Streamlined Sales Tax Simplification Act

Mr. President, I rise today to introduce the Sales Tax Fairness and Simplification Act, a bill that will level the playing field for all retailers--in-store, catalog, and online--so each retailer has the same sales tax collection responsibility. All retail sales should be treated equally. The bill will also help States begin to recover from years of budgetary shortfalls.

This bill is not a disguised attempt to increase taxes or put a new tax on the Internet. Consumers are already supposed to pay sales and use taxes in most States for purchases made over the phone, by mail, or via the Internet. Unfortunately, most consumers are unaware they are required to pay this use tax on purchases the retailer does not choose to collect sales tax on at the time of purchase.

That means consumers who buy products online are required to keep track of their purchases and then pay the outstanding use tax obligation on their State tax forms. This has proven to be unrealistic, but what is real is most people do not know this or do not comply with the requirement. As such, States are losing billions of dollars in annual revenue. This legislation will help both consumers and States by reducing the burden on consumers and providing a mechanism that will allow States to systematically and fairly collect the taxes already owed to them.

This bill is not about new taxes. Simply put, if Congress continues to allow remote sales taxes to go uncollected and electronic commerce continues to grow as predicted, other taxes--such as income or property taxes--will have to be increased to offset the lost revenue. I want to avoid that. That is why we need to implement a plan that will allow States to generate revenue using mechanisms already approved by their local leaders.

This bill is about economic growth. Sales and use taxes provide critical revenue to pay for our schools, our police officers, firefighters, road construction, and more. It will bring more money-- money that is already owed--into rural areas that are struggling economically. It will also help businesses comply with the complicated State sales tax systems. That means the business resources that have historically been spent on tax compliance could be used, among other things, to hire new people and buy new equipment.

This bill is about tax simplification. As the Supreme Court identified in the Quill versus North Dakota decision in 1992, the complicated State and local sales tax systems across this country have created an undue burden on sellers. The Quill decision stated that a multitude of complicated and diverse State sales tax rules made it too onerous to require retailers to collect sales taxes unless they had a physical presence in the State of the buyer. Local brick-and-mortar retailers collect sales taxes, while many online and catalog retailers are exempt from collecting the same taxes. This is not only fundamentally unfair to Main Street retailers, but it is costing States and localities billions in lost revenue.

The bill will help relieve this burden by requiring States to meet the simplification standards outlined in the Streamlined Sales and Use Tax Agreement. Working with the business community, the States developed the Agreement to harmonize State sales tax rules, bring uniformity to definitions of items in the sales tax base, significantly reduce the paperwork burden

on retailers, and incorporate new technology to modernize many administrative procedures. This unprecedented Agreement will increase our Nation's economic efficiency and facilitate the growth of commerce by dramatically reducing red-tape and administrative burdens on all businesses and consumers. However, most importantly, the Agreement removes the liability for collection errors from the retailer and places it with the State. This historic Agreement was approved by 34 States and the District of Columbia on November 12, 2002.

The States have made tremendous progress in changing their State tax laws to become compliant with the Agreement. Already, 19 States have enacted legislation to change their tax laws and implement the requirements of the Agreement. On October 3, 2005, the Streamlined Sales and Use Tax Agreement became effective.

This bill requires States to implement and maintain these simplification measures before they can require any seller to collect and remit sales tax. The Streamlined Sales and Use Tax Agreement includes dramatic simplification in almost every aspect of sales and use tax collection and administration, especially for the sellers who sell their products in more than one State. Areas of simplification include exemption processing, uniform definitions, State level administration of local taxes, a reduced number of sales tax rates, determining the appropriate tax rate, and reduced audit burdens for sellers using the State-certified technology.

While the States have made great progress, the Quill decision held that allowing States to require collection is an issue that, ``Congress may be better qualified to resolve, and one that it has the ultimate power to resolve.'' The States have acted. It is now time for Congress to provide States that enact the Streamlined Sales and Use Tax Agreement with the authority to require remote retailers to collect sales taxes just as Main Street retailers do today.

Congress needs to ``level the playing field'' for all retailers--in- store, catalog, and online--so each has the same sales tax collection responsibility. All retail sales should be treated equally. I believe Congressional action is needed to provide States that implement the Streamlined Sales and Use Tax Agreement with the authority to collect sales and use taxes from remote retailers. Adoption of the Agreement and Congressional authorization will provide a level playing field for brick and mortar and remote retailers.

Senator Byron Dorgan of North Dakota and I have worked tirelessly to assist sellers and State and local governments to find true simplification in almost every aspect of sales and use tax collection and administration. I want to thank Senator Dorgan for working with me on this policy issue for so many years. We have been successful in moving this issue forward from discussing it at the Federal level with Members of Congress to the drafting of the Streamlined Sales and Use Tax Agreement to approving the Governing Board this year to push forward with implementation.

For the past eleven months, Senator Dorgan and I have worked with all interested parties to try to find a mutually agreeable legislative package to introduce this year. Many hours have been dedicated in trying to find the right solution to address all concerns. I appreciate everyone's hard work on this piece of legislation and believe it is time to introduce the bill before the end of the year.

Senator Dorgan and I will be introducing two separate bills this year, but will continue to work with each other and all interested parties to find compromise on the outstanding policy issues of concern to the stakeholders. Some of the issues that will be further discussed include, but are not limited to, modifications to the small business exception language, inclusion of tribal governments language, and modifications to the language about transactional taxes on telecommunications services. Bill introduction does not stop us from negotiating and working together to improve the final product that should be enacted into public law. I look forward to working with Senator Dorgan and all interested parties to produce a compromise bill in 2006 that addresses all concerns raised over the past year.

The Sales Tax Fairness and Simplification Act provides States that implement the Streamlined Sales and Use Tax Agreement with the authority to collect sales or use taxes equally from all retailers. Adoption of the Agreement and Congressional authorization will provide a level playing field for brick and mortar and remote retailers.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I have been working closely with Senator Mike Enzi of Wyoming for several years now on Federal legislation that encourages and rewards State and local governments that radically simplify their sales tax systems by granting them authority to require large sellers to collect taxes on remote sales after substantial simplifications are implemented. This year we have delayed reintroducing related legislation that we cosponsored in the last Congress, S. 1736, primarily due to concerns that some parties have raised about the bill's small business exemption language.

After months of negotiation, there's still disagreement among the stakeholders about how the bill should define small remote sellers who would be exempted from the bill's sales tax collection requirements. Regrettably, the small business exemption issues have not been resolved to the satisfaction of all parties and Senator Enzi is re-introducing essentially our same proposal from the 108th Congress as he promised. I certainly respect his right and decision to do so.

However, I have been working on small business language that I think is a fair approach and will greatly improve the odds that this bill will become law.

The bill I am introducing today is identical to the bill that Senator Enzi is introducing today in every respect--except one. Instead of putting a small business exemption in the bill with a specific dollar threshold, my proposal sets up a process that I believe will help us get to the right answer. Under my proposal, the Small Business Administration (SBA) is required, after considering all relevant factors and soliciting input from the Treasury Department, the Streamlined Sales Tax Governing Board and others, to develop a rulemaking and propose to Congress a definition of those small sellers, including small businesses, which would not be required to collect and remit sales and use taxes. My bill provides

for the expedited consideration of SBA's proposal by the U.S. House and Senate and takes steps to ensure that a small sellers' exemption will ultimately be approved by Congress. States would be allowed to require impacted remote sellers to collect sales taxes only after federally mandated simplification is accomplished and a small business exemption is approved by Congress.

All of the other parts of my bill are identical to those included in Senator Enzi's bill. These provisions also deserve our immediate attention. There are over 7,000 tax jurisdictions across the country that rely on sales taxes to fund a range of local activities, from education and fire suppression to police protection and road construction. But billions of dollars in needed sales tax revenues go uncollected year after year in many jurisdictions due to a ruling by the U.S. Supreme Court in 1992 that said current State and local sales tax systems impose an undue burden on sellers without a physical presence in each State.

Internet and catalog sellers have argued that collecting and remitting sales taxes for thousands of different tax authorities is exceedingly complex. This is a legitimate complaint. And I understand why the U.S. Supreme Court in its Quill decision said that States and localities could not require sellers to collect sales tax on remote sales until the States and localities have first dramatically reduced the complexity and burden of collecting sales taxes.

The States and localities have stepped up to the challenge outlined in the Quill decision. For five years now, the States have been working with the retail community and local governments to develop a streamlined and uniform sales tax system agreement that will alleviate the burden of sales tax collection on local retailers and remote sellers.

The Streamlined Sales and Use Tax Agreement, which was approved by 34 States and the District of Columbia in November 2002, requires participating States to comply with dozens of stringent simplification requirements that streamline how State sales and use taxes are identified and collected. By early next year, 19 States will have enacted legislation to bring them into compliance with the Agreement and will be members of its Governing Board.

By harmonizing their State sales and use tax rules, bringing uniformity to definitions in the sales tax base, significantly reducing the paperwork burden on retailers, and incorporating a seamless electronic reporting process, compliance with the Agreement will result in a significantly reduced tax collection burden on all sellers.

As the volume of remote on-line retail sales grow, states are losing more and more sales tax revenues. An estimated $15 billion in sales and use taxes will go uncollected in 2005. This threatens the future ability of states and localities to make critical investments in even the most basic community services, while forcing local retailers who are required to collect sales taxes today to compete with large remote competitors who are not. Senator Enzi and I are determined to address this problem.

I think that the legislation I am introducing today strikes a reasonable balance between the interests of consumers, local retailers, remote sellers and the states. Having said that, I will be working with Senator Enzi early in the next session to see if we can put together a single approach that would address any remaining concerns about the small business exemption and help us move this legislative effort forward in the next session.

We will also have an opportunity to more fully examine some issues raised by the representatives of local governments and some Indian tribes about the impact of our initiative on their constituencies.

Mr. President, I have been working closely with Senator Mike Enzi of Wyoming for several years now on Federal legislation that encourages and rewards State and local governments that radically simplify their sales tax systems by granting them authority to require large sellers to collect taxes on remote sales after substantial simplifications are implemented. This year we have delayed reintroducing related legislation that we cosponsored in the last Congress, S. 1736, primarily due to concerns that some parties have raised about the bill's small business exemption language.

After months of negotiation, there's still disagreement among the stakeholders about how the bill should define small remote sellers who would be exempted from the bill's sales tax collection requirements. Regrettably, the small business exemption issues have not been resolved to the satisfaction of all parties and Senator Enzi is re-introducing essentially our same proposal from the 108th Congress as he promised. I certainly respect his right and decision to do so.

However, I have been working on small business language that I think is a fair approach and will greatly improve the odds that this bill will become law.

The bill I am introducing today is identical to the bill that Senator Enzi is introducing today in every respect--except one. Instead of putting a small business exemption in the bill with a specific dollar threshold, my proposal sets up a process that I believe will help us get to the right answer. Under my proposal, the Small Business Administration (SBA) is required, after considering all relevant factors and soliciting input from the Treasury Department, the Streamlined Sales Tax Governing Board and others, to develop a rulemaking and propose to Congress a definition of those small sellers, including small businesses, which would not be required to collect and remit sales and use taxes. My bill provides

for the expedited consideration of SBA's proposal by the U.S. House and Senate and takes steps to ensure that a small sellers' exemption will ultimately be approved by Congress. States would be allowed to require impacted remote sellers to collect sales taxes only after federally mandated simplification is accomplished and a small business exemption is approved by Congress.

All of the other parts of my bill are identical to those included in Senator Enzi's bill. These provisions also deserve our immediate attention. There are over 7,000 tax jurisdictions across the country that rely on sales taxes to fund a range of local activities, from education and fire suppression to police protection and road construction. But billions of dollars in needed sales tax revenues go uncollected year after year in many jurisdictions due to a ruling by the U.S. Supreme Court in 1992 that said current State and local sales tax systems impose an undue burden on sellers without a physical presence in each State.

Internet and catalog sellers have argued that collecting and remitting sales taxes for thousands of different tax authorities is exceedingly complex. This is a legitimate complaint. And I understand why the U.S. Supreme Court in its Quill decision said that States and localities could not require sellers to collect sales tax on remote sales until the States and localities have first dramatically reduced the complexity and burden of collecting sales taxes.

The States and localities have stepped up to the challenge outlined in the Quill decision. For five years now, the States have been working with the retail community and local governments to develop a streamlined and uniform sales tax system agreement that will alleviate the burden of sales tax collection on local retailers and remote sellers.

The Streamlined Sales and Use Tax Agreement, which was approved by 34 States and the District of Columbia in November 2002, requires participating States to comply with dozens of stringent simplification requirements that streamline how State sales and use taxes are identified and collected. By early next year, 19 States will have enacted legislation to bring them into compliance with the Agreement and will be members of its Governing Board.

By harmonizing their State sales and use tax rules, bringing uniformity to definitions in the sales tax base, significantly reducing the paperwork burden on retailers, and incorporating a seamless electronic reporting process, compliance with the Agreement will result in a significantly reduced tax collection burden on all sellers.

As the volume of remote on-line retail sales grow, states are losing more and more sales tax revenues. An estimated $15 billion in sales and use taxes will go uncollected in 2005. This threatens the future ability of states and localities to make critical investments in even the most basic community services, while forcing local retailers who are required to collect sales taxes today to compete with large remote competitors who are not. Senator Enzi and I are determined to address this problem.

I think that the legislation I am introducing today strikes a reasonable balance between the interests of consumers, local retailers, remote sellers and the states. Having said that, I will be working with Senator Enzi early in the next session to see if we can put together a single approach that would address any remaining concerns about the small business exemption and help us move this legislative effort forward in the next session.

We will also have an opportunity to more fully examine some issues raised by the representatives of local governments and some Indian tribes about the impact of our initiative on their constituencies.

Mr. President, I rise today to introduce a bill--the ``STEP UP Act''--to establish grants for summer school enrichment programs to increase the academic skills of students in need.

According to the 2005 Nation's Report Card of Educational Progress, the gap in reading scores between fourth grade children in poverty and their more affluent peers did not decrease between 1998 and 2005. Fewer than half of the fourth graders eligible for free or reduced priced lunch are able to read at even the basic level--a level attained by more than three-quarters of wealthier students. This data confirms that too many of our children are not attaining skills at levels that will lead to success, and too often, it is the children most in need who are left behind by the educational system.

Teachers understand that students return to school in the fall at levels below their performance of the previous spring. Educators know this as summer learning loss. Research has shown that students, on average, lose more than one month of reading skills and two months of math skills over the summer. That is the average.

But the impact of summer learning loss is greatest for children living in poverty, children with learning disabilities, and children who do not speak English at home. Achievement levels for such children often plummet during the summer, so that that the reading skills of disadvantaged students can fall more that three months behind the scores of their more affluent peers. The summer learning losses for children in poverty accumulate over the elementary school years, so these students end up falling further and further behind in school.

Several programs have been successful in countering summer learning loss. The BELL programs and the Teach Baltimore Summer Academy provide evidence that students can achieve months of progress, rather than months of decline, when they participate in structured enrichment and education programs for several weeks during the summer. These programs are successful but reach too few of the students who need them.

The bill I am introducing today establishes a grant program for states to support summer learning in selected local districts. These grants would be used to help students in the early elementary grades who are living in poverty, by supporting their participation in six weeks of summer school. These summer opportunities could be offered by a variety of providers, including the public schools, but also by other community organizations that have shown success in providing educational enrichment, such as youth development organizations, nonprofits, and summer enrichment camps. These summer programs would be aligned with the school year curriculum to increase the reading and math skills of students in need and to provide them with learning opportunities to avoid a path that might otherwise lead to failure in school--a path that too often ends, years later, with these students dropping out of the educational system.

The achievement gap in education begins in the early grades and remains a burden for too many throughout their time in school. It is becoming increasingly clear that much of this early difference can be combated by structured summer learning opportunities. That is the purpose of this bill, and I hope my colleagues will support this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today Senator Isakson and I introduce legislation to increase civil penalties for child exploitation. Our legislation is a small piece of a larger battle that we believe will stop would-be child predators and protect our children. Predators like the ones who exploited Masha, a little girl who was featured on Prime Time Live a few weeks ago, and the thousands of other children who are victims of these horrific crimes.

According to the National Center for Missing and Exploited Children, child pornography has become a multi-billion dollar internet business. With the increasingly sophisticated technology of digital media, child pornography has become easier to produce and purchase. Countless people around the world have instant access to pictures and videos posted on the Internet and, unfortunately, millions of these images are pornographic depictions of infants and children. Masha is one of these children, whose images--hundreds of them--are on the Internet and being downloaded around the world. And while the man who sexually abused Masha and posted the pictures on the web is in jail, the damage has been done and will continue until people stop downloading pictures of her off the internet.

Under current law, a victim of child exploitation is entitled to civil statutory damages in U.S. District Court in the amount of $50,000--less than the civil penalty for illegally downloading music off the internet. This penalty is far too low to effectively deter would-be child pornographers. This legislation increases the civil penalties recoverable by victims of child sexual exploitation, including internet child pornography, to at least $150,000. This increased penalty will serve as a deterrent to those who disseminate and possess child pornography, as well as a means of compensating victims of this terrible abuse. If someone downloads a song off the Internet, Federal copyright law provides for statutory damages to be awarded to the copyright holder in the amount of $150,000. Downloading child pornography is far more detrimental to the victim than downloading copyrighted music and, as a result, the penalty should reflect that.

But it is not only the statutory damages that are flawed. The current statute states that ``Any minor who is a victim of a violation [of the act] may sue in United States District Court''. This language has been interpreted literally by a Federal district court to restrict recovery to plaintiffs whose injuries occurred while they were minors. Thus, when victims turn 18 they cannot recover against their perpetrators even if pornographic images of them as children are still distributed via the internet. Our legislation would clarify the statute to include victims of child pornography who are injured as adults by the downloading of their pornographic images.

This bill takes an important step towards ensuring justice for victims of child exploitation. I would urge speedy passage of this legislation as a stand alone bill or encourage its inclusion in a larger child protection package. It is the very least Congress can do for Masha and the thousands of children like her who have suffered at the hands of these criminals. I thank Senator Isakson for his co- sponsorship, and I look forward to working with him and all my colleagues to see that it passes the Senate.