1-1     By:  Oliveira (Senate Sponsor - Van de Putte)         H.B. No. 1845
 1-2           (In the Senate - Received from the House May 7, 2001;
 1-3     May 7, 2001, read first time and referred to Committee on Finance;
 1-4     May 11, 2001, reported favorably by the following vote:  Yeas 11,
 1-5     Nays 0; May 11, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to simplified sales and use tax administration.
 1-9           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10           SECTION 1. Subtitle D, Title 2, Tax Code, is amended by
1-11     adding Chapter 142 to read as follows:
1-12        CHAPTER 142.  SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT
1-13           Sec. 142.001.  TITLE. This chapter may be cited as the
1-14     Simplified Sales and Use Tax Administration Act.
1-15           Sec. 142.002.  DEFINITIONS. In this chapter:
1-16                 (1)  "Agreement" means the Streamlined Sales and Use
1-17     Tax Agreement as amended and adopted on January 27, 2001.
1-18                 (2)  "Certified automated system" means software
1-19     certified jointly by the states that are signatories to the
1-20     agreement to compute the tax imposed by each jurisdiction on a
1-21     transaction, determine the amount of tax to remit to the
1-22     appropriate state, and maintain a record of the transaction.
1-23                 (3)  "Certified service provider" means an agent
1-24     certified jointly by the states that are signatories to the
1-25     agreement to perform all of the seller's sales tax functions.
1-26                 (4)  "Sales tax" means a sales tax administered or
1-27     computed under this subtitle or Subtitle C, Title 3, or in a
1-28     similar manner.
1-29                 (5)  "Seller" means a person who sells, leases, or
1-30     rents personal property or services.
1-31                 (6)  "Use tax" means a use tax administered or computed
1-32     under this subtitle or Subtitle C, Title 3, or in a similar manner.
1-33           Sec. 142.003.  LEGISLATIVE FINDING. The legislature finds
1-34     that  a simplified sales and use tax system will reduce and over
1-35     time eliminate the burden and costs of all vendors to collect this
1-36     state's sales and use tax.  The legislature also finds that this
1-37     state should participate in multistate discussions to review or
1-38     amend the terms of the agreement to simplify and modernize sales
1-39     and use tax administration to reduce the burden of tax compliance
1-40     for all sellers and for all types of commerce.
1-41           Sec. 142.004.  NEGOTIATIONS. This state shall enter into
1-42     multistate discussions for the purposes of reviewing or amending
1-43     the agreement embodying the simplification requirements prescribed
1-44     by Section 142.007.  This state may be represented by not more than
1-45     four delegates for purposes of those discussions.
1-46           Sec. 142.005.  AUTHORITY TO ENTER INTO AGREEMENT. (a)  The
1-47     comptroller is authorized and directed to participate in the
1-48     development of the Streamlined Sales and Use Tax Agreement with one
1-49     or more states to simplify and modernize sales and use tax
1-50     administration in order to substantially reduce the burden of tax
1-51     compliance for all sellers and for all types of commerce.  In the
1-52     development of the agreement, the comptroller may act jointly with
1-53     other states that are members of the agreement to establish
1-54     standards for certification of a certified service provider and
1-55     certified automated system and establish performance standards for
1-56     multistate sellers.
1-57           (b)  The comptroller or the comptroller's designee may
1-58     represent this state before the other states that are signatories
1-59     to the agreement.
1-60           Sec. 142.006.  RELATIONSHIP TO STATE LAW. The agreement
1-61     authorized by this chapter does not, in whole or part, invalidate
1-62     or amend a law of this state. Adoption of the agreement by this
1-63     state does not amend or modify a law of this state. Implementation
1-64     of a condition of the agreement in this state, whether adopted
 2-1     before, at, or after membership of this state in the agreement,
 2-2     must be by the action of this state.
 2-3           Sec. 142.007.  AGREEMENT REQUIREMENTS. (a)  The comptroller
 2-4     may not enter into the agreement authorized by this chapter unless
 2-5     the agreement requires each state to comply with the requirements
 2-6     prescribed by this section.
 2-7           (b)  The agreement must set restrictions to limit over time
 2-8     the number of state rates.
 2-9           (c)  The agreement must establish uniform standards for:
2-10                 (1)  the sourcing of transactions to taxing
2-11     jurisdictions;
2-12                 (2)  the administration of exempt sales; and
2-13                 (3)  sales and use tax returns and remittances.
2-14           (d)  The agreement must provide a central, electronic
2-15     registration system that allows a seller to register to collect and
2-16     remit sales and use taxes for all signatory states.
2-17           (e)  The agreement must provide that registration with the
2-18     central registration system and the collection of sales and use
2-19     taxes in the signatory states will not be used as a factor in
2-20     determining whether the seller has nexus with a state for any tax.
2-21           (f)  The agreement must provide for reduction of the burdens
2-22     of complying with local sales and use taxes through:
2-23                 (1)  restricting variances between the state and local
2-24     tax bases;
2-25                 (2)  requiring states to administer any sales and use
2-26     taxes levied by local jurisdictions within the state so that
2-27     sellers collecting and remitting these taxes will not have to
2-28     register or file returns with, remit funds to, or be subject to
2-29     independent audits from local taxing jurisdictions;
2-30                 (3)  restricting the frequency of changes in the local
2-31     sales and use tax rates and setting effective dates for the
2-32     application of local jurisdictional boundary changes to local sales
2-33     and use taxes; and
2-34                 (4)  providing notice of changes in local sales and use
2-35     tax rates and of changes in the boundaries of local taxing
2-36     jurisdictions.
2-37           (g)  The agreement must outline any monetary allowances that
2-38     are to be provided by the states to sellers or certified service
2-39     providers.  The agreement must allow for a joint public and private
2-40     sector study of the compliance cost on sellers and certified
2-41     service providers to collect sales and use taxes for state and
2-42     local governments under various levels of complexity to be
2-43     completed by July 1, 2002.
2-44           (h)  The agreement must require each state to certify
2-45     compliance with the terms of the agreement before joining and to
2-46     maintain compliance, under the laws of the member state, with all
2-47     provisions of the agreement while a member.
2-48           (i)  The agreement must require each state to adopt a uniform
2-49     policy for certified service providers that protects the privacy of
2-50     consumers and maintains the confidentiality of tax information.
2-51           (j)  The agreement must provide for the appointment of an
2-52     advisory council of private sector representatives and an advisory
2-53     council of nonmember state representatives to consult with in the
2-54     administration of the agreement.
2-55           Sec. 142.008.  COOPERATING SOVEREIGNS. The agreement
2-56     authorized by this chapter is an accord among individual
2-57     cooperating sovereigns in furtherance of their governmental
2-58     functions. The agreement provides a mechanism among the member
2-59     states to establish and maintain a cooperative, simplified system
2-60     for the application and administration of sales and use taxes under
2-61     the duly adopted law of each member state.
2-62           Sec. 142.009.  LIMITED BINDING AND BENEFICIAL EFFECT. (a)
2-63     The agreement authorized by this chapter binds and inures only to
2-64     the benefit of this state and the other member states. A person,
2-65     other than a member state, is not an intended beneficiary of the
2-66     agreement. A benefit to a person other than a state is established
2-67     by the law of this state and the other member states and not by the
2-68     terms of the agreement.
2-69           (b)  Consistent with Subsection (a), a person does not have a
 3-1     cause of action or defense under the agreement or by virtue of this
 3-2     state's approval of the agreement. A person may not challenge, in
 3-3     any action brought under any law, an action or inaction by any
 3-4     department, agency, or other instrumentality of this state, or any
 3-5     political subdivision of this state, on the ground that the action
 3-6     or inaction is inconsistent with the agreement.
 3-7           (c)  A law of this state, or the application of the law, may
 3-8     not be declared invalid as to any person or circumstance on the
 3-9     ground that the provision or application is inconsistent with the
3-10     agreement.
3-11           Sec. 142.010.  SELLER AND THIRD PARTY LIABILITY. (a)  A
3-12     certified service provider is the agent of a seller, with whom the
3-13     certified service provider has contracted, for the collection and
3-14     remittance of sales and use taxes. As the seller's agent, the
3-15     certified service provider is liable for sales and use tax due each
3-16     member state on all sales transactions the provider processes for
3-17     the seller except as provided by this section.
3-18           (b)  A seller that contracts with a certified service
3-19     provider is not liable to this state for sales or use tax due on
3-20     transactions processed by the certified service provider unless the
3-21     seller misrepresented the type of items it sells or committed
3-22     fraud. In the absence of probable cause to believe that the seller
3-23     has committed fraud or made a material misrepresentation, the
3-24     seller is not subject to audit on the transactions processed by the
3-25     certified service provider. A seller is subject to audit for
3-26     transactions not processed by the certified service provider. The
3-27     member states acting jointly may perform a system check of the
3-28     seller and review the seller's procedures to determine if the
3-29     certified service provider's system is functioning properly and the
3-30     extent to which the seller's transactions are being processed by
3-31     the certified service provider.
3-32           (c)  A person that provides a certified automated system is
3-33     responsible for the proper functioning of that system and is liable
3-34     to this state for underpayments of tax attributable to errors in
3-35     the functioning of the certified automated system. A seller that
3-36     uses a certified automated system remains responsible and is liable
3-37     to this state for reporting and remitting tax.
3-38           (d)  A seller that has a proprietary system for determining
3-39     the amount of tax due on transactions and has signed an agreement
3-40     establishing a performance standard for that system is liable for
3-41     the failure of the system to meet the performance standard.
3-42           SECTION 2.  This Act takes effect immediately if it receives
3-43     a vote of two-thirds of all the members elected to each house, as
3-44     provided by Section 39, Article III, Texas Constitution.  If this
3-45     Act does not receive the vote necessary for immediate effect, this
3-46     Act takes effect September 1, 2001.
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