,,ii #aafth ,,congress #ast ,session ,s4 #gfe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #ac1 #bjai,mr4 ,thune 7for himself and ,mr4 ,wyden7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to promote neutrality1 simplicity1 and fairness in the taxation of digital goods and digital services4 #a4 ,short title ,this ,act may be cited as the ,digital ,goods and ,services ,tax ,fairness ,act of #bjai4 #b4 ,multiple and discriminatory taxes prohibited 7a7 ,multiple taxes ,no ,state or local jurisdiction shall impose multiple taxes on the sale or use of a covered electronic good or service4 7b7 ,discriminatory taxes ,no ,state or local jurisdiction shall impose discriminatory taxes on the sale or use of a digital good or a digital service4 #c4 ,sourcing ,limitation ,subject to section #f7;a71 taxes on the sale of a covered electronic good or service may only be imposed by a ,state or local jurisdiction whose territorial limits encompass the customer tax address4 #d4 ,customer tax address 7a7 ,seller obligation 7#a7 ,in general ,subject to subsection 7e77#b71 a seller shall be responsible for obtaining and maintaining in the ordinary course of business the customer tax address with respect to the sale of a covered electronic good or service1 and shall be responsible for collecting and remitting the correct amount of tax for the ,state and local jurisdictions whose territorial limits encompass the customer tax address if the ,state or local jurisdiction has the authority to require such collection and remittance by the seller4 7#b7 ,certain transactions ,when a customer tax address is not a business location of the seller under clause 7i7 of section #g7d77;,a7-- 7,a7 if the sale is a separate and discrete transaction1 then a seller shall use reasonable efforts to obtain a customer tax address1 as such efforts are described in clauses 7iii71 7iv71 and 7v7 of section #g7d77;,a71 before resorting to using a customer tax address as determined by clause 7vi7 of such section #g7d77;,a72 and 7,b7 if the sale is not a separate and discrete transaction1 then a seller shall use reasonable efforts to obtain a customer tax address1 as such efforts are described in clauses 7ii71 7iii71 7iv71 and 7v7 of section #g7d77;,a71 before resorting to using a customer tax address as determined by clause 7vi7 of such section #g7d77;,a74 7b7 ,reliance on customer-,provided information ,a seller that relies in good faith on information provided by a customer to determine a customer tax address shall not be held liable for any additional tax based on a different determination of that customer tax address by a ,state or local jurisdiction or court of competent jurisdiction1 unless and until binding notice is given as provided in subsection 7c74 7c7 ,address correction ,if a ,state or local jurisdiction is authorized under ,state law to administer a tax1 and the jurisdiction determines that the customer tax address determined by a seller is not the customer tax address that would have been determined under section #g7d77;,a7 if the seller had the additional information provided by the ,state or local jurisdiction1 then the jurisdiction may give binding notice to the seller to correct the customer tax address on a prospective basis1 effective not less than #de days after the date of such notice1 if-- 7#a7 when the determination is made by a local jurisdiction1 such local jurisdiction obtains the consent of all affected local jurisdictions within the ,state before giving such notice of determination2 and 7#b7 before the ,state or local jurisdiction gives such notice of determination1 the customer is given an opportunity to demonstrate in accordance with applicable ,state or local tax administrative procedures that the address used is the customer tax address4 7d7 ,coordination with sourcing of mobile telecommunications service 7#a7 ,in general ,if-- 7,a7 a covered electronic good or service is sold to a customer by a home service provider of mobile telecommunications service that is subject to being sourced under section #aag of title #d1 ,united ,states ,code1 or the charges for a covered electronic good or service are billed to the customer by such a home service provider2 and 7,b7 the covered electronic good or service is delivered1 transferred1 or provided electronically by means of mobile telecommunications service that is deemed to be provided by such home service provider under section #aag of such title1 then the home service provider and1 if different1 the seller of the covered electronic good or service1 may presume that the customer's place of primary use for such mobile telecommunications service is the customer tax address described in section #g7d77;,a77ii7 with respect to the sale of such covered electronic good or service4 7#b7 ,definitions ,for purposes of this subsection1 the terms home service provider1 mobile telecommunications service1 and place of primary use have the same meanings as in section #abd of title #d1 ,united ,states ,code4 7e7 ,multiple locations 7#a7 ,in general ,if a digital service1 audio or video programming service1 or ,vo,i,p service is sold to a customer and available for use by the customer in multiple locations simultaneously1 the seller may determine the customer tax addresses using a reasonable and consistent method based on the addresses of use as provided by the customer and determined in agreement with the customer at the time of sale or at a later time4 7#b7 ,direct customer payment 7,a7 ,establishment of direct payment procedures ,each ,state and local jurisdiction shall provide reasonable procedures that permit the direct payment by a qualified customer1 as determined under procedures established by the ,state or local jurisdiction1 of taxes that are on the sale of covered electronic goods or services to multiple locations of the customer and that would1 absent such procedures1 be required or permitted by law to be collected from the customer by the seller4 7,b7 ,effect of customer compliance with direct payment procedures ,when a qualified customer elects to pay tax directly under the procedures established under subparagraph 7,a71 the seller shall-- 7i7 have no obligation to obtain the multiple customer tax addresses under subsection 7a72 and 7ii7 not be liable for such tax1 provided the seller follows the ,state and local procedures and maintains appropriate documentation in its books and records4 #e4 ,treatment of bundled transactions1 digital codes1 and other rules 7a7 ,bundled transaction ,if a charge for a distinct and identifiable covered electronic good or service is aggregated with and not separately stated from one or more charges for other distinct and identifiable goods or services1 which may include other covered electronic goods or services1 and any part of the aggregation is subject to taxation1 then the entire aggregation may be subject to taxation1 except to the extent that the seller can identify1 by reasonable and verifiable standards1 one or more charges for the nontaxable goods or services from its books and records kept in the ordinary course of business4 7b7 ,digital code ,the tax treatment of the sale of a digital code shall be the same as the tax treatment of the sale of the covered electronic good or service to which the digital code relates4 7c7 ,application of fixed charges to ,vo,i,p service ,with respect to ,vo,i,p service1 if any tax is based on a fixed charge1 such fixed charge shall be based on the number of simultaneous outbound calls the customer has purchased the right to place1 regardless of actual usage or the number of the customer's phone numbers4 7d7 ,rule of construction ,the sale of a digital code shall be considered the sale transaction for purposes of this ,act4 #f4 ,no inference 7a7 ,customer liability ,subject to the prohibition provided in section #b1 nothing in this ,act modifies1 impairs1 supersedes1 or authorizes the modification1 impairment1 or supersession of any law allowing a ,state or local jurisdiction to impose tax on and collect tax directly from a customer based upon use of a covered electronic good or service in such ,state4 7b7 ,non-,tax matters ,this ,act shall not be construed to apply in1 or to affect1 any non-tax regulatory matter or other context4 7c7 ,state tax matters ,the definitions contained in this ,act are intended to be used with respect to interpreting this ,act4 ,nothing in this ,act shall prohibit a ,state or local jurisdiction from adopting different nomenclature to enforce the provisions set forth in this ,act4 7d7 ,internet ,tax ,freedom ,act ,nothing in this ,act modifies1 impairs1 supersedes1 or authorizes the modification1 impairment1 or supersession of the ,internet ,tax ,freedom ,act 7#dg ,u4,s4,c4 #aea note74 #g4 ,definitions ,in this ,act1 the following definitions shall apply3 7#a7 ,audio or video programming service ,the term audio or video programming service means programming provided by1 or generally considered comparable to programming provided by1 a radio or television broadcast station1 regardless of the facilities used to deliver or provide such service4 7#b7 ,covered electronic good or service ,the term covered electronic good or service means a digital good1 digital service1 audio or video programming service1 or ,vo,i,p service4 7#c7 ,customer ,the term customer means a person that purchases a covered electronic good or service or digital code4 7#d7 ,customer tax address 7,a7 ,in general ,the term customer tax address means-- 7i7 with respect to the sale of a covered electronic good or service that is received by the customer at a business location of the seller1 such business location2 7ii7 if clause 7i7 does not apply and the primary use location of the covered electronic good or service is known by the seller1 such location2 7iii7 if neither clause 7i7 nor clause 7ii7 applies1 and if the location where the covered electronic good or service is received by the customer1 or by a donee of the customer that is identified by such customer1 is known to the seller and maintained in the ordinary course of the seller's business1 such location2 7iv7 if none of clauses 7i7 through 7iii7 applies1 the location indicated by an address for the customer that is available from the business records of the seller that are maintained in the ordinary course of the seller's business1 when use of the address does not constitute bad faith2 7v7 if none of clauses 7i7 through 7iv7 applies1 the location indicated by an address for the customer obtained during the consummation of the sale1 including the address of a customer's payment instrument1 when use of this address does not constitute bad faith2 or 7vi7 if none of clauses 7i7 through 7v7 applies1 including the circumstance in which the seller is without sufficient information to apply such paragraphs1 one of the following locations1 as selected by the seller1 provided that such location is consistently used by the seller for all such sales to which this clause applies3 7,i7 ,the location in the ,united ,states of the headquarters of the seller's business4 7,,ii7 ,the location in the ,united ,states where the seller has the greatest number of employees4 7,,iii7 ,the location in the ,united ,states-- 7aa7 from which the seller makes digital goods available for electronic delivery2 or 7bb7 from which digital services1 ,vo,i,p services1 or audio or video programming services are provided electronically4 7,b7 ,exclusion ,for purposes of this paragraph1 the term location does not include the location of a server1 machine1 or device1 including an intermediary server1 that is used simply for routing or storage4 7#e7 ,delivered or transferred electronically2 provided electronically ,the term delivered or transferred electronically means the delivery or transfer of a digital good by means other than tangible storage media1 and the term provided electronically means the provision of a digital service1 audio or video programming service1 or ,vo,i,p service remotely via electronic means4 7#f7 ,digital code ,the term digital code means a code that conveys only the right to obtain a covered electronic good or service without making further payment4 7#g7 ,digital good ,the term digital good means any software or other good that is delivered or transferred electronically1 including sounds1 images1 data1 facts1 or combinations thereof1 maintained in digital format1 where such software or other good is the true object of the transaction1 rather than the activity or service performed to create such software or other good1 that results in the delivery to the customer of a complete copy of such software or other good1 with the right to use permanently or for a specified period1 and includes1 as an incidental component1 charges for the delivery or transfer of such software or other good4 7#h7 ,digital service 7,a7 ,in general ,the term digital service means any service that is provided electronically1 including the provision of remote access to or use of a digital good1 and includes1 as an incidental component1 charges for the electronic provision of the digital service to the customer4 7,b7 ,exceptions ,the term digital service does not include a service that is predominantly attributable to the direct1 contemporaneous expenditure of live human effort1 skill1 or expertise1 a telecommunications service1 an ancillary service1 ,internet access1 audio or video programming service1 or a hotel intermediary service4 7,c7 ,clarifying definitions ,for purposes of subparagraph 7,b7-- 7i7 the term ancillary service means a service that is associated with or incidental to the provision of telecommunications services1 including1 but not limited to1 detailed telecommunications billing1 directory assistance1 vertical service1 and voice mail services2 7ii7 the term hotel intermediary service-- 7,i7 means a service provided by a person that facilitates the sale1 use1 or possession of a hotel room or other transient accommodation to the general public2 and 7,,ii7 does not include the purchase of a digital service by a person who provides a hotel intermediary service or by a person who owns1 operates1 or manages hotel rooms or other transient accommodations2 7iii7 the term ,internet access means any service included within the definition of the term internet access under section #aaje7e7 of the ,internet ,tax ,freedom ,act 7#dg ,u4,s4,c4 #aea note72 and 7iv7 the term telecommunications service-- 7,i7 means the electronic transmission1 conveyance1 or routing of voice1 data1 audio1 video1 or any other information or signals to a point1 or between or among points2 7,,ii7 includes such transmission1 conveyance1 or routing in which computer processing applications are used to act on the form1 code1 or protocol of the content for purposes of transmission1 conveyance1 or routing1 without regard to whether such service is referred to as ,vo,i,p service2 and 7,,iii7 does not include data processing and information services that allow data to be generated1 acquired1 stored1 processed1 or retrieved and delivered by an electronic transmission to a purchaser where such purchaser's primary purpose for the underlying transaction is the processed data or information4 7#i7 ,discriminatory tax 7,a7 ,in general ,the term discriminatory tax means any tax imposed by a ,state or local jurisdiction on digital goods or digital services that-- 7i7 is not generally imposed and legally collectible by such ,state or local jurisdiction on transactions involving similar property1 goods1 or services accomplished through other means2 7ii7 is not generally imposed and legally collectible at the same or higher rate by such ,state or local jurisdiction on transactions involving similar property1 goods1 or services accomplished through other means2 7iii7 imposes an obligation to collect or pay the tax on a person1 other than the seller1 that the ,state or local jurisdiction would not impose in the case of transactions involving similar property1 goods1 or services accomplished through other means2 7iv7 establishes a classification of digital services or digital goods providers for purposes of establishing a higher tax rate to be imposed on such providers than the tax rate generally imposed on providers of similar property1 goods1 or services accomplished through other means2 or 7v7 does not provide a resale and component part exemption for the purchase of digital goods or digital services in a manner consistent with the ,state's resale and component part exemption applicable to the purchase of similar property1 goods1 or services accomplished through other means4 7,b7 ,clarification ,for purposes of this paragraph1 any tax that is limited in its application to only certain services1 providers1 or industries shall not be considered to be generally imposed1 with the exception of any ,state tax which is imposed-- 7i7 in lieu of a generally imposed tax2 and 7ii7 at a rate which is not greater than the rate of such tax4 7#aj7 ,local jurisdiction 7,a7 ,in general ,the term local jurisdiction means-- 7i7 any municipality1 city1 county1 township1 parish1 transportation district1 or assessment jurisdiction2 7ii7 any other local jurisdiction in the territorial jurisdiction of the ,united ,states with the authority to impose a tax2 and 7iii7 any governmental entity or person acting on behalf of an entity described in clause 7i7 or 7ii7 and with the authority to assess1 impose1 levy1 or collect taxes4 7,b7 ,exception ,the term local jurisdiction shall not include a ,state4 7#aa7 ,multiple tax 7,a7 ,in general ,the term multiple tax means any tax that is imposed by one ,state1 one or more of that ,state's local jurisdictions1 or both on the same or essentially the same covered electronic good or service that is also subject to tax imposed by another ,state1 one or more local jurisdictions in such other ,state 7whether or not at the same rate or on the same basis71 or both1 without a credit for taxes paid in other jurisdictions4 7,b7 ,exception ,the term multiple tax shall not include a tax imposed by a ,state and one or more political subdivisions thereof on the same covered electronic good or service or a tax on persons engaged in selling covered electronic goods or services which also may have been subject to a sales or use tax thereon4 7#ab7 ,primary use location 7,a7 ,in general ,the term primary use location means a street address representative of where the customer's use of a covered electronic good or service will primarily occur1 which shall be the residential street address or a business street address of the actual end user of the covered electronic good or service1 including1 if applicable1 the address of a donee of the customer that is designated by the customer4 7,b7 ,customers that are not individuals ,for the purpose of subparagraph 7,a71 if the customer is not an individual1 the primary use location is determined by the location of the customer's employees or equipment 7machine or device7 that make use of the covered electronic good or service1 but does not include the location of a person who uses the covered electronic good or service as the purchaser of a separate good or service from the customer4 7#ac7 ,sale and purchase ,the terms sale and purchase1 and all variations thereof1 shall include the provision1 lease1 rent1 license1 and corresponding variations thereof4 7#ad7 ,seller 7,a7 ,in general ,the term seller means a person making sales of covered electronic goods or services4 7,b7 ,exceptions ,a person that provides billing service or electronic delivery or transport service on behalf of another unrelated or unaffiliated person1 with respect to the other person's sale of a covered electronic good or service1 shall not be treated as a seller of that covered electronic good or service4 7,c7 ,rule of construction ,nothing in this paragraph shall preclude the person providing the billing service or electronic delivery or transport service from entering into a contract with the seller to assume the tax collection and remittance responsibilities of the seller4 7#ae7 ,separate and discrete transaction ,the term separate and discrete transaction means a sale of a covered electronic good or service or digital code sold in a single transaction that does not involve any additional charges or continued payment in order to maintain possession of the digital good or access to or usage of the digital service1 audio or video programming service1 or ,vo,i,p service4 7#af7 ,state ,the term ,state means-- 7,a7 any of the several ,states1 the ,district of ,columbia1 or any territory or possession of the ,united ,states2 and 7,b7 any governmental entity or person acting on behalf of an entity described in subparagraph 7,a7 and with the authority to assess1 impose1 levy1 or collect taxes4 7#ag7 ,tax 7,a7 ,in general ,the term tax means any charge imposed by any ,state or local jurisdiction for the purpose of generating revenues for governmental purposes1 including any tax1 charge1 or fee levied as a fixed charge or measured by gross amounts charged1 regardless of whether such tax1 charge1 or fee is imposed on the seller or the customer and regardless of the terminology used to describe the tax1 charge1 or fee4 7,b7 ,exclusions ,the term tax does not include an ad valorem tax1 a tax on or measured by capital1 a tax on or measured by net income1 apportioned gross income1 apportioned revenue1 apportioned taxable margin1 or apportioned gross receipts1 or a ,state or local jurisdiction business and occupation tax imposed on a broad range of business activity in a ,state that enacted a ,state tax on gross receipts after ,january #a1 #aicb1 and before ,january #a1 #aicf4 7#ah7 ,vo,i,p service ,the term ,vo,i,p service means any interconnected ,vo,i,p service1 as defined in section #i4c of title #dg1 ,code of ,federal ,regulations1 or any successor technology4 #h4 ,effective date2 application 7a7 ,general rule ,this ,act shall take effect #fj days after the date of enactment of this ,act4 7b7 ,exceptions ,a ,state or local jurisdiction shall have #b years from the date of enactment of this ,act to modify any ,state or local tax statute enacted prior to the date of enactment of this ,act to conform to the provisions set forth in sections #d and #e of this ,act4 7c7 ,application to liabilities and pending cases ,nothing in this ,act shall affect liability for taxes accrued and enforced before the effective date of this ,act or affect ongoing litigation relating to such taxes4 #i4 ,savings provision ,if any provision or part of this ,act is held to be invalid or unenforceable by a court of competent jurisdiction for any reason1 such holding shall not affect the validity or enforceability of any other provision or part of this ,act unless such holding substantially limits or impairs the essential elements of this ,act1 in which case this ,act shall be deemed invalid and of no legal effect as of the date that the judgment on such holding is final and no longer subject to appeal4