803. Timing of tax on financial intermediation services.
2965	2965	‘‘Sec. 804. Financing leases.
2966	2966	‘‘Sec. 805. Basic interest rate.
2967	2967	‘‘Sec. 806. Foreign financial intermediation services.
2968	2968	‘‘SEC. 801. DETERMINATION OF FINANCIAL INTERMEDI-
2969	2969	19
2970	2970	ATION SERVICES AMOUNT. 20
2971	2971	‘‘(a) F
2972	2972	INANCIALINTERMEDIATION SERVICES.—For 21
2973	2973	purposes of this subtitle— 22
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2977	2977	‘‘(1) IN GENERAL.—The term ‘financial inter-1
2978	2978	mediation services’ means the sum of— 2
2979	2979	‘‘(A) explicitly charged fees for financial 3
2980	2980	intermediation services, and 4
2981	2981	‘‘(B) implicitly charged fees for financial 5
2982	2982	intermediation services. 6
2983	2983	‘‘(2) E
2984	2984	XPLICITLY CHARGED FEES FOR FINAN -7
2985	2985	CIAL INTERMEDIATION SERVICES .—The term ‘explic-8
2986	2986	itly charged fees for financial intermediation serv-9
2987	2987	ices’ includes— 10
2988	2988	‘‘(A) brokerage fees, 11
2989	2989	‘‘(B) explicitly stated banking, loan origi-12
2990	2990	nation, processing, documentation, credit check 13
2991	2991	fees, or other similar fees, 14
2992	2992	‘‘(C) safe-deposit box fees, 15
2993	2993	‘‘(D) insurance premiums, to the extent 16
2994	2994	such premiums are not allocable to the invest-17
2995	2995	ment account of the underlying insurance pol-18
2996	2996	icy, 19
2997	2997	‘‘(E) trustees’ fees, and 20
2998	2998	‘‘(F) other financial services fees (includ-21
2999	2999	ing mutual fund management, sales, and exit 22
3000	3000	fees). 23
3001	3001	‘‘(3) I
3002	3002	MPLICITLY CHARGED FEES FOR FINAN -24
3003	3003	CIAL INTERMEDIATION SERVICES .— 25
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3005	3005	kjohnson on DSK7ZCZBW3PROD with $$_JOB 97
3006	3006	•HR 25 IH
3007	3007	‘‘(A) IN GENERAL.—The term ‘implicitly 1
3008	3008	charged fees for financial intermediation serv-2
3009	3009	ices’ includes the gross imputed amount in rela-3
3010	3010	tion to any underlying interest-bearing invest-4
3011	3011	ment, account, or debt. 5
3012	3012	‘‘(B) G
3013	3013	ROSS IMPUTED AMOUNT .—For pur-6
3014	3014	poses of subparagraph (A), the term ‘gross im-7
3015	3015	puted amount’ means— 8
3016	3016	‘‘(i) with respect to any underlying in-9
3017	3017	terest-bearing investment or account, the 10
3018	3018	product of— 11
3019	3019	‘‘(I) the excess (if any) of the 12
3020	3020	basic interest rate (as defined in sec-13
3021	3021	tion 805) over the rate paid on such 14
3022	3022	investment, and 15
3023	3023	‘‘(II) the amount of the invest-16
3024	3024	ment or account, and 17
3025	3025	‘‘(ii) with respect to any underlying 18
3026	3026	interest-bearing debt, the product of— 19
3027	3027	‘‘(I) the excess (if any) of the 20
3028	3028	rate paid on such debt over the basic 21
3029	3029	interest rate (as defined in section 22
3030	3030	805), and 23
3031	3031	‘‘(II) the amount of the debt. 24
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3033	3033	kjohnson on DSK7ZCZBW3PROD with $$_JOB 98
3034	3034	•HR 25 IH
3035	3035	‘‘(b) SELLER OFFINANCIALINTERMEDIATIONSERV-1
3036	3036	ICES.—For purposes of section 103(a), the seller of finan-2
3037	3037	cial intermediation services shall be— 3
3038	3038	‘‘(1) in the case of explicitly charged fees for fi-4
3039	3039	nancial intermediation services, the seller shall be 5
3040	3040	the person who receives the gross payments for the 6
3041	3041	charged financial intermediation services, 7
3042	3042	‘‘(2) in the case of implicitly charged fees for fi-8
3043	3043	nancial intermediation services with respect to any 9
3044	3044	underlying interest-bearing investment or account, 10
3045	3045	the person making the interest payments on the in-11
3046	3046	terest-bearing investment or account, and 12
3047	3047	‘‘(3) in the case of implicitly charged fees for fi-13
3048	3048	nancial intermediation services with respect to any 14
3049	3049	interest-bearing debt, the person receiving the inter-15
3050	3050	est payments on the interest-bearing debt. 16
3051	3051	‘‘SEC. 802. BAD DEBTS. 17
3052	3052	‘‘(a) I
3053	3053	NGENERAL.—For purposes of section 205(a), 18
3054	3054	a bad debt shall be a business debt that becomes wholly 19
3055	3055	or partially worthless to the payee. 20
3056	3056	‘‘(b) B
3057	3057	USINESSLOAN.—For purposes of subsection 21
3058	3058	(a), a business loan or debt is a bona fide loan or debt 22
3059	3059	made for a business purpose that both parties intended 23
3060	3060	be repaid. 24
3061	3061	‘‘(c) D
3062	3062	ETERMINATION OFWORTHLESSNESS.— 25
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3064	3064	kjohnson on DSK7ZCZBW3PROD with $$_JOB 99
3065	3065	•HR 25 IH
3066	3066	‘‘(1) IN GENERAL.—No loan or debt shall be 1
3067	3067	considered wholly or partially worthless unless it has 2
3068	3068	been in arrears for 180 days or more, except that if 3
3069	3069	a debt is discharged wholly or partially in bank-4
3070	3070	ruptcy before 180 days has elapsed, then it shall be 5
3071	3071	deemed wholly or partially worthless on the date of 6
3072	3072	discharge. 7
3073	3073	‘‘(2) D
3074	3074	ETERMINATION BY HOLDER .—A loan or 8
3075	3075	debt that has been in arrears for 180 days or more 9
3076	3076	may be deemed wholly or partially worthless by the 10
3077	3077	holder unless a payment schedule has been entered 11
3078	3078	into between the debtor and the lender. 12
3079	3079	‘‘(d) C
3080	3080	ROSSREFERENCE.—See section 205(c) for tax 13
3081	3081	on subsequent payments. 14
3082	3082	‘‘SEC. 803. TIMING OF TAX ON FINANCIAL INTERMEDIATION 15
3083	3083	SERVICES. 16
3084	3084	‘‘The tax on financial intermediation services pro-17
3085	3085	vided by section 801 with respect to an underlying invest-18
3086	3086	ment account or debt shall be imposed and collected with 19
3087	3087	the same frequency that statements are rendered by the 20
3088	3088	financial institution in connection with the investment ac-21
3089	3089	count or debt but not less frequently than quarterly. 22
3090	3090	‘‘SEC. 804. FINANCING LEASES. 23
3091	3091	‘‘(a) D
3092	3092	EFINITION.—For purposes of this section, the 24
3093	3093	term ‘financing lease’ means any lease under which the 25
3094	3094	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00099 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3095	3095	kjohnson on DSK7ZCZBW3PROD with $$_JOB 100
3096	3096	•HR 25 IH
3097	3097	lessee has the right to acquire the property for 50 percent 1
3098	3098	or less of its fair market value at the end of the lease 2
3099	3099	term. 3
3100	3100	‘‘(b) G
3101	3101	ENERALRULE.—Financing leases shall be 4
3102	3102	taxed in the method set forth in this section. 5
3103	3103	‘‘(c) D
3104	3104	ETERMINATION OF PRINCIPAL ANDINTEREST 6
3105	3105	C
3106	3106	OMPONENTS OF FINANCINGLEASE.—The Secretary 7
3107	3107	shall promulgate rules for disaggregating the principal 8
3108	3108	and interest components of a financing lease. The prin-9
3109	3109	cipal amount shall be determined to the extent possible 10
3110	3110	by examination of the contemporaneous sales price or 11
3111	3111	prices of property the same or similar as the leased prop-12
3112	3112	erty. 13
3113	3113	‘‘(d) A
3114	3114	LTERNATIVEMETHOD.—In the event that con-14
3115	3115	temporaneous sales prices or property the same or similar 15
3116	3116	as the leased property are not available, the principal and 16
3117	3117	interest components of a financing lease shall be 17
3118	3118	disaggregated using the applicable interest rate (as de-18
3119	3119	fined in section 511) plus 4 percent. 19
3120	3120	‘‘(e) P
3121	3121	RINCIPALCOMPONENT.—The principal compo-20
3122	3122	nent of the financing lease shall be subject to tax as if 21
3123	3123	a purchase in the amount of the principal component had 22
3124	3124	been made on the day on which said lease was executed. 23
3125	3125	‘‘(f) I
3126	3126	NTERESTCOMPONENT.—The financial inter-24
3127	3127	mediation services amount with respect to the interest 25
3128	3128	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00100 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3129	3129	kjohnson on DSK7ZCZBW3PROD with $$_JOB 101
3130	3130	•HR 25 IH
3131	3131	component of the financing lease shall be subject to tax 1
3132	3132	under this subtitle. 2
3133	3133	‘‘(g) C
3134	3134	OORDINATION.—If the principal component 3
3135	3135	and financial intermediation services amount with respect 4
3136	3136	to the interest component of a lease have been taxed pur-5
3137	3137	suant to this section, then the gross lease or rental pay-6
3138	3138	ments shall not be subject to additional tax. 7
3139	3139	‘‘SEC. 805. BASIC INTEREST RATE. 8
3140	3140	‘‘For purposes of this chapter, the basic interest rate 9
3141	3141	with respect to a debt instrument, investment, financing 10
3142	3142	lease, or account shall be the applicable interest rate (as 11
3143	3143	determined in section 511). For debt instruments, invest-12
3144	3144	ments, or accounts of contractually fixed interest, the ap-13
3145	3145	plicable interest rate of the month of issuance shall apply. 14
3146	3146	For debt instruments, investments, or accounts of variable 15
3147	3147	interest rates and which have no reference interest rate, 16
3148	3148	the applicable interest shall be the Federal short-term in-17
3149	3149	terest rate for each month. For debt instruments, invest-18
3150	3150	ments, or accounts of variable interest rates and which 19
3151	3151	have a reference interest rate, the applicable interest shall 20
3152	3152	be the applicable interest rate for the reference interest 21
3153	3153	rate for each month. 22
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3155	3155	kjohnson on DSK7ZCZBW3PROD with $$_JOB 102
3156	3156	•HR 25 IH
3157	3157	‘‘SEC. 806. FOREIGN FINANCIAL INTERMEDIATION SERV-1
3158	3158	ICES. 2
3159	3159	‘‘(a) S
3160	3160	PECIALRULESRELATING TOINTERNATIONAL 3
3161	3161	F
3162	3162	INANCIAL INTERMEDIATION SERVICES.—Financial 4
3163	3163	intermediation services shall be deemed as used or con-5
3164	3164	sumed within the United States if the person (or any re-6
3165	3165	lated party as defined in section 205(e)) purchasing the 7
3166	3166	services is a resident of the United States. 8
3167	3167	‘‘(b) D
3168	3168	ESIGNATION OFTAXREPRESENTATIVE.—Any 9
3169	3169	person that provides financial intermediation services to 10
3170	3170	United States residents must, as a condition of lawfully 11
3171	3171	providing such services, designate, in a form prescribed 12
3172	3172	by the Secretary, a tax representative for purposes of this 13
3173	3173	subtitle. The tax representative shall be responsible for en-14
3174	3174	suring that the taxes imposed by this subtitle are collected 15
3175	3175	and remitted and shall be jointly and severally liable for 16
3176	3176	collecting and remitting these taxes. The Secretary may 17
3177	3177	require reasonable bond of the tax representative. The 18
3178	3178	Secretary or a sales tax administering authority may bring 19
3179	3179	an action seeking a temporary restraining order, an in-20
3180	3180	junction, or such other order as may be appropriate to 21
3181	3181	enforce this section. 22
3182	3182	‘‘(c) C
3183	3183	ROSSREFERENCES.—For definition of person, 23
3184	3184	see section 901. 24
3185	3185	‘‘CHAPTER 9—ADDITIONAL MATTERS 25
3186	3186	‘‘Sec. 901. Additional matters.
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3188	3188	kjohnson on DSK7ZCZBW3PROD with $$_JOB 103
3189	3189	•HR 25 IH
3190	3190	‘‘Sec. 902. Transition matters.
3191	3191	‘‘Sec. 903. Wages to be reported to Social Security Administration.
3192	3192	‘‘Sec. 904. Trust Fund revenue.
3193	3193	‘‘Sec. 905. Withholding of tax on nonresident aliens and foreign corporations.
3194	3194	‘‘SEC. 901. ADDITIONAL MATTERS.
3195	3195	1
3196	3196	‘‘(a) I
3197	3197	NTANGIBLE PROPERTY ANTIAVOIDANCE 2
3198	3198	R
3199	3199	ULE.—Notwithstanding section 2(a)(14)(a)(i), the sale 3
3200	3200	of a copyright or trademark shall be treated as the sale 4
3201	3201	of taxable services (within the meaning of section 101(a)) 5
3202	3202	if the substance of the sales of copyright or trademark 6
3203	3203	constituted the sale of the services that produced the copy-7
3204	3204	righted material or the trademark. 8
3205	3205	‘‘(b) D
3206	3206	EMINIMISPAYMENTS.—Up to $400 of gross 9
3207	3207	payments per calendar year shall be exempt from the tax 10
3208	3208	imposed by section 101 if— 11
3209	3209	‘‘(1) made by a person not in connection with 12
3210	3210	a trade or business at any time during such calendar 13
3211	3211	year prior to making said gross payments, and 14
3212	3212	‘‘(2) made to purchase any taxable property or 15
3213	3213	service which is imported into the United States by 16
3214	3214	such person for use or consumption by such person 17
3215	3215	in the United States. 18
3216	3216	‘‘(c) D
3217	3217	EMINIMISSALES.—Up to $1,200 per calendar 19
3218	3218	year of gross payments shall be exempt from the tax im-20
3219	3219	posed by section 101 if received— 21
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3221	3221	kjohnson on DSK7ZCZBW3PROD with $$_JOB 104
3222	3222	•HR 25 IH
3223	3223	‘‘(1) by a person not in connection with a trade 1
3224	3224	or business during such calendar year prior to the 2
3225	3225	receipt of said gross payments, and 3
3226	3226	‘‘(2) in connection with a casual or isolated 4
3227	3227	sale. 5
3228	3228	‘‘(d) D
3229	3229	EMINIMISSALE OFFINANCIALINTERMEDI-6
3230	3230	ATIONSERVICES.—Up to $10,000 per calendar year of 7
3231	3231	gross payments received by a person from the sale of fi-8
3232	3232	nancial intermediation services (as determined in accord-9
3233	3233	ance with section 801) shall be exempt from the tax im-10
3234	3234	posed by section 101. The exemption provided by this sub-11
3235	3235	section is in addition to other exemptions afforded by this 12
3236	3236	chapter. The exemption provided by this subsection shall 13
3237	3237	not be available to large sellers (as defined in section 14
3238	3238	501(e)(3)). 15
3239	3239	‘‘(e) P
3240	3240	ROXYBUYINGTAXABLE.—If a registered per-16
3241	3241	son provides taxable property or services to a person either 17
3242	3242	as a gift, prize, reward, or as remuneration for employ-18
3243	3243	ment, and such taxable property or services were not pre-19
3244	3244	viously subject to tax pursuant to section 101, then the 20
3245	3245	provision of such taxable property or services by the reg-21
3246	3246	istered person shall be deemed the conversion of such tax-22
3247	3247	able property or services to personal use subject to tax 23
3248	3248	pursuant to section 103(c) at the tax inclusive fair market 24
3249	3249	value of such taxable property or services. 25
3250	3250	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00104 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3251	3251	kjohnson on DSK7ZCZBW3PROD with $$_JOB 105
3252	3252	•HR 25 IH
3253	3253	‘‘(f) SUBSTANCEOVERFORM.—The substance of a 1
3254	3254	transaction will prevail over its form if the transaction has 2
3255	3255	no bona fide economic purpose and is designed to evade 3
3256	3256	tax imposed by this subtitle. 4
3257	3257	‘‘(g) C
3258	3258	ERTAINEMPLOYEEDISCOUNTSTAXABLE.— 5
3259	3259	‘‘(1) E
3260	3260	MPLOYEE DISCOUNT .—For purposes of 6
3261	3261	this subsection, the term ‘employee discount’ means 7
3262	3262	an employer’s offer of taxable property or services 8
3263	3263	for sale to its employees or their families (within the 9
3264	3264	meaning of section 302(b)) for less than the offer of 10
3265	3265	such taxable property or services to the general pub-11
3266	3266	lic. 12
3267	3267	‘‘(2) E
3268	3268	MPLOYEE DISCOUNT AMOUNT .—For pur-13
3269	3269	poses of this subsection, the employee discount 14
3270	3270	amount is the amount by which taxable property or 15
3271	3271	services are sold pursuant to an employee discount 16
3272	3272	below the amount for which such taxable property or 17
3273	3273	services would have been sold to the general public. 18
3274	3274	‘‘(3) T
3275	3275	AXABLE AMOUNT .—If the employee dis-19
3276	3276	count amount exceeds 20 percent of the price that 20
3277	3277	the taxable property or services would have been sold 21
3278	3278	to the general public, then the sale of such taxable 22
3279	3279	property or services by the employer shall be deemed 23
3280	3280	the conversion of such taxable property or services 24
3281	3281	to personal use and tax shall be imposed on the tax-25
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3283	3283	kjohnson on DSK7ZCZBW3PROD with $$_JOB 106
3284	3284	•HR 25 IH
3285	3285	able employee discount amount. The taxable em-1
3286	3286	ployee discount amount shall be— 2
3287	3287	‘‘(A) the employee discount amount, minus 3
3288	3288	‘‘(B) 20 percent of the amount for which 4
3289	3289	said taxable property or services would have 5
3290	3290	been sold to the general public. 6
3291	3291	‘‘(h) S
3292	3292	ATURDAY, SUNDAY, ORLEGALHOLIDAY.— 7
3293	3293	When the last day prescribed for performing any act re-8
3294	3294	quired by this subtitle falls on a Saturday, Sunday, or 9
3295	3295	legal holiday (in the jurisdiction where the return is to 10
3296	3296	be filed), the performance of such act shall be considered 11
3297	3297	timely if it is performed on the next day which is not a 12
3298	3298	Saturday, Sunday, or legal holiday (in the jurisdiction 13
3299	3299	where the return is to be filed). 14
3300	3300	‘‘SEC. 902. TRANSITION MATTERS. 15
3301	3301	‘‘(a) I
3302	3302	NVENTORY.— 16
3303	3303	‘‘(1) Q
3304	3304	UALIFIED INVENTORY .—Inventory held 17
3305	3305	by a trade or business on the close of business on 18
3306	3306	December 31, 2026, shall be qualified inventory if it 19
3307	3307	is sold— 20
3308	3308	‘‘(A) before December 31, 2027, 21
3309	3309	‘‘(B) by a registered person, and 22
3310	3310	‘‘(C) subject to the tax imposed by section 23
3311	3311	101. 24
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3313	3313	kjohnson on DSK7ZCZBW3PROD with $$_JOB 107
3314	3314	•HR 25 IH
3315	3315	‘‘(2) COSTS.—For purposes of this section, 1
3316	3316	qualified inventory shall have the cost that it had for 2
3317	3317	Federal income tax purposes for the trade or busi-3
3318	3318	ness as of December 31, 2026 (including any 4
3319	3319	amounts capitalized by reason of section 263A of the 5
3320	3320	Internal Revenue Code of 1986 as in effect on De-6
3321	3321	cember 31, 2026). 7
3322	3322	‘‘(3) T
3323	3323	RANSITIONAL INVENTORY CREDIT .—The 8
3324	3324	trade or business which held the qualified inventory 9
3325	3325	on the close of business on December 31, 2026, shall 10
3326	3326	be entitled to a transitional inventory credit equal to 11
3327	3327	the cost of the qualified inventory (determined in ac-12
3328	3328	cordance with paragraph (2)) times the rate of tax 13
3329	3329	imposed by section 101. 14
3330	3330	‘‘(4) T
3331	3331	IMING OF CREDIT.—The credit provided 15
3332	3332	under paragraph (3) shall be allowed with respect to 16
3333	3333	the month when the inventory is sold subject to the 17
3334	3334	tax imposed by this subtitle. Said credit shall be re-18
3335	3335	ported as an intermediate and export sales credit 19
3336	3336	and the person claiming said credit shall attach sup-20
3337	3337	porting schedules in the form that the Secretary 21
3338	3338	may prescribe. 22
3339	3339	‘‘(b) W
3340	3340	ORK-IN-PROCESS.—For purposes of this sec-23
3341	3341	tion, inventory shall include work-in-process. 24
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3343	3343	kjohnson on DSK7ZCZBW3PROD with $$_JOB 108
3344	3344	•HR 25 IH
3345	3345	‘‘(c) QUALIFIEDINVENTORYHELD BYBUSINESSES 1
3346	3346	N
3347	3347	OTSELLINGSAIDQUALIFIEDINVENTORY AT RE-2
3348	3348	TAIL.— 3
3349	3349	‘‘(1) I
3350	3350	N GENERAL.—Qualified inventory held by 4
3351	3351	businesses that sells said qualified inventory not sub-5
3352	3352	ject to tax pursuant to section 102(a) shall be eligi-6
3353	3353	ble for the transitional inventory credit only if that 7
3354	3354	business (or a business that has successor rights 8
3355	3355	pursuant to paragraph (2)) receives certification in 9
3356	3356	a form satisfactory to the Secretary that the quali-10
3357	3357	fied inventory was subsequently sold subject to the 11
3358	3358	tax imposed by this subtitle. 12
3359	3359	‘‘(2) T
3360	3360	RANSITIONAL INVENTORY CREDIT RIGHT 13
3361	3361	MAY BE SOLD.—The business entitled to the transi-14
3362	3362	tional inventory credit may sell the right to receive 15
3363	3363	said transitional inventory credit to the purchaser of 16
3364	3364	the qualified inventory that gave rise to the credit 17
3365	3365	entitlement. Any purchaser of such qualified inven-18
3366	3366	tory (or property or services into which the qualified 19
3367	3367	inventory has been incorporated) may sell the right 20
3368	3368	to said transitional inventory credit to a subsequent 21
3369	3369	purchaser of said qualified inventory (or property or 22
3370	3370	services into which the qualified inventory has been 23
3371	3371	incorporated). 24
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3373	3373	kjohnson on DSK7ZCZBW3PROD with $$_JOB 109
3374	3374	•HR 25 IH
3375	3375	‘‘SEC. 903. WAGES TO BE REPORTED TO SOCIAL SECURITY 1
3376	3376	ADMINISTRATION. 2
3377	3377	‘‘(a) I
3378	3378	NGENERAL.—Employers shall submit such in-3
3379	3379	formation to the Social Security Administration as is re-4
3380	3380	quired by the Social Security Administration to calculate 5
3381	3381	Social Security benefits under title II of the Social Secu-6
3382	3382	rity Act, including wages paid, in a form prescribed by 7
3383	3383	the Secretary. A copy of the employer submission to the 8
3384	3384	Social Security Administration relating to each employee 9
3385	3385	shall be provided to each employee by the employer. 10
3386	3386	‘‘(b) W
3387	3387	AGES.—For purposes of this section, the term 11
3388	3388	‘wages’ means all cash remuneration for employment (in-12
3389	3389	cluding tips to an employee by third parties provided that 13
3390	3390	the employer or employee maintains records documenting 14
3391	3391	such tips) including self-employment income; except that 15
3392	3392	such term shall not include— 16
3393	3393	‘‘(1) any insurance benefits received (including 17
3394	3394	death benefits), 18
3395	3395	‘‘(2) pension or annuity benefits received, 19
3396	3396	‘‘(3) tips received by an employee over $5,000 20
3397	3397	per year, and 21
3398	3398	‘‘(4) benefits received under a government enti-22
3399	3399	tlement program (including Social Security benefits 23
3400	3400	and unemployment compensation benefits). 24
3401	3401	‘‘(c) S
3402	3402	ELF-EMPLOYMENTINCOME.—For purposes of 25
3403	3403	subsection (b), the term ‘self-employment income’ means 26
3404	3404	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00109 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3405	3405	kjohnson on DSK7ZCZBW3PROD with $$_JOB 110
3406	3406	•HR 25 IH
3407	3407	gross payments received for taxable property or services 1
3408	3408	minus the sum of— 2
3409	3409	‘‘(1) gross payments made for taxable property 3
3410	3410	or services (without regard to whether tax was paid 4
3411	3411	pursuant to section 101 on such taxable property or 5
3412	3412	services), and 6
3413	3413	‘‘(2) wages paid by the self-employed person to 7
3414	3414	employees of the self-employed person. 8
3415	3415	‘‘SEC. 904. TRUST FUND REVENUE. 9
3416	3416	‘‘(a) S
3417	3417	ECRETARYTOMAKEALLOCATION OFSALES 10
3418	3418	T
3419	3419	AXREVENUE.—The Secretary shall allocate the revenue 11
3420	3420	received by virtue of the tax imposed by section 101 in 12
3421	3421	accordance with this section. The revenue shall be allo-13
3422	3422	cated among— 14
3423	3423	‘‘(1) the general revenue, 15
3424	3424	‘‘(2) the old-age and survivors insurance trust 16
3425	3425	fund, 17
3426	3426	‘‘(3) the disability insurance trust fund, 18
3427	3427	‘‘(4) the hospital insurance trust fund, and 19
3428	3428	‘‘(5) the Federal supplementary medical insur-20
3429	3429	ance trust fund. 21
3430	3430	‘‘(b) G
3431	3431	ENERALRULE.— 22
3432	3432	‘‘(1) G
3433	3433	ENERAL REVENUE .—The proportion of 23
3434	3434	total revenue allocated to the general revenue shall 24
3435	3435	be the same proportion as the rate in section 25
3436	3436	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00110 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3437	3437	kjohnson on DSK7ZCZBW3PROD with $$_JOB 111
3438	3438	•HR 25 IH
3439	3439	101(b)(4) bears to the combined Federal tax rate 1
3440	3440	percentage (as defined in section 101(b)(3)). 2
3441	3441	‘‘(2) The amount of revenue allocated to the 3
3442	3442	old-age and survivors insurance and disability insur-4
3443	3443	ance trust funds shall be the same proportion as the 5
3444	3444	old-age, survivors and disability insurance rate (as 6
3445	3445	defined in subsection (d)) bears to the combined 7
3446	3446	Federal tax rate percentage (as defined in section 8
3447	3447	101(b)(3)). 9
3448	3448	‘‘(3) The amount of revenue allocated to the 10
3449	3449	hospital insurance and Federal supplementary med-11
3450	3450	ical insurance trust funds shall be the same propor-12
3451	3451	tion as the hospital insurance rate (as defined in 13
3452	3452	subsection (e)) bears to the combined Federal tax 14
3453	3453	rate percentage (as defined in section 101(b)(3)). 15
3454	3454	‘‘(c) C
3455	3455	ALENDARYEAR2027.—Notwithstanding sub-16
3456	3456	section (b), the revenue allocation pursuant to subsection 17
3457	3457	(a) for calendar year 2027 shall be as follows: 18
3458	3458	‘‘(1) 64.83 percent of total revenue to general 19
3459	3459	revenue, 20
3460	3460	‘‘(2) 27.43 percent of total revenue to the old- 21
3461	3461	age and survivors insurance and disability insurance 22
3462	3462	trust funds, and 23
3463	3463	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00111 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3464	3464	kjohnson on DSK7ZCZBW3PROD with $$_JOB 112
3465	3465	•HR 25 IH
3466	3466	‘‘(3) 7.74 percent of total revenue to the hos-1
3467	3467	pital insurance and Federal supplementary medical 2
3468	3468	insurance trust funds. 3
3469	3469	‘‘(d) O
3470	3470	LD-AGE, SURVIVORS ANDDISABILITYINSUR-4
3471	3471	ANCERATE.—The old-age, survivors and disability insur-5
3472	3472	ance rate shall be determined by the Social Security Ad-6
3473	3473	ministration. The old-age, survivors and disability insur-7
3474	3474	ance rate shall be that sales tax rate which is necessary 8
3475	3475	to raise the same amount of revenue that would have been 9
3476	3476	raised by imposing a 12.4 percent tax on the Social Secu-10
3477	3477	rity wage base (including self-employment income) as de-11
3478	3478	termined in accordance with chapter 21 of the Internal 12
3479	3479	Revenue Code most recently in effect prior to the enact-13
3480	3480	ment of this Act. The rate shall be determined using actu-14
3481	3481	arially sound methodology and announced at least 6 15
3482	3482	months prior to the beginning of the calendar year for 16
3483	3483	which it applies. 17
3484	3484	‘‘(e) H
3485	3485	OSPITALINSURANCERATE.—The hospital in-18
3486	3486	surance rate shall be determined by the Social Security 19
3487	3487	Administration. The hospital insurance rate shall be that 20
3488	3488	sales tax rate which is necessary to raise the same amount 21
3489	3489	of revenue that would have been raised by imposing a 2.9 22
3490	3490	percent tax on the Medicare wage base (including self-em-23
3491	3491	ployment income) as determined in accordance with chap-24
3492	3492	ter 21 of the Internal Revenue Code most recently in effect 25
3493	3493	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00112 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3494	3494	kjohnson on DSK7ZCZBW3PROD with $$_JOB 113
3495	3495	•HR 25 IH
3496	3496	prior to the enactment of this Act. The rate shall be deter-1
3497	3497	mined using actuarially sound methodology and an-2
3498	3498	nounced at least 6 months prior to the beginning of the 3
3499	3499	calendar year for which it applies. 4
3500	3500	‘‘(f) A
3501	3501	SSISTANCE.—The Secretary shall provide such 5
3502	3502	technical assistance as the Social Security Administration 6
3503	3503	shall require to determine the old-age, survivors and dis-7
3504	3504	ability insurance rate and the hospital insurance rate. 8
3505	3505	‘‘(g) F
3506	3506	URTHERALLOCATIONS.— 9
3507	3507	‘‘(1) O
3508	3508	LD-AGE, SURVIVORS AND DISABILITY IN -10
3509	3509	SURANCE.—The Secretary shall allocate revenue re-11
3510	3510	ceived because of the old-age, survivors and dis-12
3511	3511	ability insurance rate to the old-age and survivors 13
3512	3512	insurance trust fund and the disability insurance 14
3513	3513	trust fund in accordance with law or, in the absence 15
3514	3514	of other statutory provision, in the same proportion 16
3515	3515	that the old-age and survivors insurance trust fund 17
3516	3516	receipts bore to the sum of the old-age and survivors 18
3517	3517	insurance trust fund receipts and the disability in-19
3518	3518	surance trust fund receipts in calendar year 2026 20
3519	3519	(taking into account only receipts pursuant to chap-21
3520	3520	ter 21 of the Internal Revenue Code). 22
3521	3521	‘‘(2) H
3522	3522	OSPITAL INSURANCE .—The Secretary 23
3523	3523	shall allocate revenue received because of the hos-24
3524	3524	pital insurance rate to the hospital insurance trust 25
3525	3525	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00113 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3526	3526	kjohnson on DSK7ZCZBW3PROD with $$_JOB 114
3527	3527	•HR 25 IH
3528	3528	fund and the Federal supplementary medical insur-1
3529	3529	ance trust fund in accordance with law or, in the ab-2
3530	3530	sence of other statutory provision, in the same pro-3
3531	3531	portion that hospital insurance trust fund receipts 4
3532	3532	bore to the sum of the hospital insurance trust fund 5
3533	3533	receipts and Federal supplementary medical insur-6
3534	3534	ance trust fund receipts in calendar year 2026 (tak-7
3535	3535	ing into account only receipts pursuant to chapter 8
3536	3536	21 of the Internal Revenue Code). 9
3537	3537	‘‘SEC. 905. WITHHOLDING OF TAX ON NONRESIDENT ALIENS 10
3538	3538	AND FOREIGN CORPORATIONS. 11
3539	3539	‘‘(a) I
3540	3540	NGENERAL.—All persons, in whatever capacity 12
3541	3541	acting (including lessees or mortgagors or real or personal 13
3542	3542	property, fiduciaries, employers, and all officers and em-14
3543	3543	ployees of the United States) having control, receipt, cus-15
3544	3544	tody, disposal, or payment of any income to the extent 16
3545	3545	such income constitutes gross income from sources within 17
3546	3546	the United States of any nonresident alien individual, for-18
3547	3547	eign partnership, or foreign corporation shall deduct and 19
3548	3548	withhold from that income a tax equal to 23 percent there-20
3549	3549	of. 21
3550	3550	‘‘(b) E
3551	3551	XCEPTION.—No tax shall be required to be de-22
3552	3552	ducted from interest on portfolio debt investments. 23
3553	3553	‘‘(c) T
3554	3554	REATYCOUNTRIES.—In the case of payments 24
3555	3555	to nonresident alien individuals, foreign partnerships, or 25
3556	3556	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3557	3557	kjohnson on DSK7ZCZBW3PROD with $$_JOB 115
3558	3558	•HR 25 IH
3559	3559	foreign corporations that have a residence in (or the na-1
3560	3560	tionality of a country) that has entered into a tax treaty 2
3561	3561	with the United States, then the rate of withholding tax 3
3562	3562	prescribed by the treaty shall govern.’’. 4
3563	3563	SEC. 202. CONFORMING AND TECHNICAL AMENDMENTS. 5
3564	3564	(a) R
3565	3565	EPEALS.—The following provisions of the Inter-6
3566	3566	nal Revenue Code of 1986 are repealed: 7
3567	3567	(1) Subchapter A of chapter 61 of subtitle D 8
3568	3568	(as redesignated by section 104) (relating to infor-9
3569	3569	mation and returns). 10
3570	3570	(2) Sections 6103 through 6116 of subchapter 11
3571	3571	B of chapter 61 of subtitle D (as so redesignated). 12
3572	3572	(3) Section 6157 (relating to unemployment 13
3573	3573	taxes). 14
3574	3574	(4) Section 6163 (relating to estate taxes). 15
3575	3575	(5) Section 6164 (relating to corporate taxes). 16
3576	3576	(6) Section 6166 (relating to estate taxes). 17
3577	3577	(7) Section 6167 (relating to foreign expropria-18
3578	3578	tion losses). 19
3579	3579	(8) Sections 6201, 6205, and 6207 (relating to 20
3580	3580	assessments). 21
3581	3581	(9) Subchapter C of chapter 63 of subtitle D 22
3582	3582	(as so redesignated) (relating to tax treatment of 23
3583	3583	partnership items). 24
3584	3584	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00115 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3585	3585	kjohnson on DSK7ZCZBW3PROD with $$_JOB 116
3586	3586	•HR 25 IH
3587	3587	(10) Section 6305 (relating to collections of cer-1
3588	3588	tain liabilities). 2
3589	3589	(11) Sections 6314, 6315, 6316, and 6317 (re-3
3590	3590	lating to payments of repealed taxes). 4
3591	3591	(12) Sections 6324, 6324A, and 6324B (relat-5
3592	3592	ing to liens for estate and gift taxes). 6
3593	3593	(13) Section 6344 (relating to cross references). 7
3594	3594	(14) Section 6411 (relating to carrybacks). 8
3595	3595	(15) Section 6413 (relating to employment 9
3596	3596	taxes). 10
3597	3597	(16) Section 6414 (relating to withheld income 11
3598	3598	taxes). 12
3599	3599	(17) Section 6422 (relating to cross references). 13
3600	3600	(18) Section 6425 (relating to overpayment of 14
3601	3601	corporate estimated taxes). 15
3602	3602	(19) Section 6504 (relating to cross references). 16
3603	3603	(20) Section 6652 (relating to failure to file 17
3604	3604	certain information returns). 18
3605	3605	(21) Sections 6654 and 6655 (relating to fail-19
3606	3606	ure to payment estimated income tax). 20
3607	3607	(22) Section 6662 (relating to penalties). 21
3608	3608	(23) Sections 6677 through 6711 (relating to 22
3609	3609	income tax related penalties). 23
3610	3610	(24) Part II of subchapter B of chapter 68 (re-24
3611	3611	lating to certain information returns). 25
3612	3612	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00116 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3614	3614	•HR 25 IH
3615	3615	(25) Part I of subchapter A of chapter 70 (re-1
3616	3616	lating to termination of taxable year). 2
3617	3617	(26) Section 6864 (relating to certain 3
3618	3618	carrybacks). 4
3619	3619	(27) Section 7103 (relating to cross references). 5
3620	3620	(28) Section 7204 (relating to withholding 6
3621	3621	statements). 7
3622	3622	(29) Section 7211 (relating certain statements). 8
3623	3623	(30) Section 7231 (relating to failure to obtain 9
3624	3624	certain licenses). 10
3625	3625	(31) Section 7270 (relating to insurance poli-11
3626	3626	cies). 12
3627	3627	(32) Section 7404 (relating to estate taxes). 13
3628	3628	(33) Section 7407 (relating to income tax pre-14
3629	3629	parers). 15
3630	3630	(34) Section 7408 (relating to income tax shel-16
3631	3631	ters). 17
3632	3632	(35) Section 7409 (relating to 501(c)(3) organi-18
3633	3633	zations). 19
3634	3634	(36) Section 7427 (relating to income tax pre-20
3635	3635	parers). 21
3636	3636	(37) Section 7428 (relating to 501(c)(3) organi-22
3637	3637	zations). 23
3638	3638	(38) Section 7476 (relating to declaratory judg-24
3639	3639	ments relating to retirement plans). 25
3640	3640	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00117 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3641	3641	kjohnson on DSK7ZCZBW3PROD with $$_JOB 118
3642	3642	•HR 25 IH
3643	3643	(39) Section 7478 (relating to declaratory judg-1
3644	3644	ments relating to certain tax-exempt obligations). 2
3645	3645	(40) Section 7508 (relating to postponing time 3
3646	3646	for certain actions required by the income, estate, 4
3647	3647	and gift tax). 5
3648	3648	(41) Section 7509 (relating to Postal Service 6
3649	3649	payroll taxes). 7
3650	3650	(42) Section 7512 (relating to payroll taxes). 8
3651	3651	(43) Section 7517 (relating to estate and gift 9
3652	3652	tax evaluation). 10
3653	3653	(44) Section 7518 (relating to Merchant Marine 11
3654	3654	tax incentives). 12
3655	3655	(45) Section 7519 (relating to taxable years). 13
3656	3656	(46) Section 7520 (relating to insurance and 14
3657	3657	annuity valuation tables). 15
3658	3658	(47) Section 7523 (relating to reporting Fed-16
3659	3659	eral income and outlays on Form 1040s). 17
3660	3660	(48) Section 7611 (relating to church income 18
3661	3661	tax exemptions and church unrelated business in-19
3662	3662	come tax inquiries). 20
3663	3663	(49) Section 7654 (relating to possessions’ in-21
3664	3664	come taxes). 22
3665	3665	(50) Section 7655 (relating to cross references). 23
3666	3666	(51) Section 7701(a)(16). 24
3667	3667	(52) Section 7701(a)(19). 25
3668	3668	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3669	3669	kjohnson on DSK7ZCZBW3PROD with $$_JOB 119
3670	3670	•HR 25 IH
3671	3671	(53) Section 7701(a)(20). 1
3672	3672	(54) Paragraphs (32) through (38) of section 2
3673	3673	7701(a). 3
3674	3674	(55) Paragraphs (41) through (46) of section 4
3675	3675	7701(a). 5
3676	3676	(56) Section 7701(b). 6
3677	3677	(57) Subsections (e) through (m) of section 7
3678	3678	7701. 8
3679	3679	(58) Section 7702 (relating to life insurance 9
3680	3680	contracts). 10
3681	3681	(59) Section 7702A (relating to modified en-11
3682	3682	dowment contracts). 12
3683	3683	(60) Section 7702B (relating to long-term care 13
3684	3684	insurance). 14
3685	3685	(61) Section 7703 (relating to the determina-15
3686	3686	tion of marital status). 16
3687	3687	(62) Section 7704 (relating to publicly traded 17
3688	3688	partnerships). 18
3689	3689	(63) Section 7805. 19
3690	3690	(64) Section 7851. 20
3691	3691	(65) Section 7872. 21
3692	3692	(66) Section 7873. 22
3693	3693	(b) O
3694	3694	THERCONFORMING AND TECHNICALAMEND-23
3695	3695	MENTS.— 24
3696	3696	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00119 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3698	3698	•HR 25 IH
3699	3699	(1) Section 6151 of such Code is amended by 1
3700	3700	striking subsection (b) and by redesignating sub-2
3701	3701	section (c) as subsection (b). 3
3702	3702	(2) Section 6161 of such Code is amended to 4
3703	3703	read as follows: 5
3704	3704	‘‘SEC. 6161. EXTENSION OF TIME FOR PAYING TAX. 6
3705	3705	‘‘The Secretary, except as otherwise provided in this 7
3706	3706	title, may extend the time for payment of the amount of 8
3707	3707	the tax shown or required to be shown on any return, re-9
3708	3708	port, or declaration required under authority of this title 10
3709	3709	for a reasonable period not to exceed 6 months (12 months 11
3710	3710	in the case of a taxpayer who is abroad).’’. 12
3711	3711	(3) Section 6211(a) of such Code is amended— 13
3712	3712	(A) by striking ‘‘income, estate, and gift 14
3713	3713	taxes imposed by subtitles A and B and’’, 15
3714	3714	(B) by striking ‘‘subtitle A or B, or’’, and 16
3715	3715	(C) by striking ‘‘, as defined in subsection 17
3716	3716	(b)(2),’’ in paragraph (2). 18
3717	3717	(4) Section 6211(b) of such Code is amended to 19
3718	3718	read as follows: 20
3719	3719	‘‘(b) R
3720	3720	EBATEDEFINED.—For purposes of subsection 21
3721	3721	(a)(2), the term ‘rebate’ means so much of an abatement, 22
3722	3722	credit, refund, or other payment, as was made on the 23
3723	3723	ground that the tax imposed by chapter 41, 42, 43, or 24
3724	3724	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00120 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
3725	3725	kjohnson on DSK7ZCZBW3PROD with $$_JOB 121
3726	3726	•HR 25 IH
3727	3727	44 was less than the excess of the amount specified in 1
3728	3728	subsection (a)(1) over the rebates previously made.’’. 2
3729	3729	(5) Section 6212(b) of such Code is amended to 3
3730	3730	read as follows: 4
3731	3731	‘‘(b) A
3732	3732	DDRESS FORNOTICE OFDEFICIENCY.—In the 5
3733	3733	absence of notice to the Secretary under section 6903 of 6
3734	3734	the existence of a fiduciary relationship, notice of a defi-7
3735	3735	ciency in respect of a tax imposed by chapter 42, 43, or 8
3736	3736	44 if mailed to the taxpayer at his last known address, 9
3737	3737	shall be sufficient for purposes of such chapter and this 10
3738	3738	chapter even if such taxpayer is deceased, or is under a 11
3739	3739	legal disability, or, in the case of a corporation has termi-12
3740	3740	nated its existence.’’. 13
3741	3741	(6) Section 6302(b) of such Code is amended 14
3742	3742	by striking ‘‘21,’’. 15
3743	3743	(7) Section 6302 of such Code is amended by 16
3744	3744	striking subsections (g) and (i) and by redesignating 17
3745	3745	subsection (h) as subsection (g). 18
3746	3746	(8) Section 6325 of such Code is amended by 19
3747	3747	striking subsection (c) and by redesignating sub-20
3748	3748	sections (d) through (h) as subsections (c) through 21
3749	3749	(g), respectively. 22
3750	3750	(9) Section 6402(d) of such Code is amended 23
3751	3751	by striking paragraph (3). 24
3752	3752	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00121 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3754	3754	•HR 25 IH
3755	3755	(10) Section 6402 of such Code is amended by 1
3756	3756	striking subsection (j) and by redesignating sub-2
3757	3757	section (k) as subsection (j). 3
3758	3758	(11) Section 6501(b) of such Code is amend-4
3759	3759	ed— 5
3760	3760	(A) by striking ‘‘except tax imposed by 6
3761	3761	chapter 3, 4, 21, or 24,’’ in paragraph (1), and 7
3762	3762	(B) by striking paragraph (2) and by re-8
3763	3763	designating paragraphs (3) and (4) as para-9
3764	3764	graphs (2) and (3), respectively. 10
3765	3765	(12) Section 6501(c) of such Code is amended 11
3766	3766	by striking paragraphs (5) through (9). 12
3767	3767	(13) Section 6501(e) of such Code is amended 13
3768	3768	by striking ‘‘subsection (c)—’’ and all that follows 14
3769	3769	through ‘‘subtitle D’’ in paragraph (3) and inserting 15
3770	3770	‘‘subsection (c), in the case of a return of a tax im-16
3771	3771	posed under a provision of subtitle B’’. 17
3772	3772	(14) Section 6501 of such Code is amended by 18
3773	3773	striking subsections (f) through (k) and subsections 19
3774	3774	(m) and (n) and by redesignating subsection (1) as 20
3775	3775	subsection (f). 21
3776	3776	(15) Section 6503(a) of such Code is amend-22
3777	3777	ed— 23
3778	3778	(A) by striking paragraph (2), 24
3779	3779	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00122 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3781	3781	•HR 25 IH
3782	3782	(B) by striking ‘‘DEFICIENCY.—’’ and all 1
3783	3783	that follows through ‘‘The running’’ and insert-2
3784	3784	ing ‘‘D
3785	3785	EFICIENCY.—The running’’, and 3
3786	3786	(C) by striking ‘‘income, estate, gift and’’. 4
3787	3787	(16) Section 6503 of such Code is amended by 5
3788	3788	striking subsections (e), (f), (i), and (k) and by re-6
3789	3789	designating subsections (g), (h), and (j) as sub-7
3790	3790	sections (e), (f), and (g), respectively. 8
3791	3791	(17) Section 6511 of such Code is amended by 9
3792	3792	striking subsections (d) and (g) and by redesig-10
3793	3793	nating subsections (f) and (h) as subsections (d) and 11
3794	3794	(e), respectively. 12
3795	3795	(18) Section 6512(b)(1) of such Code is amend-13
3796	3796	ed by striking ‘‘of income tax for the same taxable 14
3797	3797	year, of gift tax for the same calendar year or cal-15
3798	3798	endar quarter, of estate tax in respect of the taxable 16
3799	3799	estate of the same decedent, or’’. 17
3800	3800	(19) Section 6513 of such Code is amended— 18
3801	3801	(A) by striking ‘‘(a) E
3802	3802	ARLYRETURN OR 19
3803	3803	A
3804	3804	DVANCEPAYMENT OFTAX.—’’, and 20
3805	3805	(B) by striking subsections (b) and (e). 21
3806	3806	(20) Chapter 67 of such Code is amended by 22
3807	3807	striking subchapters A through D and inserting the 23
3808	3808	following: 24
3809	3809	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00123 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3811	3811	•HR 25 IH
3812	3812	‘‘SEC. 6601. INTEREST ON OVERPAYMENTS AND UNDER-1
3813	3813	PAYMENT. 2
3814	3814	‘‘(a) U
3815	3815	NDERPAYMENTS.—If any amount of tax im-3
3816	3816	posed by this title is not paid on or before the last date 4
3817	3817	prescribed for payment, interest on such amount at the 5
3818	3818	Federal short-term rate (as defined in section 511(b)) 6
3819	3819	shall be paid from such last date to the date paid. 7
3820	3820	‘‘(b) O
3821	3821	VERPAYMENTS.—Interest shall be allowed and 8
3822	3822	paid upon any overpayment in respect of any internal rev-9
3823	3823	enue tax at the Federal short-term rate (as defined in sec-10
3824	3824	tion 511(b)) from 60 days after the date of the overpay-11
3825	3825	ment until the date the overpayment is refunded.’’. 12
3826	3826	(21) Section 6651(a)(1) of such Code is amend-13
3827	3827	ed by striking ‘‘subchapter A of chapter 61 (other 14
3828	3828	than part III thereof),’’. 15
3829	3829	(22) Section 6656 of such Code is amended by 16
3830	3830	striking subsection (c) and by redesignating sub-17
3831	3831	section (d) as subsection (c). 18
3832	3832	(23) Section 6663 of such Code is amended by 19
3833	3833	striking subsection (c). 20
3834	3834	(24) Section 6664(c) of such Code is amend-21
3835	3835	ed— 22
3836	3836	(A) by striking ‘‘Exception.—’’ and all 23
3837	3837	that follows through ‘‘No penalty’’ and insert-24
3838	3838	ing ‘‘Exception.—No penalty’’, and 25
3839	3839	(B) by striking paragraphs (2) and (3). 26
3840	3840	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00124 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3842	3842	•HR 25 IH
3843	3843	(25) Chapter 72 of such Code is amended by 1
3844	3844	striking all matter preceding section 7011. 2
3845	3845	(26) Section 7422 of such Code is amended by 3
3846	3846	striking subsections (h) and (i) and by redesignating 4
3847	3847	subsections (j) and (k) as subsections (h) and (i), re-5
3848	3848	spectively. 6
3849	3849	(27) Section 7451 of such Code is amended to 7
3850	3850	read as follows: 8
3851	3851	‘‘SEC. 7451. FEE FOR FILING PETITION. 9
3852	3852	‘‘The Tax Court is authorized to impose a fee in an 10
3853	3853	amount not in excess of $60 to be fixed by the Tax Court 11
3854	3854	for the filing of any petition for the redetermination of 12
3855	3855	a deficiency.’’. 13
3856	3856	(28) Section 7454 of such Code is amended by 14
3857	3857	striking subsection (b) and by redesignating sub-15
3858	3858	section (c) as subsection (b). 16
3859	3859	(29) Section 7463(a) of such Code is amend-17
3860	3860	ed— 18
3861	3861	(A) by striking paragraphs (2) and (3), 19
3862	3862	(B) by redesignating paragraph (4) as 20
3863	3863	paragraph (2), and 21
3864	3864	(C) by striking ‘‘D’’ in paragraph (2) (as 22
3865	3865	so redesignated) and inserting ‘‘B’’. 23
3866	3866	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00125 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3868	3868	•HR 25 IH
3869	3869	(30) Section 7463(c) of such Code is amended 1
3870	3870	by striking ‘‘sections 6214(a) and’’ and inserting 2
3871	3871	‘‘section’’. 3
3872	3872	(31) Section 7463(e) of such Code is amended 4
3873	3873	by striking ‘‘, to the extent that the procedures de-5
3874	3874	scribed in subchapter B of chapter 63 apply’’. 6
3875	3875	(32) Section 7481 of such Code is amended by 7
3876	3876	striking subsection (d). 8
3877	3877	(33) Section 7608 of such Code is amended by 9
3878	3878	striking ‘‘subtitle E’’ each place it appears and in-10
3879	3879	serting ‘‘subtitle C’’. 11
3880	3880	(34) Section 7701(a)(29) of such Code is 12
3881	3881	amended by striking ‘‘1986’’ and inserting ‘‘2025’’. 13
3882	3882	(35) Section 7809(c) of such Code is amended 14
3883	3883	by striking paragraphs (1) and (4) and by redesig-15
3884	3884	nating paragraphs (2) and (3) as paragraphs (1) 16
3885	3885	and (2), respectively. 17
3886	3886	(36) Section 7871(a) of such Code is amended 18
3887	3887	by striking paragraphs (1) and (3) through (6) and 19
3888	3888	by redesignating paragraphs (2) and (7) as para-20
3889	3889	graphs (1) and (2), respectively. 21
3890	3890	(37) Section 7871 of such Code is amended by 22
3891	3891	striking subsection (c) and by redesignating sub-23
3892	3892	sections (d) and (e) as subsections (c) and (d), re-24
3893	3893	spectively. 25
3894	3894	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00126 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3896	3896	•HR 25 IH
3897	3897	(38) Section 8021 of such Code is amended by 1
3898	3898	striking subsection (a) and by redesignating sub-2
3899	3899	sections (b) through (f) as subsections (a) through 3
3900	3900	(e), respectively. 4
3901	3901	(39) Section 8022(2)(A) of such Code is 5
3902	3902	amended by striking ‘‘, particularly the income tax’’. 6
3903	3903	(40) Section 8023 of such Code is amended by 7
3904	3904	striking ‘‘Internal Revenue Service’’ each place it ap-8
3905	3905	pears and inserting ‘‘Department of the Treasury’’. 9
3906	3906	(41) Section 9501(b)(2) of such Code is amend-10
3907	3907	ed by striking subparagraph (C). 11
3908	3908	(42) Section 9702(a) of such Code is amended 12
3909	3909	by striking paragraph (4). 13
3910	3910	(43) Section 9705(a) of such Code is amended 14
3911	3911	by striking paragraph (4) and by redesignating 15
3912	3912	paragraph (5) as paragraph (4). 16
3913	3913	(44) Section 9706(d)(2)(A) of such Code is 17
3914	3914	amended by striking ‘‘6103’’ and inserting ‘‘605(e)’’. 18
3915	3915	(45) Section 9707 of such Code is amended by 19
3916	3916	striking subsection (f). 20
3917	3917	(46) Section 9712(d) of such Code is amended 21
3918	3918	by striking paragraph (5) and by redesignating 22
3919	3919	paragraph (6) as paragraph (5). 23
3920	3920	(47) Section 9803(a) of such Code is amended 24
3921	3921	by striking ‘‘(as defined in section 414(f))’’. 25
3922	3922	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3924	3924	•HR 25 IH
3925	3925	TITLE III—OTHER MATTERS 1
3926	3926	SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED 2
3927	3927	FEDERAL TAXES. 3
3928	3928	(a) A
3929	3929	PPROPRIATIONS.—Appropriations for any ex-4
3930	3930	penses of the Internal Revenue Service including proc-5
3931	3931	essing tax returns for years prior to the repeal of the taxes 6
3932	3932	repealed by title I of this Act, revenue accounting, man-7
3933	3933	agement, transfer of payroll and wage data to the Social 8
3934	3934	Security Administration for years after fiscal year 2029 9
3935	3935	shall not be authorized. 10
3936	3936	(b) R
3937	3937	ECORDS.—Federal records related to the admin-11
3938	3938	istration of taxes repealed by title I of this Act shall be 12
3939	3939	destroyed by the end of fiscal year 2029, except that any 13
3940	3940	records necessary to calculate Social Security benefits 14
3941	3941	shall be retained by the Social Security Administration 15
3942	3942	and any records necessary to support ongoing litigation 16
3943	3943	with respect to taxes owed or refunds due shall be retained 17
3944	3944	until final disposition of such litigation. 18
3945	3945	(c) C
3946	3946	ONFORMINGAMENDMENTS.—Section 7802 of 19
3947	3947	the Internal Revenue Code of 1986 is amended— 20
3948	3948	(1) by striking subsections (a) and (b) and by 21
3949	3949	redesignating subsections (c) and (d) as subsections 22
3950	3950	(a) and (b), 23
3951	3951	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00128 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3953	3953	•HR 25 IH
3954	3954	(2) by striking ‘‘Internal Revenue Service’’ each 1
3955	3955	place it appears and inserting ‘‘Department of the 2
3956	3956	Treasury’’, and 3
3957	3957	(3) by striking ‘‘Commissioner’’ or ‘‘Commis-4
3958	3958	sioner of Internal Revenue’’ each place they appear 5
3959	3959	and inserting ‘‘Secretary’’. 6
3960	3960	(d) E
3961	3961	FFECTIVEDATE.—The amendments made by 7
3962	3962	subsection (c) shall take effect on January 1, 2029. 8
3963	3963	SEC. 302. ADMINISTRATION OF OTHER FEDERAL TAXES. 9
3964	3964	(a) I
3965	3965	NGENERAL.—Section 7801 of the Internal Rev-10
3966	3966	enue Code of 1986 (relating to the authority of the De-11
3967	3967	partment of the Treasury) is amended by adding at the 12
3968	3968	end the following: 13
3969	3969	‘‘(d) E
3970	3970	XCISETAXBUREAU.—There shall be in the 14
3971	3971	Department of the Treasury an Excise Tax Bureau to ad-15
3972	3972	minister those excise taxes not administered by the Bu-16
3973	3973	reau of Alcohol, Tobacco, Firearms and Explosives. 17
3974	3974	‘‘(e) S
3975	3975	ALESTAXBUREAU.—There shall be in the De-18
3976	3976	partment of the Treasury a Sales Tax Bureau to admin-19
3977	3977	ister the national sales tax in those States where it is re-20
3978	3978	quired pursuant to section 404, and to discharge other 21
3979	3979	Federal duties and powers relating to the national sales 22
3980	3980	tax (including those required by sections 402, 403, and 23
3981	3981	405). The Office of Revenue Allocation shall be within the 24
3982	3982	Sales Tax Bureau.’’. 25
3983	3983	VerDate Sep 11 2014 03:53 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00129 Fmt 6652 Sfmt 6201 E:\BILLS\H25.IH H25
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3985	3985	•HR 25 IH
3986	3986	(b) ASSISTANTGENERAL COUNSELS.—Section 1
3987	3987	7801(a)(2) of such Code is amended to read as follows: 2
3988	3988	‘‘(2) A
3989	3989	SSISTANT GENERAL COUNSELS .—The 3
3990	3990	Secretary of the Treasury may appoint, without re-4
3991	3991	gard to the provisions of the civil service laws, and 5
3992	3992	fix the duties of not more than 5 assistant general 6
3993	3993	counsels.’’. 7
3994	3994	SEC. 303. SALES TAX INCLUSIVE SOCIAL SECURITY BENE-8
3995	3995	FITS INDEXATION. 9
3996	3996	Subparagraph (D) of section 215(i)(1) of the Social 10
3997	3997	Security Act (42 U.S.C. 415(i)(1)) (relating to cost-of-liv-11
3998	3998	ing increases in Social Security benefits) is amended to 12
3999	3999	read as follows: 13
4000	4000	‘‘(D)(i) the term ‘CPI increase percentage’, 14
4001	4001	with respect to a base quarter or cost-of-living quar-15
4002	4002	ter in any calendar year, means the percentage 16
4003	4003	(rounded to the nearest one-tenth of 1 percent) by 17
4004	4004	which the Consumer Price Index for that quarter (as 18
4005	4005	prepared by the Department of Labor) exceeds such 19
4006	4006	index for the most recent prior calendar quarter 20
4007	4007	which was a base quarter under subparagraph 21
4008	4008	(A)(ii) or, if later, the most recent cost-of-living 22
4009	4009	computation quarter under subparagraph (B), 23
4010	4010	‘‘(ii) if the Consumer Price Index (as so pre-24
4011	4011	pared) does not include the national sales tax paid, 25
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4014	4014	•HR 25 IH
4015	4015	then the term ‘CPI increase percentage’, with re-1
4016	4016	spect to a base quarter or cost-of-living quarter in 2
4017	4017	any calendar year, means the percentage (rounded 3
4018	4018	to the nearest one-tenth of 1 percent) by which the 4
4019	4019	product of— 5
4020	4020	‘‘(I) the Consumer Price Index for that 6
4021	4021	quarter (as so prepared), and 7
4022	4022	‘‘(II) the national sales tax factor, 8
4023	4023	exceeds such index for the most recent prior cal-9
4024	4024	endar quarter which was a base quarter under sub-10
4025	4025	paragraph (A)(ii) or, if later, the most recent cost 11
4026	4026	of living computation quarter under subparagraph 12
4027	4027	(B), and 13
4028	4028	‘‘(iii) the national sales tax factor is equal to 14
4029	4029	one plus the quotient that is— 15
4030	4030	‘‘(I) the sales tax rate imposed by section 16
4031	4031	101 of the Internal Revenue Code of 2025, di-17
4032	4032	vided by 18
4033	4033	‘‘(II) the quantity that is one minus such 19
4034	4034	sales tax rate.’’. 20
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4037	4037	•HR 25 IH
4038	4038	TITLE IV—SUNSET OF SALES 1
4039	4039	TAX IF SIXTEENTH AMEND-2
4040	4040	MENT NOT REPEALED 3
4041	4041	SEC. 401. ELIMINATION OF SALES TAX IF SIXTEENTH 4
4042	4042	AMENDMENT NOT REPEALED. 5
4043	4043	If the Sixteenth Amendment to the Constitution of 6
4044	4044	the United States is not repealed before the end of the 7
4045	4045	7-year period beginning on the date of the enactment of 8
4046	4046	this Act, then all provisions of, and amendments made by, 9
4047	4047	this Act shall not apply to any use or consumption in any 10
4048	4048	year beginning after December 31 of the calendar year 11
4049	4049	in which or with which such period ends, except that the 12
4050	4050	Sales Tax Bureau of the Department of the Treasury shall 13
4051	4051	not be terminated until 6 months after such December 31. 14
4052	4052	Æ
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