HB660 By Representative Scott RFD Ways and Means General Fund Rd 1 12-MAY-15

SYNOPSIS: This bill, known as the Non-Nexus Use Tax Remittance Act, would provide an easily-accessible method for non-nexus sellers to remit, on behalf of their customers, a non-nexus sellers use tax on items delivered into Alabama.

A BILL TO BE ENTITLED AN ACT

Relating to non-nexus sellers use tax to establish an easily-accessible method for non-nexus sellers to remit, on behalf of their customers, use tax on items delivered into Alabama.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Sections 40-23-191 through 40-23-200 are hereby added to Division 3 of Article 6 of Chapter 23 of Title 40 of the Code of Alabama 1975, as follows:

§40-23-191.

"This act shall be titled “The Non-Nexus Use Tax Remittance Act”.

"§40-23-192.

"For the purpose of this act, the following terms shall have the respective meanings ascribed to them in this section:

"(1) DEPARTMENT. The Alabama Department of Revenue.

"(2) LOCALITY. A county, municipality, or other local governmental taxing authority which levies a local sales and/or use tax.

"(3) NEXUS. Business activity within the state of Alabama that is sufficient to require a non-resident seller to be subject to requirements for collecting and remitting state and local sales or use tax for purchases delivered into the state of Alabama.

"(4) NON-NEXUS SELLER. An individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation or other legal entity that sells tangible personal property or a service, but does not have nexus in this state.

"(5) NON-NEXUS SELLERS USE TAX. The eight percent (8%) tax to be collected, reported, and remitted by non-nexus sellers who are participating in the program pursuant to requirements and procedures established pursuant to this act.

"(6) NON-NEXUS USE TAX REMITTANCE PROGRAM or PROGRAM. The program established in this act to provide a mechanism for non-nexus sellers to collect, report, and remit the non-nexus sellers use tax established pursuant to this act.

"(7) STATE. The State of Alabama.

"§40-23-193.

"(a) There is hereby established The Non-Nexus Use Tax Remittance Program designed to allow a non-nexus seller who participates in the program to collect, report, and remit the non-nexus sellers use tax authorized herein in lieu of the sales or use taxes otherwise due by or on behalf of Alabama customers who have purchased items from the non-nexus seller that were shipped or otherwise delivered into Alabama by the non-nexus seller. Participation in the program shall be by election of the non-nexus seller and only those non-nexus sellers accepted into the program as set out herein shall collect and remit the non-nexus sellers use tax. Participation in the program shall not be construed as subjecting a non-nexus seller to franchise, income, occupation, or any other type of taxes or licensing requirements levied or imposed by the state of Alabama or any locality against taxpayers who have nexus with the state.

"(b) The program shall be administered by the department, which pursuant to this act, shall develop and make available to the non-nexus seller an easily-accessible, online system in which to collect, report, and remit the non-nexus sellers use tax. Participants in the program shall be required to collect, report, and remit the non-nexus sellers use tax for all sales delivered into the state as long as remaining a participant in the program. Participants are eligible for the program as long as they do not have nexus with the state of Alabama and comply with all provisions of this act and procedures adopted by the department for participation in the program.

"(c) In order to participate in the program, a non-nexus seller shall make application with the department on a form designed by the department for that purpose. The application shall require, at a minimum, that the non-nexus seller:

"(1) Certifies that he or she does not have nexus with the state of Alabama sufficient to legally require the seller to collect and remit sales and use tax due on purchases delivered into the state.

"(2) Agrees to collect, report, and remit the non-nexus sellers use tax for all sales delivered into the state as long as he or she remains a participant in the program.

"(3) Agrees to provide the department with information related to sales from Alabama customers as required by this act or requested by the department.

"(4) Agrees to comply with all program reporting requirements established under program procedures.

"Any applicant who falsely certifies on his or her application that he or she does not have nexus with the state of Alabama shall be subject to the negligence and/or fraud penalties under procedures found in Section 40-2A-11.

"(d) The department shall review all applications for participation, and where an applicant is determined to satisfy requirements to participate in the program, shall establish a non-nexus sellers use tax account for the non-nexus seller which will allow the non-nexus seller to report and remit all non-nexus sellers use tax collected pursuant to this act.

"(e) A participating non-nexus seller shall be removed from the program if:

"(1) He or she substantially fails to collect, report, and remit non-nexus sellers use taxes.

"(2) He or she fails to submit required reports on a timely basis.

"(3) Upon a determination that the non-nexus seller has nexus with Alabama.

"(4) There is any other finding by the department that the participant is not in compliance with the terms authorizing participation in the program.

"Any participant who fails to report that he or she has established nexus with the state or falsely certifies on any report that he or she does not have nexus with the state of Alabama shall be subject to the negligence and/or fraud penalties under procedures found in Section 40-2A-11. Removal from the program or assessment of the fraud or negligence penalty shall be subject to appeal rights and procedures established in this title.

"§40-23-194.

"(a) The non-nexus sellers use tax due under the program is eight percent (8%) of the sales price on any tangible personal property sold or delivered into Alabama by a non-nexus seller participating in the program. The collection and remittance of non-nexus sellers use tax relieves the non-nexus seller and the purchaser from any additional state or local sales and use taxes on the transaction.

"(b) The non-nexus sellers use tax collected by the non-nexus seller shall be electronically reported and remitted in the manner prescribed by the department on or before the 20th day of the month next succeeding the month in which the tax accrues. The required monthly reporting from the non-nexus seller shall only include statewide totals of the non-nexus sales and non-nexus sellers use taxes collected and remitted, and shall not require information related to the location of purchasers or amount of sales into a specific locality. The department may not require a non-nexus seller to report and remit the non-nexus sellers use tax more frequently than is required for other sellers.

"(c) No non-nexus seller shall be required to collect the tax at a rate greater than eight percent (8%), regardless of the combined actual tax rates that may otherwise be applicable. Additionally, no purchase for which the non-nexus sellers use tax is collected shall be subject to any additional sales or use tax from any locality levying a sales or use tax with respect to the purchase or use of the property, regardless of the actual tax rate that might have otherwise been applicable.

"(d) The participating non-nexus seller shall collect the tax on all purchases delivered into Alabama unless the purchaser furnishes the non-nexus seller with a valid exemption certificate, sales tax license, or direct pay permit issued by the department. The non-nexus seller shall retain all exemption certificates, sales tax licenses, or direct pay permits in its files, or in such other manner as directed by the department.

"(e) The non-nexus seller shall provide the purchaser with a statement or invoice showing that the non-nexus sellers use tax was collected and is to be remitted on the purchaser’s behalf. The statement shall be in a manner prescribed by the department and shall include the non-nexus seller’s program account number issued by the department upon the non-nexus seller’s approval as a participant in the program.

"§40-23-195.

"Non-nexus sellers may deduct and retain a discount equal to two percent of the non-nexus sellers use tax collected and properly reported and remitted to the department in a timely manner. The department is authorized to prescribe rules for administering the discount. No discount shall be allowed for any taxes which are not timely reported and remitted to the department pursuant to program procedures.

"§40-23-196.

"(a) The department may adopt, promulgate, and enforce reasonable rules and regulations related to the implementation, administration, and participation in the program. The department shall have exclusive responsibility for reviewing and accepting applications for participation and for the administration, return processing, and review of the eligibility of non-nexus sellers participating in the program. Non-nexus sellers participating in the program shall not be subject to audit or review by any Alabama locality. Non-nexus sellers shall maintain records of all sales of purchases delivered into Alabama, including copies of invoices showing the purchaser, address, purchase amount, and non-nexus sellers use tax collected. Such records shall be made available for review and inspection upon request by the department.

"§40-23-197.

"(a) Any taxpayer who pays a non-nexus sellers use tax through this program that is higher than the actual state and local sales or use tax levied in the locality where the purchase was delivered may file for a refund or credit of the excess amount paid to the non-nexus seller participating in the program. A business taxpayer who has a registered consumer use tax account with the department may claim credit for the overpayment of non-nexus use tax on their consumer use tax return in a manner prescribed by the department. All other taxpayers may file a petition for refund in the manner prescribed by the department. The petition for refund may only be filed once per year. In the event the amount due to be refunded in a year is less than twenty-five ($25.00) dollars, payment of the refund may be deferred by the department and combined with amounts due to be paid pursuant to subsequent annual refund petitions for a period of up to three years.

"(b) Any taxpayer seeking a refund or credit of excess taxes paid to a non-nexus seller participating in the program shall maintain records documenting the amount of non-nexus sellers use tax paid. Refunds or credits shall only be paid where proper documentation of amounts paid by the taxpayer is submitted to the department with the petition for refund.

"§40-23-198.

"(a) The proceeds of non-nexus sellers use tax paid pursuant to this act shall be appropriated to the department, which shall retain the amount necessary to fund the administrative costs of implementing and operating the program and to cover the amounts paid for discounts authorized in §40-23-194. The balance of the amounts collected shall be distributed as follows:

"(1) Fifty percent (50%) to the state treasury and allocated seventy-five percent (75%) to the General Fund and twenty-five percent (25%) to the Education Trust Fund.

"(2) Twenty-five percent (25%) to each county in the state on a prorated basis according to population as determined in the most recent federal census prior to the distribution.

"(3) Twenty-five percent (25%) of funds to be distributed to each municipality in the state on a prorated basis according to population as determined in the most recent federal census prior to the distribution.

"(b) The distribution of the proceeds from the non-nexus sellers use tax paid to counties and municipalities shall occur quarterly in a manner prescribed by the Department.

"§40-23-199.

"(a) In the event that a national agreement for the collection of sales and use taxes from remote or non-nexus sellers or the other federal legislation requiring remote or non-nexus sellers to collect and remit Alabama’s sales or use taxes is enacted, the provisions of this act shall be inapplicable as to any non-nexus seller who is not registered with the department as a participant in the program at least six months prior to the date of passage of such national agreement or act. In such event, the provisions of this act will continue to apply to any non-nexus seller who has been approved by the department as a participant in the program at least six months prior to the passage of such agreement or act and to any taxpayer who has paid or pays the non-nexus sellers use tax authorized under this act provided the non-nexus seller continues to collect, report, and remit the non-nexus sellers use tax and otherwise complies with all procedures and requirements of the program. Non-nexus sellers participating in the program pursuant to this subsection may continue to receive a discount of two percent (2%) on all non-nexus sellers use taxes properly remitted under the provisions of this act and shall continue to report sales under the conditions set out in Section 40-23-194.

"§40-23-200.

"(a) Subject to the limitations set out herein, a non-nexus seller participating in the program shall be granted amnesty for any uncollected or unpaid remote use tax that may have been due on sales made to purchasers in the state for the twelve-month period preceding the effective date of the non-nexus sellers’ participation in the program.

"(b) The amnesty will preclude assessment for uncollected or unpaid non-nexus use tax together with any penalty or interest for sales made during the twelve-month period prior to the effective date of the non-nexus seller’s participation in the program.

"(c) The amnesty provided herein shall be granted to any non-nexus seller who applies to participate in the program following acceptance into the program by the department.

"(d) Amnesty is not available to a non-nexus seller with respect to any matter or matters for which the non-nexus seller has received notice of the commencement of an audit and the audit is not yet finally resolved, including any related administrative and judicial processes.

"(e) Amnesty is not available for any non-nexus sellers use tax already paid or remitted to the state or for taxes collected by the non-nexus seller.

"(f) Amnesty is fully effective, absent the non-nexus seller's fraud or intentional misrepresentation of a material fact, as long as the non-nexus remote seller continues his or her participation in the program and continues to collect, report, and remit applicable non-nexus sellers use tax for a period of at least thirty-six months. The state shall toll its statute of limitations applicable to asserting a tax liability during this thirty-six month period.

"(g) Amnesty is applicable only to non-nexus use tax due from a non-nexus seller in his or her capacity as a non-nexus seller and not to remote use taxes due from a seller in his or her capacity as a buyer."

Section 2. This act shall become effective on January 1, 2016, following its passage and approval by the Governor, or upon its otherwise becoming law.

Taxation

Revenue Department

Sales and Use Tax

Non-Nexus Sellers Use Tax

Code Added