PlainBillCongress, translated.Legislation. Context. Public interest.Congressional Research Service
Version 00 · Introduced in House · Jan 3, 2025
FairTax Act of 2025
This bill replaces federal income, payroll, estate, and gift taxes with a federal sales tax beginning in 2027 and eliminates the Internal Revenue Service.
The bill establishes a 23% tax-inclusive (30% tax-exclusive) federal sales tax rate on taxable property and services to be administered primarily by each state. The federal sales tax rate is adjusted annually beginning in 2028 so that it is the sum of the
Showing the opening paragraphs of the official summary.
general revenue rate (14.91%);
old-age, survivors and disability insurance rate; and
hospital insurance rate.
The bill includes exemptions for property or services purchased for business, investment, and certain state government functions.
Registered, qualified families may receive a monthly sales tax rebate in the amount of the monthly federal poverty level (or twice such amount for married individuals) multiplied by the federal sales tax rate. Each family member must have a Social Security number and be a lawful resident of the United States.
Federal sales tax revenues are allocated to general revenue, the Social Security trust funds, and the Medicare trust funds. (Special allocation rules apply for 2027.)
The bill eliminates appropriations for the Internal Revenue Service after FY2029 and establishes an Excise Tax Bureau and a Sales Tax Bureau within the Department of the Treasury.
Finally, the bill terminates the federal sales tax if the Sixteenth Amendment to the Constitution (authorizing a federal income tax) is not repealed within seven years from the date the bill is enacted.
People & committees
Rep. Carter, Earl L. "Buddy" [R-GA-1] · R–GA
Legislative record
A procedural vote is different from passage. Passage in one chamber does not establish enactment. Explore the glossary.
Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
No related bills are listed in this snapshot. This does not establish whether the proposal has appeared in earlier Congresses.
Source last updated: Sep 11, 2025. Consult Congress.gov for the current record.
AI Conversation Starters
Choose a perspective, copy a prompt, and paste it into your preferred AI. Each prompt includes the bill version and available official source links, and asks for counterarguments as well as supporting evidence.
Analyze H.R.25, the FairTax Act of 2025, as objectively as possible. Explain what taxes it would replace, how the national sales tax and family rebate would work, who may benefit, who may be harmed, what administrative changes it creates, and what evidence would help determine whether it is good for the American people. Separate official bill facts from interpretation, and include the strongest arguments for and against it.
Analyze H.R.25 from the perspective of someone concerned about inequality, public revenue, and the tax burden on working families. Explain the strongest concerns about a national sales tax, whether the rebate addresses them, and what parts of the bill could still be appealing or worth debating.
Analyze H.R.25 from the perspective of someone who favors simpler taxes, lower compliance burdens, and reducing IRS power. Explain the strongest case for the bill, the political and economic risks conservatives should still examine, and how it may affect families, businesses, and federal revenue.
Analyze H.R.25 from a civil-liberties and limited-government perspective. Focus on the tradeoff between eliminating income-tax reporting and creating a national sales-tax collection system. Identify privacy effects, enforcement risks, and who gains or loses flexibility.
PlainBill explanation
Based on the full Introduced in House · 2025-01-03 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
As introduced on January 3, 2025, this bill would generally replace federal taxes on people’s and businesses’ income, wages, self-employment earnings, and wealth transferred through gifts or after death with a national sales tax starting January 1, 2027. In 2027, consumers would pay $23 in federal tax out of every $100 spent on taxable goods or services, including the tax, with exemptions including qualifying used property, qualifying business purchases, and property purchased and held exclusively for investment; later rates could change. Eligible households that register would receive monthly payments based on family size and federal poverty guidelines, with counted members required to be lawful U.S. residents with Social Security numbers. If the Sixteenth Amendment to the U.S. Constitution were not repealed within seven years after the bill became law, the sales tax would end on December 31 of the year that deadline falls in.
2025-01-03: Introduced in House
Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.
Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.
Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.
Except as otherwise provided in this Act, the amendments made by this Act shall take effect on January 1, 2027.
In the calendar year 2027, the rate of tax is 23 percent of the gross payments for the taxable property or service.
The term gross payments means payments for taxable property or services, including Federal taxes imposed by this title.
For years after the calendar year 2027, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.
any property (including leaseholds of any term or rents with respect to such property) but excluding— (I) intangible property, and (II) used property
No tax shall be imposed under section 101 on any taxable property or service purchased for a business purpose in a trade or business.
No tax shall be imposed under section 101 on any taxable property or service purchased for an investment purpose and held exclusively for an investment purpose.
Each qualified family shall be eligible to receive a sales tax rebate each month. The sales tax rebate shall be in an amount equal to the product of— (1) the rate of tax imposed by section 101, and (2) the monthly poverty level.
In order for a person to be counted as a member of the family for purposes of determining the size of the qualified family, such person must— (A) have a bona fide Social Security number, and (B) be a lawful resident of the United States.
In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary.
the annual level determined by the Department of Health and Human Services poverty guidelines required by sections 652 and 673(2) of the Omnibus Reconciliation Act of 1981 for a particular family size
If the Sixteenth Amendment to the Constitution of the United States is not repealed before the end of the 7-year period beginning on the date of the enactment of this Act, then all provisions of, and amendments made by, this Act shall not apply to any use or consumption in any year beginning after December 31 of the calendar year in which or with which such period ends
The proposal declares that existing taxes harm the economy and that a national sales tax would improve it. These are proposed congressional findings, not demonstrated effects. Courts and tax administrators would use the sales-tax subtitle’s stated purposes as their primary guide to interpretation.
Congress finds the Federal income tax— (1) retards economic growth and has reduced the standard of living of the American public;
Congress finds further that a broad-based national sales tax on goods and services purchased for final consumption—
(4) will promote economic growth;
Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction.
Unless otherwise specified, the amendments would take effect January 1, 2027. The bill would strike the presidential election campaign financing subtitle, redesignate remaining subtitles, and allow the tax code to be cited as the Internal Revenue Code of 2025.
Except as otherwise provided in this Act, the amendments made by this Act shall take effect on January 1, 2027.
by striking subtitle H (relating to financing of Presidential election campaigns);
by redesignating— (A) subtitle D (relating to miscellaneous excise taxes) as subtitle B;
may be cited as the Internal Revenue Code of 2025.
For 2027, the sales tax would be 23 percent of gross payments, which include federal taxes imposed by the title. Thus, a $100 total including this federal tax would consist of $23 tax and $77 before that tax. After 2027, the rate would combine a 14.91 percent general-revenue component with Social Security and hospital-insurance components.
The term gross payments means payments for taxable property or services, including Federal taxes imposed by this title.
In the calendar year 2027, the rate of tax is 23 percent of the gross payments for the taxable property or service.
For years after the calendar year 2027, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.
The combined Federal tax rate percentage is the sum of— (A) the general revenue rate (as defined in paragraph (4)), (B) the old-age, survivors and disability insurance rate, and (C) the hospital insurance rate. (4) General revenue rate The general revenue rate shall be 14.91 percent.
The tax would generally cover property, rents, leases, and services consumed in the United States, including financial intermediation services. Defined intangible and used property would be excluded, subject to the bill’s special rules. Used property includes qualifying previously taxed property and property held for nonbusiness purposes on December 31, 2026.
The term taxable property or service means— (i) any property (including leaseholds of any term or rents with respect to such property) but excluding— (I) intangible property, and (II) used property, and (ii) any service (including any financial intermediation services as determined by section 801).
The term used property means— (A) property on which the tax imposed by section 101 has been collected and for which no credit has been allowed under section 202, 203, or 205, or (B) property that was held other than for a business purpose (as defined in section 102(b)) on December 31, 2026.
Purchases for business purposes and purchases held exclusively for investment would generally be exempt. Education and training would be treated as services used to produce, provide, render, or sell taxable property or services, but the business-purpose exemption would still require purchase by a person engaged in a trade or business and use in that business under section 102(b). Education and training means tuition and job-related training, excluding room, board, and the listed recreational activities.
No tax shall be imposed under section 101 on any taxable property or service purchased for a business purpose in a trade or business.
No tax shall be imposed under section 101 on any taxable property or service purchased for an investment purpose and held exclusively for an investment purpose.
Education and training shall be treated as services used to produce, provide, render, or sell taxable property or services.
For purposes of this section, the term purchased for a business purpose in a trade or business means purchased by a person engaged in a trade or business and used in that trade or business— (1) for resale, (2) to produce, provide, render, or sell taxable property or services, or (3) in furtherance of other bona fide business purposes.
The term education and training means tuition for primary, secondary, or postsecondary level education, and job-related training courses. Such term does not include room, board, sports activities, recreational activities, hobbies, games, arts or crafts or cultural activities.
Consumers would generally owe the tax, but paying it to a seller and receiving the required receipt would discharge that liability. Sellers would generally collect and remit it; purchasers would remit tax on covered imports. The sales tax would apply in addition to import duties, and Treasury would have to provide regulations coordinating its collection and administration on imports with applicable import duties to the maximum extent practicable. Converting untaxed business or export purchases to personal use would trigger tax at fair market value. Barter taxes would be remitted in money using tax-inclusive fair market value.
The person using or consuming taxable property or services in the United States is liable for the tax imposed by this section, except as provided in paragraph (2) of this subsection.
A person using or consuming a taxable property or service in the United States is not liable for the tax imposed by this section if the person pays the tax to a person selling the taxable property or service and receives from such person a purchaser’s receipt within the meaning of section 509.
Except as provided otherwise by this section, any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (including financial intermediation services).
In the case of taxable property or services purchased outside of the United States and imported into the United States for use or consumption in the United States, the purchaser shall remit the tax imposed by section 101.
The tax imposed by this section is in addition to any import duties imposed by chapter 4 of title 19, United States Code. The Secretary shall provide by regulation that, to the maximum extent practicable, the tax imposed by this section on imported taxable property and services is collected and administered in conjunction with any applicable import duties imposed by the United States.
Property or services purchased for a business purpose in a trade or business or for export (sold untaxed pursuant to section 102(a)) that is subsequently converted to personal use shall be deemed purchased at the time of conversion and shall be subject to the tax imposed by section 101 at the fair market value of the converted property as of the date of conversion.
If gross payment for taxable property or services is made in other than money, then the person responsible for collecting and remitting the tax shall remit the tax to the sales tax administering authority in money as if gross payment had been made in money at the tax inclusive fair market value of the taxable property or services purchased.
Households employing domestic servants and governments other than government enterprises would be taxable employers and remit tax on covered wages. The text excludes specified employment services for businesses, qualified not-for-profit organizations, government enterprises, and employees of taxable employers directly providing education and training.
The term taxable employer includes— (i) any household employing domestic servants, and (ii) any government except for government enterprises (as defined in section 704).
shall not include any service performed by an employee for which the employee is paid wages or a salary— (I) by an employer in the regular course of the employer’s trade or business, (II) by an employer that is a not-for-profit organization (as defined in section 706), (III) by an employer that is a government enterprise (as defined in section 704), and (IV) by taxable employers to employees directly providing education and training.
In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.
The bill would provide credits for qualifying business conversions, business or export purchases, administration, bad debts, insurance proceeds, transition inventory, and overpayments. Only one chapter 2 credit could apply to a particular gross payment. Compliant, timely monthly filers would receive an administration credit of the greater of $200 or 0.25 percent of tax remitted, capped at 20 percent of tax due before credits.
(1) such person’s business use conversion credit pursuant to section 202 for such month, (2) such person’s intermediate and export sales credit pursuant to section 203 for such month, (3) the administration credit pursuant to section 204 for such month, (4) the bad debt credit pursuant to section 205 for such month, (5) the insurance proceeds credit pursuant to section 206 for such month, (6) the transitional inventory credit pursuant to section 902, and (7) any amount paid in excess of the amount due.
Only one credit allowed by chapter 2 may be taken with respect to any particular gross payment.
Every person filing a timely monthly report (with regard to extensions) in compliance with section 501 shall be entitled to a taxpayer administrative credit equal to the greater of— (1) $200, or (2) one-quarter of 1 percent of the tax remitted.
The credit allowed under this section shall not exceed 20 percent of the tax due to be remitted prior to the application of any credit or credits permitted by section 201.
The business-use conversion credit would require tax actually paid and business use beginning at 95 percent or more during the month. The credit would be the lesser of the conversion-date fair market value multiplied by the tax rate divided by one minus that rate, or the tax paid, including any amount determined under the mixed-use rules. A separate credit would cover sales tax paid on qualifying business or export purchases.
(1) on which tax was imposed by section 101 (and actually paid), and (2) which commenced to be 95 percent or more used during such month for business purposes (within the meaning of section 102(b)).
The amount determined under this paragraph with respect to any taxable property or service is the lesser of— (1) the product of— (A) the rate imposed by section 101, and (B) the quotient that is— (i) the fair market value of the property or service when its use is converted, divided by (ii) the quantity that is one minus the tax rate imposed by section 101, or (2) the amount of tax paid with respect to such taxable property or service, including the amount, if any, determined in accordance with section 705 (relating to mixed use property).
a person’s intermediate and export sales credit is the amount of sales tax paid on the purchase of any taxable property or service purchased for— (1) a business purpose in a trade or business (as defined in section 102(b)), or (2) export from the United States for use or consumption outside the United States.
For unpaid invoices, an accrual-method taxpayer could claim a credit for tax remitted but unpaid by the purchaser only after invoicing and remitting the tax, delivering the property or performing the services, and remaining unpaid 180 days after the invoice was due. Other bad-debt credits would use the bad-debt amount multiplied by the tax rate divided by one minus that rate. A qualifying debt must be a bona fide business debt intended to be repaid and wholly or partly worthless. Generally it must be at least 180 days in arrears; earlier bankruptcy discharge establishes worthlessness to the discharged extent. After 180 days, the holder could deem it worthless unless a payment schedule had been entered into. Related-party sales would be excluded, later recoveries would be taxed as tax-inclusive sales in the month received, and partial payments would be allocated proportionately.
Any person electing the accrual method pursuant to section 503 that has with respect to a transaction— (1) invoiced the tax imposed by section 101, (2) remitted the invoiced tax, (3) actually delivered the taxable property or performed the taxable services invoiced, and (4) not been paid 180 days after date the invoice was due to be paid, shall be entitled to a credit equal to the amount of tax remitted and unpaid by the purchaser.
Any person who has experienced a bad debt (other than unpaid invoices within the meaning of subsection (b)) shall be entitled to a credit equal to the product of— (1) the rate imposed by section 101, and (2) the quotient that is— (A) the amount of the bad debt (as defined in section 802), divided by (B) the quantity that is one minus the rate imposed by section 101.
a bad debt shall be a business debt that becomes wholly or partially worthless to the payee.
a business loan or debt is a bona fide loan or debt made for a business purpose that both parties intended be repaid.
No loan or debt shall be considered wholly or partially worthless unless it has been in arrears for 180 days or more, except that if a debt is discharged wholly or partially in bankruptcy before 180 days has elapsed, then it shall be deemed wholly or partially worthless on the date of discharge.
A loan or debt that has been in arrears for 180 days or more may be deemed wholly or partially worthless by the holder unless a payment schedule has been entered into between the debtor and the lender.
The credit provided by this section shall not be available with respect to sales made to related parties. For purposes of this section, related party means affiliated firms and family members (as defined in section 302(b)).
Any payment made with respect to a transaction subsequent to a section 205 credit being taken with respect to that transaction shall be subject to tax in the month the payment was received as if a tax inclusive sale of taxable property and services in the amount of the payment had been made.
Partial payments shall be treated as pro rata payments of the underlying obligation and shall be allocated proportionately
The insurance-proceeds credit would require tax to have been paid on the entire premium except its investment-account portion. The credit would equal the insurer’s payment multiplied by the tax rate divided by one minus that rate. Normally the insurer would pay the credit to the insured and claim it instead; an insurer could elect to require the insured to apply, with identifying information and the credit amount reported to the insured and Treasury. Amounts already paid through the insurer would reduce the insured’s credit. No credit would apply to purchases already made tax-free by the insurer under the specified exemption.
A person receiving a payment from an insurer by virtue of an insurance contract shall be entitled to a credit in an amount determined by subsection (b), less any amount paid to the insured by the insurer pursuant to subsection (c), if the entire premium (except that portion allocable to the investment account of the underlying policy) for the insurance contract giving rise to the insurer’s obligation to make a payment to the insured was subject to the tax imposed by section 101 and said tax was paid.
The amount of the credit shall be the product of— (1) the rate imposed by section 101, and (2) the quotient that is— (A) the amount of the payment made by the insurer to the insured, divided by (B) the quantity that is one minus the rate imposed by section 101.
The credit determined in accordance with subsection (b) shall be paid by the insurer to the insured and the insurer shall be entitled to the credit in lieu of the insured, except that the insurer may elect, in a form prescribed by the Secretary, to not pay the credit and require the insured to make application for the credit.
In the event of such election, the insurer shall provide to the Secretary and the insured the name and tax identification number of the insurer and of the insured and indicate the proper amount of the credit.
If taxable property or services purchased by an insurer on behalf of an insured are purchased free of tax by virtue of section 2(a)(8)(C), then the credit provided by this section shall not be available with respect to that purchase.
Under proposed Code section 207, refunds would generally be due within 60 days after application. Balances unpaid after that period would earn interest from the application date. Only a court ruling finding reasonable cause to question the overpayment could suspend the deadline. Registered sellers could instead carry an overpayment forward without interest.
the overpayment shown on the report shall be refunded to the registered seller within 60 days of receipt of said application. In the absence of such application, the overpayment may be carried forward, without interest, by the person entitled to the credit.
the credit balance due shall be refunded to the person within 60 days of receipt of said application.
Balances due not paid within 60 days after the application for refund is received shall bear interest from the date of application.
only during any period that there is in effect a preliminary, temporary, or final ruling from a Federal or State court that there is reasonable cause to believe that such overpayment may not actually be due.
A qualified family’s monthly rebate would equal the sales-tax rate multiplied by one-twelfth of its annual poverty amount. The amount would use federal poverty guidelines for family size. For families containing a married couple, it would add the difference between twice the one-person guideline and the two-person guideline.
The sales tax rebate shall be in an amount equal to the product of— (1) the rate of tax imposed by section 101, and (2) the monthly poverty level.
The monthly poverty level for any particular month shall be one-twelfth of the annual poverty level.
(1) the annual level determined by the Department of Health and Human Services poverty guidelines required by sections 652 and 673(2) of the Omnibus Reconciliation Act of 1981 for a particular family size, and (2) in case of families that include a married couple, the annual marriage penalty elimination amount.
The annual marriage penalty elimination amount shall be the amount that is— (1) the amount that is two times the annual level determined by the Department of Health and Human Services poverty guidelines required by sections 652 and 673(2) of the Omnibus Reconciliation Act of 1981 for a family of one, less (2) the annual level determined by the Department of Health and Human Services poverty guidelines required by sections 652 and 673(2) of the Omnibus Reconciliation Act of 1981 for a family of two.
Receiving the rebate would require annual registration. Counted family members would need bona fide Social Security numbers and lawful U.S. residence. Defined family members sharing a residence would form one family, with special rules for supported students and children of divorced or legally separated parents. The exclusion for incarcerated individuals would apply when both the specified confinement on the determination date and the scheduled six-month confinement condition are met.
All family members sharing a common residence shall be considered as part of one qualified family.
such person must— (A) have a bona fide Social Security number, and (B) be a lawful resident of the United States.
(d) Annual Registration In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary.
Any person who was a registered student during not fewer than 5 months in a calendar year while living away from the common residence of a qualified family but who receives over 50 percent of such person’s support during a calendar year from members of the qualified family shall be included as part of the family unit whose members provided said support
If a child’s parents are divorced or legally separated, a child for purposes of this chapter shall be treated as part of the qualified family of the custodial parent.
An individual shall not be eligible under this chapter to be included as a member of any qualified family if that individual— (1) is incarcerated in a local, State, or Federal jail, prison, mental hospital, or other institution on the family determination date, and (2) is scheduled to be incarcerated for 6 months or more in the 12-month period following the effective date of the annual registration or the revised registration of said qualified family.
The Social Security Administration would pay registered families monthly to designated recipients aged 18 or older. Revised family registrations would be optional and take effect for the first month beginning 60 days after filing. Failure to register annually within 30 days of the family determination date would stop payments in the month beginning 90 days after that date. Curing the failure would permit recovery of up to six months of lapsed payments without interest.
The Social Security Administration shall provide a monthly sales tax rebate to duly registered qualified families
Payments may only be made to persons 18 years or older.
Revised registrations reflecting changes in family status are not mandatory.
shall take effect for the first month beginning 60 days after the revised registration was filed.
Any qualified family that fails to register in accordance with this section within 30 days of the family determination date, shall cease receiving the monthly family consumption allowance in the month beginning 90 days after the family determination date.
Any qualified family that failed to timely make its annual registration in accordance with this section but subsequently cures its failure to register, shall be entitled to up to 6 months of lapsed sales tax rebate payments. No interest on lapsed payment amount shall be paid.
States maintaining a sales tax could administer the federal tax through Treasury agreements. Administering states would remit collections within five days and could retain a 0.25 percent administration fee. Treasury takeover would require recurring remittance failures or material agreement breaches, written notice, failure to cure within a reasonable time, and a federal district court decision with the required findings and best-interest determination. After revocation, a state could not be an administering state for at least five years; separately, the text provides eligibility without prejudice for the first calendar year commencing eight years after revocation. Administering states could not investigate or audit facilities in other administering states for the federal or conforming state sales tax, but would have to cooperate through section 402 mechanisms, compacts, or other agreements.
For purposes of this section, the term administering State means any State— (1) which maintains a sales tax, and (2) which enters into a cooperative agreement with the Secretary containing reasonable provisions governing the administration by such State of the taxes imposed by the subtitle and the remittance to the United States in a timely manner of taxes collected under this chapter.
Administering States shall remit and pay over taxes collected under this subtitle on behalf of the United States (less the administration fee allowable under paragraph (2)) not later than 5 days after receipt.
An administering State may retain an administration fee equal to one-quarter of 1 percent of the amounts otherwise required to be remitted to the United States under this chapter by the administering State.
The Secretary may administer the tax imposed by this subtitle in an administering State only if— (1) (A) such State has failed on a regular basis to timely remit to the United States taxes collected under this chapter on behalf of the United States, or (B) such State has on a regular basis otherwise materially breached the agreement referred to in subsection (b)(2), (2) the State has failed to cure such alleged failures and breaches within a reasonable time, (3) the Secretary provides such State with written notice of such alleged failures and breaches, and (4) a District Court of the United States within such State, upon application of the Secretary, has rendered a decision— (A) making findings of fact that— (i) such State has failed on a regular basis to timely remit to the United States taxes collected under this chapter on behalf of the United States, or such State has on a regular basis otherwise materially breached the agreement referred to in subsection (b)(2), (ii) the Secretary has provided such State with written notice of such alleged failures and breaches, and (iii) the State has failed to cure such alleged failures and breaches within a reasonable time, and (B) making a determination that it is in the best interest of the citizens of the United States that the administering State’s authority to administer the tax imposed by this subtitle be revoked and said tax be administered directly by the Secretary.
A State that has had its authority revoked pursuant to subsection (e) shall not be an administering State for a period of not less than 5 years after the date of the order of revocation. For the first calendar year commencing 8 years after the date of the order of revocation, the State shall be regarded without prejudice as eligible to become an administering State.
Administering States shall not conduct investigations or audits at facilities in other administering States in connection with the tax imposed by section 101 or conforming State sales tax but shall instead cooperate with other administering States using the mechanisms established by section 402, by compact or by other agreement.
Treasury would facilitate state information sharing, have authority to issue regulations, and host tax-administration conferences at least annually. Destination rules would determine whether purchases are domestic or foreign and their destination state or territory; interstate revenue allocations would follow destination. Tangible personal property would generally follow first delivery, real property its location, and other taxable property the purchaser’s residence. Services would generally follow where used or consumed, with multijurisdiction invoices allocated by time or a regulatory method. Telecommunications, electricity, and financial intermediation services would follow purchaser residence. Domestic transportation would follow the final destination, divided equally among final destinations for round or multiple trips. Transportation with a foreign origin or final destination would have 50 percent of its service amount attributed to the U.S. destination or origin. Tangible-property rentals would generally follow location during use; vehicle, aircraft, and watercraft rentals or leases of one month or less would follow original delivery, and longer terms the renter’s or lessee’s residence. An Office of Revenue Allocation would arbitrate interstate destination disputes among administering states, subject to judicial review for abuse of discretion.
The Secretary shall administer a program to facilitate information sharing among States.
The Secretary shall have the authority to promulgate regulations, to provide guidelines, to assist States in administering the national sales tax, to provide for uniformity in the administration of the tax and to provide guidance to the public.
Not less than once annually, the Secretary shall host a conference with the sales tax administrators from the various administering States to evaluate the state of the national sales tax system, to address issues of mutual concern and to develop and consider legislative, regulatory, and administrative proposals to improve the tax system.
The tax imposed by this subtitle is a destination principle tax. This section shall govern for purposes of determining— (1) whether the destination of taxable property and services is within or without the United States, and (2) which State or territory within the United States is the destination of taxable property and services.
Except as provided in subsection (g) (relating to certain leases), the destination of tangible personal property shall be the State or territory in which the property was first delivered to the purchaser (including agents and authorized representatives).
The destination of real property, or rents or leaseholds on real property, shall be the State or territory in which the real property is located.
The destination of any other taxable property shall be the residence of the purchaser.
The destination of services shall be the State or territory in which the use or consumption of the services occurred. Allocation of service invoices relating to more than 1 jurisdiction shall be on the basis of time or another method determined by regulation.
The destination of telecommunications services shall be the residence of the purchaser.
For transportation services where all of the final destinations are within the United States, the destination of transportation services shall be the final destination of the trip (in the case of round or multiple trip fares, the services amount shall be equally allocated among each final destination).
For transportation services where the final destination or origin of the trip is without the United States, the service amount shall be deemed 50 percent attributable to the United States destination or origin.
The destination of electrical services shall be the residence of the purchaser.
The destination of financial intermediation services shall be the residence of the purchaser.
Except as provided in paragraph (2), the destination of rents paid for the lease of tangible property and leaseholds on such property shall be where the property is located while in use.
The destination of rental and lease payments on land vehicles, aircraft and water craft shall be— (A) in the case of rentals and leases of a term of 1 month or less, the location where the land vehicle, aircraft, or water craft was originally delivered to the renter or lessee, and (B) in the case of rentals and leases of a term greater than 1 month, the residence of the renter or lessee.
For purposes of allocating revenue— (1) between or among administering States from taxes imposed by this subtitle or from State sales taxes administered by third-party administering States, or (2) between or among States imposing conforming State sales taxes, the revenue shall be allocated to those States that are the destination of the taxable property or service.
The Secretary shall establish an Office of Revenue Allocation to arbitrate any claims or disputes among administering States as to the destination of taxable property and services for purposes of allocating revenue between or among the States from taxes imposed by this subtitle. The determination of the Administrator of the Office of Revenue Allocation shall be subject to judicial review in any Federal court with competent jurisdiction. The standard of review shall be abuse of discretion.
Proposed Code section 401(g) would allow a state to contract with an administering state for administration of its sales tax. Section 404 also assigns Treasury administration to a jurisdiction that elects that arrangement, creating uncertainty about how the two provisions would operate together. Section 407 would give a state administering authority nonexclusive jurisdiction over gross payments whose destination is within that state and preserve federal jurisdiction, including an express right to exercise preemptive jurisdiction.
It shall be permissible for a State to contract with an administering State to administer the State’s sales tax for an agreed fee.
The Secretary shall administer the tax imposed by this subtitle in any State or other United States jurisdiction that— (1) is not an administering State, or (2) elected to have another State administer its tax in accordance with section 401(g).
A sales tax administering authority shall have jurisdiction over any gross payments made which have a destination (as determined in accordance with section 405) within the State of said sales tax administering authority. This grant of jurisdiction is not exclusive of any other jurisdiction that such sales tax administering authority may have.
The grant of jurisdiction in subsection (a) shall not be in derogation of Federal jurisdiction over the same matter. The Federal Government shall have the right to exercise preemptive jurisdiction over matters relating to the taxes imposed by this subtitle.
Treasury would be required to enter into an agreement among conforming states enabling them to collect conforming state sales tax on sales by sellers outside a state to destinations within that state. When Treasury and a sales tax administering authority issued inconsistent rules or regulations, Treasury’s lawful rule or regulation would govern. Treasury rules would generally require 90 days after publication before taking effect, except for an emergency declared by the Secretary personally. Retroactive rules would generally be prohibited, with an exception for regulations preventing abuse. The bill would require Small Business Administration review of regulations’ effects on small businesses and apply the named small-business regulatory statutes.
The Secretary is authorized to enter into and shall enter into an agreement among conforming States enabling conforming States to collect conforming State sales tax on sales made by sellers without a particular conforming State to a destination within that particular conforming State.
In the event that the Secretary and any sales tax administering authority have issued inconsistent rules or regulations, any lawful rule or regulation issued by the Secretary shall govern.
Except in the case of an emergency declared by the Secretary (and not his designee), no rule or regulation issued by the Secretary with respect to any internal revenue law shall take effect before 90 days have elapsed after its publication in the Federal Register.
No rule, ruling, or regulation issued or promulgated by the Secretary relating to any internal revenue law or by a sales tax administering authority shall apply to a period prior to its publication in the Federal Register (or State equivalent) except that a regulation may take retroactive effect to prevent abuse.
After publication of any proposed or temporary regulation by the Secretary relating to internal revenue laws, the Secretary shall submit such regulation to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of such regulation on small businesses.
The Small Business Regulatory Enforcement Fairness Act (Public Law 104–121; 110 Stat. 857 (SBREFA)) and the Regulatory Flexibility Act (5 U.S.C. 601–612 (RFA)) shall apply to regulations promulgated under this subtitle.
Covered businesses would have to register before selling taxable property or services. Monthly reports and payments would generally be due on the 15th of the following month; report extensions would not extend payment deadlines. Cash accounting would be the default, with an option to elect accrual accounting.
Any person liable to collect and remit taxes pursuant to section 103(a) who is engaged in a trade or business shall register as a seller
Any person that is required to register and who fails to do so is prohibited from selling taxable property or services.
On or before the 15th day of each month
a report relating to the previous calendar month.
The tax imposed by this subtitle during any calendar month is due and shall be paid to the appropriate sales tax administering authority on or before the 15th day of the succeeding month.
no extension shall be granted with respect to the time for paying or remitting the taxes
Registered sellers and other persons shall report transactions using the cash method of accounting unless an election to use the accrual method of accounting is made
Registered sellers that do not meet the small-seller definition would have to deposit weekly tax collections in separate accounts within three business days after the week ends. A small seller must not have collected $20,000 or more in any of the preceding 12 months. Sellers collecting at least $100,000 in any such month would be large sellers, required to remit deposited taxes weekly and provide security equal to the greater of $100,000 or 1.5 times average monthly tax liability over the preceding six months. Failure to provide security would result in revocation of seller registration. Security could be forfeited to Treasury to cover tax due plus interest only if the final-notice amount remained unpaid, no related Taxpayer Assistance Order was in effect, the appeal deadline had passed or the appeal was denied, and the amount was not being litigated in any judicial forum.
Any registered seller that is not a small seller shall deposit all sales taxes collected pursuant to section 103 in a particular week in a separate segregated account maintained at a bank or other financial institution within 3 business days of the end of such week.
For purposes of this subsection, a small seller is any person that has not collected $20,000 or more of the taxes imposed by this subtitle in any of the previous 12 months.
Any seller that has collected $100,000 or more of the taxes imposed by this subtitle in any of the previous 12 months is a large seller. A large seller shall remit to the sales tax administering authority the entire balance of deposited taxes in its separate segregated account on the first business day following the end of the calendar week.
A large seller (within the meaning of subsection (e)(3)) shall be required to provide security in an amount equal to the greater of $100,000 or one and one-half times the seller’s average monthly tax liability during the previous 6 calendar months.
Failure to provide security in accordance with this section shall result in revocation of the seller’s section 502 registration.
If a person who has provided security pursuant to this subsection— (1) fails to pay an amount indicated in a final notice of amount due under this subtitle (within the meaning of section 605(d)), (2) no Taxpayer Assistance Order is in effect relating to the amount due, (3) either the time for filing an appeal pursuant to section 604 has passed or the appeal was denied, and (4) the amount due is not being litigated in any judicial forum, then the security or part of the security, as the case may be, may be forfeited in favor of the Secretary to the extent of such tax due (plus interest if any).
Treasury would establish a toll-free and other reporting system for possible violations and would be authorized to maintain an awards program compensating individuals who help discover or prosecute tax fraud.
The Secretary shall establish a system under which a violation of this subtitle can be brought to the attention of the sales tax administering authority for investigation through the use of a toll-free telephone number and otherwise.
The Secretary is authorized to maintain a program of awards wherein individuals that assist the Secretary or sales tax administering authorities in discovering or prosecuting tax fraud may be remunerated.
The bill would impose civil penalties for registration, collection, payment, reporting, and account violations, and criminal penalties for specified intentional violations. Willfully failing to remit collected tax could bring up to two years’ imprisonment. Late-filing penalties would not apply where reasonable cause is shown. Additionally, on application, the administering authority would have to waive the ordinary late-filing penalty once per registered person per 24 months; that waiver would not cover the doubled penalty for reports filed after receipt of a written inquiry about the report. The designated tax matters person and responsible officers or partners would be jointly and severally liable for tax and penalties, with contribution rights among liable persons.
Each person who is required to register pursuant to section 502 but fails to do so prior to notification by the sales tax administering authority shall be liable for a penalty of $500.
Each person who is required to and recklessly or willfully fails to collect taxes imposed by this subtitle shall be liable for a penalty equal to the greater of $500 or 20 percent of tax not collected.
Each person who is required to and recklessly or willfully fails to pay taxes imposed by this subtitle shall be liable for a penalty equal to the greater of $500 or 20 percent of the tax not paid.
In the case of a failure by any person who is required to and fails to file a report required by section 501 on or before the due date (determined with regard to any extension) for such report, such person shall pay a penalty for each month or fraction thereof that said report is late equal to the greater of— (A) $50, or (B) 0.5 percent of the gross payments required to be shown on the report.
The amount of the penalty under paragraph (1) shall be doubled with respect to any report filed after a written inquiry with respect to such report is received by the taxpayer from the sales tax administering authority.
(4) Exceptions (A) Reasonable cause No penalty shall be imposed under this subsection with respect to any failure if it is shown that such failure is due to reasonable cause. (B) Other waiver authority In addition to penalties not imposed by reason of subparagraph (A), the sales tax administering authority, on application, shall waive the penalty imposed by paragraph (1) once per registered person per 24-month period. The preceding sentence shall not apply to a penalty determined under paragraph (2).
Any person required to maintain a separate segregated account pursuant to section 501(e) that fails to maintain such a separate segregated account shall pay a penalty of $1,000.
Each person who willfully fails to remit taxes imposed by this subtitle and collected from purchasers may be fined an amount up to the amount determined in accordance with paragraph (1) or imprisoned for a period of not more than 2 years or both.
The tax matters person (designated pursuant to section 502(c)) and responsible officers or partners of a firm shall be jointly and severally liable for the tax imposed by this subtitle and penalties imposed by this subtitle.
If more than 1 person is liable with respect to any tax or penalty imposed by this subtitle, each person who paid such tax or penalty shall be entitled to recover from other persons who are liable for such tax or penalty an amount equal to the excess of the amount paid by such person over such person’s proportionate share of the tax or penalty.
Tax authorities would have audit and summons powers, with administrative summons restricted during specified criminal referrals. Tax remitters would generally retain records for six years after the later of filing or the filing deadline; purchasers claiming intermediate or export exemptions would retain supporting records for seven years after purchase. Sellers would generally separately charge tax and issue detailed transaction receipts under proposed Code section 509(a). Qualifying vending-machine sales would be excepted. Financial intermediation services would be exempt from all section 509(a) requirements, including separate charging and the specified detailed transaction receipt, but receipts would still be required when tax is imposed under section 803.
Persons are subject to administrative summons
has the authority to conduct at a reasonable time and place examinations and audits
No administrative summons may be issued by the sales tax administering authority and no action be commenced to enforce an administrative summons with respect to any person if a Justice Department referral or referral to a State Attorney General’s Office is in effect with respect to such person relating to a tax imposed by this subtitle.
for a period of 6 years after the latter of the filing of the report for which the records formed the basis or when the report was due to be filed.
shall keep records sufficient to determine whether said exemption was valid for a period of 7 years after the purchase
the seller shall charge the tax imposed by section 101 separately from the purchase.
the seller shall provide to the purchaser a receipt for each transaction
The requirements of subsection (a) shall be inapplicable in the case of sales by vending machines.
The requirements of subsection (a) shall be inapplicable in the case of sales financial intermediation service. Receipts shall be issued when the tax is imposed (in accordance with section 803 (relating to timing of tax on financial intermediation services)).
Proposed Code section 510 would prohibit section 504 additions to tax during a pending bankruptcy case only under specified conditions. For estate-incurred taxes, the failure must follow a court order finding probable insufficient estate funds for administrative expenses. For debtor-incurred taxes, the tax must predate the earlier of the relief order or an involuntary-case trustee appointment, and either the petition must precede the return deadline or the addition-to-tax date must fall on or after the petition date.
No addition to tax shall be made under section 504 with respect to a period during which a case is pending under title 11, United States Code— (1) if such tax was incurred by the estate and the failure occurred pursuant to an order of the court finding probable insufficiency of funds of the estate to pay administrative expenses, or (2) if— (A) such tax was incurred by the debtor before the earlier of the order for relief or (in the involuntary case) the appointment of a trustee, and (B) the petition was filed before the due date prescribed by law (including extensions) for filing a return of such tax, or the date for making the addition to tax occurs on or after the date the petition was filed.
In disputes, taxpayers would generally produce records while the government would bear the burden of persuasion. Taxpayers could recover reasonable professional fees unless the government’s position was substantially justified. They would receive rights notices, have administrative appeal rights generally exercisable within 60 days of final notice, and receive a final amount-due notice at least 30 days before collection or enforcement.
shall have the burden of production of documents and records but the sales tax administering authority or the Secretary shall have the burden of persuasion.
shall be entitled to reasonable attorneys’ fees, accountancy fees, and other reasonable professional fees incurred in direct relation to the dispute unless the sales tax administering authority or the Secretary establishes that its position was substantially justified.
a document setting forth in plain English the rights of the person.
Said administrative appeal must be made within 60 days of receiving a final notice of amount due pursuant to section 605(d) unless leave for an extension is granted by the appeals officer in a form prescribed by the Secretary. Leave shall be granted to avoid hardship.
No collection or enforcement action will be commenced against a person until 30 days after they have been provided with a final notice of amount due
Authorities could seize property, garnish wages, or file liens under the specified court or appeal conditions. Protected amounts would include listed household and work property worth up to $15,000 and monthly money income equal to 150 percent of the monthly poverty level. Subject to reasonable Treasury regulations, liens would have to be released within 30 days after the liability was satisfied or became unenforceable, or a bond was accepted as security. Independent problem-resolution offices could issue Taxpayer Assistance Orders to halt likely unlawful collection or prevent hardship other than having to pay lawfully due taxes. Officers could also order release or return of levied or seized property, release of liens, and return of garnished wages. Only the issuing officer, the administering authority’s highest official, or its general counsel could rescind or modify an order upon a finding that collection was justified by clear and convincing evidence; reversal authority could not be delegated. An order would suspend applicable limitation periods for eight weeks, or a longer period specified in the order capped at six months. Authorities could allow installment agreements to facilitate collection or compromise amounts allegedly due.
The sales tax administering authority may levy and seize property, garnish wages or salary and file liens to collect amounts due under this subtitle, pursuant to enforcement of— (1) a judgment duly rendered by a court of law, (2) an amount due if the taxpayer has failed to exercise his appeals rights under section 604, or (3) an amount due if the appeals process determined that an amount remained due and the taxpayer has failed to timely petition the Tax Court for relief.
There shall be exempt from levy, seizure, and garnishment or penalty in connection with any tax imposed by this subtitle— (1) wearing apparel, school books, fuel, provisions, furniture, personal effects, tools of a trade or profession, livestock in a household up to an aggregate value of $15,000, and (2) monthly money income equal to 150 percent of the monthly poverty level (as defined in section 303).
Subject to such reasonable regulations as the Secretary may provide, any lien imposed with respect to a tax imposed by this title shall be released not later than 30 days after— (1) the liability was satisfied or became unenforceable, or (2) a bond was accepted as security.
Each sales tax administering authority shall establish an independent Problem Resolution Office and appoint an adequate number of problem resolution officers.
Problem resolution officers shall have the authority to investigate complaints and issue a Taxpayer Assistance Order to administratively enjoin any collection activity if, in the opinion of the problem resolution officer, said collection activity is reasonably likely to not be in compliance with law or to prevent hardship (other than by reason of having to pay taxes lawfully due).
Problem resolution officers shall also have the authority to issue Taxpayer Assistance Orders releasing or returning property that has been levied upon or seized, ordering that a lien be released and that garnished wages be returned.
A Taxpayer Assistance Order may only be rescinded or modified by the problem resolution officer that issued it, by the highest official in the relevant sales tax administering authority or by its general counsel upon a finding that the collection activity is justified by clear and convincing evidence. The authority to reverse this Taxpayer Assistance Order may not be delegated.
The running of any applicable period of limitation shall be suspended for a period of 8 weeks following the issuance of a Taxpayer Assistance Order or, if specified, for a longer period set forth in the Taxpayer Assistance Order provided the suspension does not exceed 6 months.
The sales tax administering authority is authorized to enter into written agreements with any person under which the person is allowed to satisfy liability for payment of any tax under this subtitle (and penalties and interest relating thereto) in installment payments if the sales tax administering authority determines that such agreement will facilitate the collection of such liability.
The sales tax administering authority may compromise any amounts alleged to be due.
Tax reports and report information would generally be confidential, subject to specified exceptions, including authorized recipients, other tax administrators, congressional committees, and specified statistical and Treasury uses. Congressional disclosure would require a written request from the specified committee officials. Information identifying a particular person could be furnished to a committee only in closed executive session unless that person consents in writing.
All reports and report information (related to any internal revenue law) shall be confidential and except as authorized by this title
disclose the report and report information of a person to that person or persons as that person may designate
A sales tax administering authority may impose, disclose the report and report information to another sales tax administering authority.
Upon written request from the Chairman of the Committee on Ways and Means, the Chairman of the Committee on Finance of the Senate, or the Chairman or Chief of Staff of the Joint Committee on Taxation, a sales tax administering authority shall disclose the report and report information, except that any report or report information that can be associated with or otherwise identify a particular person shall be furnished to such committee only when sitting in closed executive session unless such person otherwise consents in writing to such disclosure.
the structuring of censuses and national economic accounts and conducting related statistical activities authorized by law.
preparing economic or financial forecasts, projections, analyses, or estimates.
Dues, contributions, and similar payments to qualified not-for-profit organizations would fall outside taxable gross payments. Qualification covers the enumerated religious, charitable, scientific, public-safety testing, literary, educational, civic, social-welfare, labor, agricultural, horticultural, business, and fraternal categories, subject to the organizational-purpose and private-inurement conditions. Property or services supplied in connection with payments would be treated as taxable purchases at fair market value. Qualified organizations’ purchases would be eligible for section 102 exemptions. Purchases for activities not engaged in for profit would lose the intermediate-sales exemption and specified credits. However, an activity would conclusively be deemed for-profit if gross payments from sales of taxable property or services exceeded the sum of taxable property and services purchased, wages and salaries paid, and taxes of any type paid in at least two of its most recent three operating calendar years.
Dues, contributions, and similar payments to qualified not-for-profit organizations shall not be considered gross payments for taxable property or services for purposes of this subtitle.
For purposes of this section, the term qualified not-for-profit organization means a not-for-profit organization organized and operated exclusively— (1) for religious, charitable, scientific, testing for public safety, literary, or educational purposes, (2) as civic leagues or social welfare organizations, (3) as labor, agricultural, or horticultural organizations, (4) as chambers of commerce, business leagues, or trade associations, or (5) as fraternal beneficiary societies, orders, or associations, no part of the net earnings of which inures to the benefit of any private shareholder or individual.
If a qualified not-for-profit organization provides taxable property or services in connection with contributions, dues, or similar payments to the organization, then it shall be required to treat the provision of said taxable property or services as a purchase taxable pursuant to this subtitle at the fair market value of said taxable property or services.
Taxable property and services purchased by a qualified not-for-profit organization shall be eligible for the exemptions provided in section 102.
Neither the exemption afforded by section 102 for intermediate sales nor the credits available pursuant to section 202 or 203 shall be available for any taxable property or service purchased for use in an activity if that activity is not engaged in for-profit.
If the activity has received gross payments for the sale of taxable property or services that exceed the sum of— (1) taxable property and services purchased, (2) wages and salary paid, and (3) taxes (of any type) paid, in two or more of the most recent 3 calendar years during which it operated then the business activity shall be conclusively deemed to be engaged in for profit.
Lottery tickets, bets, and similar chances would not themselves be taxable property or services. Gaming sponsors would register and pay a separate 23 percent tax on receipts from chances minus payouts and other gaming-specific taxes.
Any person selling one or more chances is a gaming sponsor and shall register
the term chance means a lottery ticket, a raffle ticket, chips, other tokens, a bet or bets placed, a wager or wagers placed
a chance is not taxable property or services for purposes of section 101.
A 23-percent tax is hereby imposed on the taxable gaming services of a gaming sponsor.
(1) gross receipts of the gaming sponsor from the sale of chances, minus (2) the sum of— (A) total gaming payoffs to chance purchasers (or their designees), and (B) gaming specific taxes (other than the tax imposed by this section) imposed by the Federal, State, or local government.
Federal, state, and local-government purchases would generally be taxable; state functions not constituting final consumption would be excluded. Government enterprises would collect tax like private sellers and receive qualifying business-input exemptions, but could not channel tax-free purchases to government units. The enterprise definition covers government-owned or operated entities receiving private payments, with a rule that a government-owned entity does not qualify unless taxable-sales revenues exceed $2,500 in a quarter. Government transfers to an enterprise without full consideration would constitute taxable government purchases to the extent they exceed the consideration’s fair market value.
Purchases by the Federal Government of taxable property and services shall be subject to the tax imposed by section 101.
Purchases by State governments and their political subdivisions of taxable property and services shall be subject to the tax imposed by section 101.
No tax shall be imposed under section 101 on State government functions that do not constitute the final consumption of property or services.
Government enterprises shall comply with all duties imposed by this subtitle and shall be liable for penalties and subject to enforcement action in the same manner as private persons
Government enterprises shall not be subject to tax on purchases that would not be subject to tax pursuant to section 102(b) if the government enterprise were a private enterprise.
Government enterprises may not use the exemption afforded by section 102(b) to serve as a conduit for tax-free purchases by government units
Any entity owned or operated by a Federal, State, or local governmental unit or political subdivision that receives gross payments from private persons is a government enterprise, except that a government-owned entity shall not become a government enterprise for purposes of this section unless in any quarter it has revenues from selling taxable property or services that exceed $2,500.
A transfer of funds to a government enterprise by a government entity without full consideration shall constitute a taxable government purchase with the meaning of section 703 to the extent that the transfer of funds exceeds the fair market value of the consideration.
Mixed personal and business use would generally be taxable unless exempt business use exceeds 95 percent during each year or portion of ownership. Registered persons could claim credits reflecting business use, with allocation periods of 360 months for real property, 84 months for other tangible property, and 60 months for vehicles, ending earlier on sale. Mixed use would be accounted for annually, with credit claims permitted after the relevant year.
Mixed use property or service shall be subject to tax notwithstanding section 102(a)(1) unless such property or service is used more than 95 percent for purposes that would give rise to an exemption pursuant to section 102(a)(1) during each calendar year (or portions thereof) it is owned.
A person registered pursuant to section 502 is entitled to a business use conversion credit (pursuant to section 202) equal to the product of— (A) the mixed use property amount, (B) the business use ratio, and (C) the rate of tax imposed by section 101.
(A) one-three-hundred-sixtieth of the gross payments for real property for 360 months or until the property is sold, (B) one-eighty-fourth of the gross payments for tangible personal property for 84 months or until the property is sold, (C) one-sixtieth of the gross payments for vehicles for 60 months or until the property is sold
must account for the mixed use on a calendar year basis, and may file for the credit with respect to mixed use property in any month following the calendar year giving rise to the credit.
Financial-service taxation would include explicit fees and insurance premiums outside investment accounts, plus implicit fees calculated from interest-rate differences multiplied by the investment, account, or debt amount. Tax connected with accounts or debts would be imposed and collected with statements, at least quarterly. A financing lease would be a lease allowing the lessee to acquire the property for 50 percent or less of its fair market value at the end of the lease term. Such leases would split principal and interest for taxation. Principal would be determined where possible from contemporaneous sales prices of the same or similar property; when those prices were unavailable, the components would be separated using the applicable interest rate under section 511 plus 4 percent. Principal would be taxed as a purchase on the execution date, and the financial-intermediation services amount associated with interest would also be taxable. Once both components had been taxed under this rule, gross lease or rental payments would not face additional tax.
The term financial intermediation services means the sum of— (A) explicitly charged fees for financial intermediation services, and (B) implicitly charged fees for financial intermediation services.
(D) insurance premiums, to the extent such premiums are not allocable to the investment account of the underlying insurance policy,
For purposes of subparagraph (A), the term gross imputed amount means— (i) with respect to any underlying interest-bearing investment or account, the product of— (I) the excess (if any) of the basic interest rate (as defined in section 805) over the rate paid on such investment, and (II) the amount of the investment or account, and (ii) with respect to any underlying interest-bearing debt, the product of— (I) the excess (if any) of the rate paid on such debt over the basic interest rate (as defined in section 805), and (II) the amount of the debt.
The tax on financial intermediation services provided by section 801 with respect to an underlying investment account or debt shall be imposed and collected with the same frequency that statements are rendered by the financial institution in connection with the investment account or debt but not less frequently than quarterly.
For purposes of this section, the term financing lease means any lease under which the lessee has the right to acquire the property for 50 percent or less of its fair market value at the end of the lease term.
The Secretary shall promulgate rules for disaggregating the principal and interest components of a financing lease. The principal amount shall be determined to the extent possible by examination of the contemporaneous sales price or prices of property the same or similar as the leased property.
In the event that contemporaneous sales prices or property the same or similar as the leased property are not available, the principal and interest components of a financing lease shall be disaggregated using the applicable interest rate (as defined in section 511) plus 4 percent.
The principal component of the financing lease shall be subject to tax as if a purchase in the amount of the principal component had been made on the day on which said lease was executed.
The financial intermediation services amount with respect to the interest component of the financing lease shall be subject to tax under this subtitle.
If the principal component and financial intermediation services amount with respect to the interest component of a lease have been taxed pursuant to this section, then the gross lease or rental payments shall not be subject to additional tax.
Treasury would determine federal short-, mid-, and long-term interest benchmarks monthly for the following month, using average market yields on outstanding marketable U.S. obligations in the corresponding maturity bands. The applicable rate would be short-term for terms of up to three years, mid-term for over three through nine years, and long-term for over nine years. These would supply the basic interest rate for implicit financial-service fees. Fixed-rate instruments would use the issuance-month rate; variable-rate instruments without a reference rate would use the monthly federal short-term rate, while those with a reference rate would use the monthly applicable rate for that reference rate.
In the case of a debt instrument, investment, financing lease, or account with a term of not over 3 years, the applicable interest rate is the Federal short-term rate.
In the case of a debt instrument, investment, financing lease, or account with a term of over 3 years but not over 9 years, the applicable interest rate is the Federal mid-term rate.
In the case of a debt instrument, investment, financing lease, or account with a term of over 9 years, the applicable interest rate is the Federal long-term rate.
The Federal short-term rate shall be the rate determined by the Secretary based on the average market yield (selected by the Secretary and ending in the calendar month in which the determination is made during any one month) on outstanding marketable obligations of the United States with remaining periods to maturity of 3 years or fewer.
The Federal mid-term rate shall be the rate determined by the Secretary based on the average market yield (selected by the Secretary and ending in the calendar month in which the determination is made during any 1 month) on outstanding marketable obligations of the United States with remaining periods to maturity of more than 3 years and not over 9 years.
The Federal long-term rate shall be the rate determined by the Secretary based on the average market yield (selected by the Secretary and ending in the calendar month in which the determination is made during any 1 month) on outstanding marketable obligations of the United States with remaining periods to maturity of over 9 years.
During each calendar month, the Secretary shall determine the Federal short-term rate, the Federal mid-term rate and the Federal long-term rate which shall apply during the following calendar month.
For purposes of this chapter, the basic interest rate with respect to a debt instrument, investment, financing lease, or account shall be the applicable interest rate (as determined in section 511). For debt instruments, investments, or accounts of contractually fixed interest, the applicable interest rate of the month of issuance shall apply. For debt instruments, investments, or accounts of variable interest rates and which have no reference interest rate, the applicable interest shall be the Federal short-term interest rate for each month. For debt instruments, investments, or accounts of variable interest rates and which have a reference interest rate, the applicable interest shall be the applicable interest rate for the reference interest rate for each month.
Financial intermediation services would be deemed consumed domestically if the purchaser or a defined related party is a U.S. resident. Providers serving U.S. residents would have to designate a tax representative responsible for collection and remittance, with joint and several liability and a possible bond requirement.
Financial intermediation services shall be deemed as used or consumed within the United States if the person (or any related party as defined in section 205(e)) purchasing the services is a resident of the United States.
Any person that provides financial intermediation services to United States residents must, as a condition of lawfully providing such services, designate, in a form prescribed by the Secretary, a tax representative
shall be jointly and severally liable for collecting and remitting these taxes. The Secretary may require reasonable bond of the tax representative.
Annual small-transaction exemptions would cover up to $400 of qualifying personal imports, $1,200 of qualifying casual or isolated sales, and $10,000 of financial-service receipts for persons outside the large-seller category. The import and casual-sale exemptions carry the stated nonbusiness conditions.
Up to $400 of gross payments per calendar year shall be exempt from the tax imposed by section 101 if— (1) made by a person not in connection with a trade or business at any time during such calendar year prior to making said gross payments, and (2) made to purchase any taxable property or service which is imported into the United States by such person for use or consumption by such person in the United States.
Up to $1,200 per calendar year of gross payments shall be exempt from the tax imposed by section 101 if received— (1) by a person not in connection with a trade or business during such calendar year prior to the receipt of said gross payments, and (2) in connection with a casual or isolated sale.
Up to $10,000 per calendar year of gross payments received by a person from the sale of financial intermediation services (as determined in accordance with section 801) shall be exempt from the tax imposed by section 101.
The exemption provided by this subsection shall not be available to large sellers (as defined in section 501(e)(3)).
Antiavoidance rules would tax copyright or trademark sales that substantively sell the underlying services, and treat previously untaxed property or services supplied by registered persons as gifts, prizes, rewards, or employment remuneration as personal-use conversions. For employer discounts offered to employees or their families, the special employee-discount tax would apply only to the discount exceeding 20 percent of the public price; this does not exempt the underlying sale from otherwise applicable tax. Transactions lacking a bona fide economic purpose and designed to evade the tax would be governed by substance over form.
the sale of a copyright or trademark shall be treated as the sale of taxable services (within the meaning of section 101(a)) if the substance of the sales of copyright or trademark constituted the sale of the services that produced the copyrighted material or the trademark.
If a registered person provides taxable property or services to a person either as a gift, prize, reward, or as remuneration for employment, and such taxable property or services were not previously subject to tax pursuant to section 101, then the provision of such taxable property or services by the registered person shall be deemed the conversion of such taxable property or services to personal use subject to tax pursuant to section 103(c) at the tax inclusive fair market value of such taxable property or services.
the term employee discount means an employer’s offer of taxable property or services for sale to its employees or their families (within the meaning of section 302(b)) for less than the offer of such taxable property or services to the general public.
If the employee discount amount exceeds 20 percent of the price that the taxable property or services would have been sold to the general public, then the sale of such taxable property or services by the employer shall be deemed the conversion of such taxable property or services to personal use and tax shall be imposed on the taxable employee discount amount.
The taxable employee discount amount shall be— (A) the employee discount amount, minus (B) 20 percent of the amount for which said taxable property or services would have been sold to the general public.
The substance of a transaction will prevail over its form if the transaction has no bona fide economic purpose and is designed to evade tax imposed by this subtitle.
Qualifying business inventory held at the close of December 31, 2026, and sold before December 31, 2027, by a registered person in a taxable sale would receive a transition credit equal to its specified income-tax cost multiplied by the sales-tax rate. Work in progress would count. For businesses selling the inventory without tax under section 102(a), eligibility would require certification of a subsequent taxable sale. Credit rights could be sold to the inventory’s purchaser and passed along to subsequent purchasers of the inventory or property or services incorporating it.
Inventory held by a trade or business on the close of business on December 31, 2026, shall be qualified inventory if it is sold— (A) before December 31, 2027, (B) by a registered person, and (C) subject to the tax imposed by section 101.
qualified inventory shall have the cost that it had for Federal income tax purposes
a transitional inventory credit equal to the cost of the qualified inventory (determined in accordance with paragraph (2)) times the rate of tax imposed by section 101.
inventory shall include work-in-process.
Qualified inventory held by businesses that sells said qualified inventory not subject to tax pursuant to section 102(a) shall be eligible for the transitional inventory credit only if that business (or a business that has successor rights pursuant to paragraph (2)) receives certification in a form satisfactory to the Secretary that the qualified inventory was subsequently sold subject to the tax imposed by this subtitle.
The business entitled to the transitional inventory credit may sell the right to receive said transitional inventory credit to the purchaser of the qualified inventory that gave rise to the credit entitlement. Any purchaser of such qualified inventory (or property or services into which the qualified inventory has been incorporated) may sell the right to said transitional inventory credit to a subsequent purchaser of said qualified inventory (or property or services into which the qualified inventory has been incorporated).
Employers would be required to report information needed to calculate Social Security benefits and provide employees copies of their submissions. For this reporting provision, wages would mean cash employment remuneration, including documented tips and defined self-employment income, but would exclude insurance benefits, pension or annuity benefits, tips over $5,000 per year, and government entitlement benefits. Self-employment income would be gross payments received for taxable property or services minus gross payments made for such property or services and employee wages.
Employers shall submit such information to the Social Security Administration as is required by the Social Security Administration to calculate Social Security benefits under title II of the Social Security Act, including wages paid, in a form prescribed by the Secretary. A copy of the employer submission to the Social Security Administration relating to each employee shall be provided to each employee by the employer.
the term wages means all cash remuneration for employment (including tips to an employee by third parties provided that the employer or employee maintains records documenting such tips) including self-employment income; except that such term shall not include— (1) any insurance benefits received (including death benefits), (2) pension or annuity benefits received, (3) tips received by an employee over $5,000 per year, and (4) benefits received under a government entitlement program (including Social Security benefits and unemployment compensation benefits).
the term self-employment income means gross payments received for taxable property or services minus the sum of— (1) gross payments made for taxable property or services (without regard to whether tax was paid pursuant to section 101 on such taxable property or services), and (2) wages paid by the self-employed person to employees of the self-employed person.
In 2027, sales-tax revenue would be allocated 64.83 percent to general revenue, 27.43 percent to Social Security insurance funds, and 7.74 percent to hospital and supplementary medical insurance funds. Later allocations would follow the respective rate components. The Social Security Administration would calculate insurance rates to match revenues from the specified 12.4 percent Social Security and 2.9 percent Medicare wage-base benchmarks using actuarially sound methodology, announcing rates at least six months before the applicable year. Within each insurance-fund group, Treasury would divide revenue between the constituent funds according to law or, absent another statutory provision, in proportion to their respective 2026 receipts, counting only receipts under chapter 21 of the Internal Revenue Code. This would apply separately to the old-age and survivors insurance and disability insurance funds, and to the hospital insurance and Federal supplementary medical insurance funds.
Notwithstanding subsection (b), the revenue allocation pursuant to subsection (a) for calendar year 2027 shall be as follows: (1) 64.83 percent of total revenue to general revenue, (2) 27.43 percent of total revenue to the old-age and survivors insurance and disability insurance trust funds, and (3) 7.74 percent of total revenue to the hospital insurance and Federal supplementary medical insurance trust funds.
The proportion of total revenue allocated to the general revenue shall be the same proportion as the rate in section 101(b)(4) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
The amount of revenue allocated to the old-age and survivors insurance and disability insurance trust funds shall be the same proportion as the old-age, survivors and disability insurance rate (as defined in subsection (d)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
The amount of revenue allocated to the hospital insurance and Federal supplementary medical insurance trust funds shall be the same proportion as the hospital insurance rate (as defined in subsection (e)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
The Secretary shall allocate revenue received because of the old-age, survivors and disability insurance rate to the old-age and survivors insurance trust fund and the disability insurance trust fund in accordance with law or, in the absence of other statutory provision, in the same proportion that the old-age and survivors insurance trust fund receipts bore to the sum of the old-age and survivors insurance trust fund receipts and the disability insurance trust fund receipts in calendar year 2026 (taking into account only receipts pursuant to chapter 21 of the Internal Revenue Code).
The Secretary shall allocate revenue received because of the hospital insurance rate to the hospital insurance trust fund and the Federal supplementary medical insurance trust fund in accordance with law or, in the absence of other statutory provision, in the same proportion that hospital insurance trust fund receipts bore to the sum of the hospital insurance trust fund receipts and Federal supplementary medical insurance trust fund receipts in calendar year 2026 (taking into account only receipts pursuant to chapter 21 of the Internal Revenue Code).
The bill would require 23 percent withholding on covered U.S.-source income of nonresident alien individuals, foreign partnerships, and foreign corporations. Portfolio-debt interest would be exempt, and applicable tax-treaty withholding rates would govern.
to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.
No tax shall be required to be deducted from interest on portfolio debt investments.
then the rate of withholding tax prescribed by the treaty shall govern.
Section 202 would repeal listed reporting, assessment, payment, penalty, and other provisions and make specified deletions, substitutions, and redesignations elsewhere. Where the underlying law is absent, these instructions establish textual changes but do not establish all resulting legal effects. The complete replacement interest provision would charge the federal short-term rate on late payments from the payment deadline and provide overpayment interest from 60 days after overpayment until refund. That overpayment rule uses a different starting point from proposed sales-tax section 207.
The following provisions of the Internal Revenue Code of 1986 are repealed:
(1) Subchapter A of chapter 61 of subtitle D (as redesignated by section 104) (relating to information and returns).
(8) Sections 6201, 6205, and 6207 (relating to assessments).
(11) Sections 6314, 6315, 6316, and 6317 (relating to payments of repealed taxes).
(22) Section 6662 (relating to penalties).
Section 6151 of such Code is amended by striking subsection (b) and by redesignating subsection (c) as subsection (b).
If any amount of tax imposed by this title is not paid on or before the last date prescribed for payment, interest on such amount at the Federal short-term rate (as defined in section 511(b)) shall be paid from such last date to the date paid.
Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax at the Federal short-term rate (as defined in section 511(b)) from 60 days after the date of the overpayment until the date the overpayment is refunded.
Balances due not paid within 60 days after the application for refund is received shall bear interest from the date of application.
The replacement payment-extension provision would authorize Treasury, subject to other provisions of the title, to allow reasonable extensions of up to six months, or twelve months for a taxpayer abroad. This would not override the sales-tax subtitle’s express prohibition on payment extensions. The replacement section 6211(b) would define a rebate, for subsection (a)(2), as the portion of an abatement, credit, refund, or other payment made because tax under chapter 41, 42, 43, or 44 was less than the subsection (a)(1) amount minus previous rebates; the referenced subsection (a)(1) amount is not supplied in full. Replacement section 6212(b) would make a deficiency notice for chapter 42, 43, or 44 tax mailed to the taxpayer’s last known address sufficient for that chapter and the deficiency-notice chapter, absent notice to Treasury under section 6903 of a fiduciary relationship, even if the taxpayer had died, was under a legal disability, or was a terminated corporation. Another replacement provision would authorize a Tax Court filing fee of no more than $60 for a petition to redetermine a deficiency. These descriptions do not establish how the replacement provisions compare with existing law.
The Secretary, except as otherwise provided in this title, may extend the time for payment of the amount of the tax shown or required to be shown on any return, report, or declaration required under authority of this title for a reasonable period not to exceed 6 months (12 months in the case of a taxpayer who is abroad).
Notwithstanding paragraphs (1) and (2), no extension shall be granted with respect to the time for paying or remitting the taxes under this subtitle.
Section 6211(b) of such Code is amended to read as follows: (b) Rebate Defined For purposes of subsection (a)(2), the term rebate means so much of an abatement, credit, refund, or other payment, as was made on the ground that the tax imposed by chapter 41, 42, 43, or 44 was less than the excess of the amount specified in subsection (a)(1) over the rebates previously made.
Section 6212(b) of such Code is amended to read as follows: (b) Address for Notice of Deficiency In the absence of notice to the Secretary under section 6903 of the existence of a fiduciary relationship, notice of a deficiency in respect of a tax imposed by chapter 42, 43, or 44 if mailed to the taxpayer at his last known address, shall be sufficient for purposes of such chapter and this chapter even if such taxpayer is deceased, or is under a legal disability, or, in the case of a corporation has terminated its existence.
The Tax Court is authorized to impose a fee in an amount not in excess of $60 to be fixed by the Tax Court for the filing of any petition for the redetermination of a deficiency.
IRS expenses would no longer have authorized appropriations after fiscal year 2029. Federal records related to administration of taxes repealed by title I would be destroyed by that fiscal year’s end, except records needed to calculate Social Security benefits, which the Social Security Administration would retain, and records needed to support tax litigation, which would be retained until its final disposition. Section 301(c) would delete and redesignate specified administrative subsections and substitute Treasury and Secretary references for IRS and Commissioner references, effective January 1, 2029.
Appropriations for any expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year 2029 shall not be authorized.
Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2029, except that any records necessary to calculate Social Security benefits shall be retained by the Social Security Administration and any records necessary to support ongoing litigation with respect to taxes owed or refunds due shall be retained until final disposition of such litigation.
(1) by striking subsections (a) and (b) and by redesignating subsections (c) and (d) as subsections (a) and (b), (2) by striking Internal Revenue Service each place it appears and inserting Department of the Treasury, and (3) by striking Commissioner or Commissioner of Internal Revenue each place they appear and inserting Secretary.
The amendments made by subsection (c) shall take effect on January 1, 2029.
Treasury would receive an Excise Tax Bureau for excise taxes outside the Bureau of Alcohol, Tobacco, Firearms and Explosives’ administration and a Sales Tax Bureau for federal sales-tax duties. The Office of Revenue Allocation would be within the Sales Tax Bureau.
There shall be in the Department of the Treasury an Excise Tax Bureau to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
There shall be in the Department of the Treasury a Sales Tax Bureau to administer the national sales tax in those States where it is required pursuant to section 404, and to discharge other Federal duties and powers relating to the national sales tax (including those required by sections 402, 403, and 405). The Office of Revenue Allocation shall be within the Sales Tax Bureau.
Section 302(b)’s replacement paragraph would authorize the Treasury Secretary to appoint and set the duties of no more than five assistant general counsels without regard to civil-service laws. The prior provision is not supplied, so the evidence does not establish whether this authority differs from existing law or identify any actual appointee.
Section 7801(a)(2) of such Code is amended to read as follows: (2) Assistant general counsels The Secretary of the Treasury may appoint, without regard to the provisions of the civil service laws, and fix the duties of not more than 5 assistant general counsels.
Social Security cost-of-living calculations would include a sales-tax adjustment if the Consumer Price Index did not already include the national sales tax. The specified factor would be one plus the tax rate divided by one minus the tax rate.
if the Consumer Price Index (as so prepared) does not include the national sales tax paid
the product of— (I) the Consumer Price Index for that quarter (as so prepared), and (II) the national sales tax factor
the national sales tax factor is equal to one plus the quotient that is— (I) the sales tax rate imposed by section 101 of the Internal Revenue Code of 2025, divided by (II) the quantity that is one minus such sales tax rate.
If the Sixteenth Amendment were not repealed before the end of seven years after enactment, the bill’s provisions and amendments would stop applying to use or consumption in years after that period’s ending calendar year. The Sales Tax Bureau could not be terminated until six months after that December 31; the provision does not require termination on that date. The bill expresses support for repealing the amendment but does not itself supply a constitutional amendment or ratification process.
If the Sixteenth Amendment to the Constitution of the United States is not repealed before the end of the 7-year period beginning on the date of the enactment of this Act, then all provisions of, and amendments made by, this Act shall not apply to any use or consumption in any year beginning after December 31 of the calendar year in which or with which such period ends, except that the Sales Tax Bureau of the Department of the Treasury shall not be terminated until 6 months after such December 31.
Congress further finds that the 16th Amendment to the United States Constitution should be repealed.
The supplied official-actions snapshot, updated September 11, 2025, records introduction in the House and referral to the House Committee on Ways and Means on January 3, 2025.
Source snapshot updated 2025-09-11T13:32:33Z. 2025-01-03: Referred to the House Committee on Ways and Means. 2025-01-03: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-01-03. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No provision unrelated to the bill’s tax-replacement, implementation, or transition framework was identified in the complete supplied introduced text. A narrow exception within that framework is evaluated as a targeted benefit rather than automatically treated as an unrelated rider. This conclusion is version-limited, and the supplied sources do not establish amendment attachment history.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified in the complete supplied introduced text. General formula allocations, family rebates, and administrative compensation do not by themselves establish such earmarks. Member disclosures, committee reports, and conference materials were not supplied, so formal earmark status beyond this text cannot be established.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
Findings to examine
The supplied introduced text contains narrow tax exceptions and a position-specific civil-service-law exemption warranting identification within the bill’s framework. Broad program eligibility and general tax administration rules are not classified as targeted benefits solely because they benefit an eligible class. These findings identify special treatment without establishing that it is unjustified, newly available relative to existing law, or used by any actual beneficiary.
Section 201, proposed Code section 901(d), gives financial-intermediation service sellers that are not large sellers a sector-specific exemption for up to $10,000 in annual gross payments, in addition to other exemptions.
Up to $10,000 per calendar year of gross payments received by a person from the sale of financial intermediation services (as determined in accordance with section 801) shall be exempt from the tax imposed by section 101. The exemption provided by this subsection is in addition to other exemptions afforded by this chapter. The exemption provided by this subsection shall not be available to large sellers (as defined in section 501(e)(3)).
Section 201, proposed Code section 905(b), exempts portfolio-debt interest from the otherwise prescribed 23 percent withholding on covered U.S.-source income of nonresident alien individuals, foreign partnerships, and foreign corporations. This favors a specific investment-income category within the bill’s withholding policy.
having control, receipt, custody, disposal, or payment of any income to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.
(b) Exception No tax shall be required to be deducted from interest on portfolio debt investments.
Section 302(b) would authorize the Treasury Secretary to appoint and set duties for no more than five assistant general counsels without regard to civil-service laws. This is a narrow exemption for specified appointments. The supplied evidence does not establish whether it changes existing appointment authority or identify actual appointees.
The Secretary of the Treasury may appoint, without regard to the provisions of the civil service laws, and fix the duties of not more than 5 assistant general counsels.
Section 201, proposed Code section 901(g), provides preferential treatment for employer discounts offered to employees and their families: the special employee-discount tax applies only to the discount exceeding 20 percent of the public price. The allowance does not make the underlying sale wholly exempt from otherwise applicable sales tax.
the term employee discount means an employer’s offer of taxable property or services for sale to its employees or their families (within the meaning of section 302(b)) for less than the offer of such taxable property or services to the general public.
If the employee discount amount exceeds 20 percent of the price that the taxable property or services would have been sold to the general public, then the sale of such taxable property or services by the employer shall be deemed the conversion of such taxable property or services to personal use and tax shall be imposed on the taxable employee discount amount.
The taxable employee discount amount shall be— (A) the employee discount amount, minus (B) 20 percent of the amount for which said taxable property or services would have been sold to the general public.
Full text preserved for this analysis. Legislative record snapshot: Sep 11, 2025. How PlainBill uses AI