UNAPPROVED DRAFT BILL -- Subject to Change Without Notice!
BILL NO.
INTRODUCED BY
(Primary Sponsor)
A BILL FOR AN ACT ENTITLED: "AN ACT IMPOSING A STATEWIDE, GENERAL, RETAIL SALES AND USE TAX; PROVIDING FOR EXEMPTIONS FROM THE SALES TAX AND USE TAX; PROVIDING FOR VARIOUS NONTAXABLE TRANSACTIONS; PROVIDING PENALTIES FOR CERTAIN ACTS OR OMISSIONS; PROVIDING FOR THE ALLOCATION OF SALES TAX AND USE TAX REVENUE; STATUTORILY APPROPRIATING SALES TAX AND USE TAX REVENUE FOR ADMINISTRATION OF THE SALES TAX AND USE TAX; REQUIRING THE DEPARTMENT OF REVENUE TO PURSUE BECOMING A SIGNATORY TO THE STREAMLINED SALES AND USE TAX AGREEMENT; ELIMINATING THE MONTANA INDIVIDUAL INCOME TAX; ELIMINATING CERTAIN CREDITS AGAINST THE MONTANA INDIVIDUAL INCOME TAX; AMENDING SECTIONS 5-12-303, 7-13-308, 7-14-1133, 7-14-1636, 7-34-2416, 13-37-218, 15-1-101, 15-1-102, 15-1-205, 15-1-206, 15-1-208, 15-1-211, 15-1-302, 15-1-501, 15-1-503, 15-2-201, 15-2-302, 15-30-163, 15-30-164, 15-30-246, 15-30-1101, 15-30-1102, 15-30-1112, 15-30-1113, 15-30-1121, 15-31-102, 15-31-113, 15-31-131, 15-31-150, 15-31-161, 15-31-162, 15-32-102, 15-32-104, 15-32-106, 15-32-303, 15-32-402, 15-32-403, 15-32-404, 15-32-405, 15-32-502, 15-32-503, 15-32-505, 15-32-510, 15-32-602, 15-32-610, 15-33-106, 15-50-207, 15-61-204, 15-62-208, 15-63-202, 17-6-311, 17-6-316, 17-6-602, 17-7-111, 17-7-502, 19-2-1004, 19-17-407, 19-18-612, 19-19-504, 19-20-706, 19-21-212, 19-50-101, 20-25-503, 20-25-504, 33-27-101, 33-27-102, 33-27-103, 37-4-104, 39-51-1109, 39-51-1301, 39-51-2402, 53-2-211, 67-11-303, 87-2-102, 87-2-105, 87-5-121, AND 90-8-202, MCA; REPEALING SECTIONS 2-18-1312, 15-1-230, 15-1-231, 15-30-101, 15-30-102, 15-30-103, 15-30-105, 15-30-106, 15-30-107, 15-30-110, 15-30-111, 15-30-112, 15-30-113, 15-30-114, 15-30-115, 15-30-116, 15-30-117, 15-30-121, 15-30-122, 15-30-123, 15-30-124, 15-30-125, 15-30-126, 15-30-127, 15-30-128, 15-30-129, 15-30-130, 15-30-131, 15-30-132, 15-30-134, 15-30-135, 15-30-136, 15-30-137, 15-30-138, 15-30-141, 15-30-142, 15-30-143, 15-30-144, 15-30-145, 15-30-146, 15-30-147, 15-30-148, 15-30-149, 15-30-150, 15-30-151, 15-30-152, 15-30-153, 15-30-155, 15-30-156, 15-30-157, 15-30-161, 15-30-162, 15-30-165, 15-30-166, 15-30-167, 15-30-168, 15-30-171, 15-30-172, 15-30-173, 15-30-174, 15-30-175, 15-30-176, 15-30-177, 15-30-178, 15-30-179, 15-30-180, 15-30-181, 15-30-186, 15-30-188, 15-30-189, 15-30-190, 15-30-191, 15-30-192, 15-30-201, 15-30-202, 15-30-203, 15-30-204, 15-30-205, 15-30-206, 15-30-207, 15-30-208, 15-30-209, 15-30-210, 15-30-215, 15-30-241, 15-30-247, 15-30-248, 15-30-249, 15-30-250, 15-30-251, 15-30-255, 15-30-256, 15-30-257, 15-30-301, 15-30-302, 15-30-303, 15-30-304, 15-30-305, 15-30-306, 15-30-307, 15-30-310, 15-30-311, 15-30-312, 15-30-313, 15-30-314, 15-30-316, 15-30-321, 15-30-323, 15-30-324, 15-30-331, 15-30-601, 15-30-602, 15-30-603, 15-30-604, 15-30-605, 15-30-1111, 15-31-170, 15-32-109, 15-32-115, 15-32-201, 15-32-202, 15-32-203, 15-61-202, AND 15-62-207, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND APPLICABILITY DATES."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Definitions. As used in [sections 1 through 20], unless the context clearly indicates otherwise, the following definitions apply:
(1) "Business entity" means an individual, partnership, corporation, corporate division, joint stock company, or any other association or entity, public or private, or separate business unit of any individual, partnership, corporation, corporate division, joint stock company, or any other association or entity.
(2) "Certified automated system" means software certified jointly by the states that are signatories to the Streamlined Sales and Use Tax Agreement to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction.
(3) "Certified service provider" means an agent certified jointly by the states that are signatories to the Streamlined Sales and Use Tax Agreement to perform all of the seller's sales tax or use tax functions.
(4) "Closely held subsidiary corporation" means:
(a) a corporation in which the parent corporation owns stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and owns at least 80% of the total number of shares of all other classes of stock; or
(b) a business entity if:
(i) sold to a purchaser of all or not less than 80% of the value of all of the assets that are located in this state of the business entity; and
(ii) the purchaser continues to use the tangible personal property in the operation of an ongoing business entity in this state.
(4) "Contractor" means:
(a) a person who has an agreement with the owner or lessee of real property in this state to perform services or furnish materials and services for the construction, alteration, improvement, or repair of real property in this state;
(b) a person who acts on behalf of the owner or lessee of real property in this state to arrange for the furnishing of services or the furnishing of materials and services for the construction, alteration, improvement, or repair of real property in this state; or
(c) a person who owns or leases real property in this state for the purpose of developing the property and who, in the development of the property, alters or makes improvements to the property or contracts for the alteration or improvement of the property.
(5) "Delivery charge" means a charge by the seller for preparation and delivery to a location designated by the purchaser of personal property or services, including but not limited to transportation, shipping, handling, postage, crating, and packing.
(6) "Manufactured home" means a residential dwelling built in accordance with the federal Manufactured Home Construction and Safety Standards that is more than 8 1/2 feet in width and that is designed, constructed, and equipped as a dwelling place or place of business to which wheels may be attached for movement upon streets or highways.
(7) "Modular home" means a residential dwelling constructed in a factory to a residential construction code other than the federal Manufactured Home Construction and Safety Standards.
(8) "Nonresident contractor" means a contractor who has not been a bona fide resident of this state for at least 1 year prior to bidding upon or entering into a construction contract.
(9) "Nonresident subcontractor" means any subcontractor who has not been a bona fide resident of this state for at least 1 year prior to bidding upon or entering into a construction contract.
(10) "Population" means the population as determined by the last federal census, to become effective on the July 1 following the receipt of the official census figures.
(11) "Prebuilt home" means any residential dwelling that is wholly or in substantial part made, fabricated, formed, or assembled in manufacturing facilities for installation or assembly on a building site. A prebuilt home includes but is not limited to a manufactured home, modular home, and mobile home.
(12) "Real property" means land and any appurtenances or structures affixed to the land. An article is considered real property if:
(a) it is buried or embedded;
(b) it is physically or constructively annexed to the real property;
(c) it is adapted to the use of the real property; or
(d) considering the purpose for which the annexation was made, it can reasonably be inferred that the intent of the annexing party to was to make the article a permanent part of the real property.
(13) "Retail sale" means the sale, lease, rental, or use of tangible personal property for storage, use, or consumption or for any purpose other than for resale, sublease, or subrent.
(14) "Sale" means the transfer of title or possession for storage, use, or other consumption in this state for a consideration, including the fabrication of tangible personal property if the materials are furnished by the purchaser. The term excludes an exchange or transfer of tangible personal property upon which the seller has directly or indirectly paid sales tax or use tax incidental to:
(a) a division of partnership assets among the partners according to their interests in the partnership or a limited partnership;
(b) the formation of a corporation by the owners of a business and the transfer of the owners' business assets to the corporation in exchange for all the corporation's outstanding stock, except qualifying shares, in proportion to assets contributed;
(c) the transfer of assets of shareholders in the formation or dissolution of a professional corporation;
(d) the dissolution and the pro rata distribution of the corporation's assets to its stockholders;
(e) the transfer of assets from a parent corporation to a closely held subsidiary corporation if the transfer is solely in exchange for stock or securities of the closely held subsidiary corporation;
(f) the transfer of assets from a closely held subsidiary corporation to a parent corporation or to another closely held subsidiary corporation if the transfer is solely in exchange for stock or securities of the parent corporation or the closely held subsidiary corporation that received the assets;
(g) a transfer of a partnership interest;
(h) the formation of a partnership by the transfer of assets to the partnership or transfers to a partnership in exchange for proportionate interests in the partnership;
(i) the repossession of personal property by a chattel mortgage holder or foreclosure by a lienholder;
(j) the transfer of assets between:
(i) a parent corporation and a closely held subsidiary corporation of the parent;
(ii) closely held subsidiary corporations of the same parent corporation; or
(iii) affiliated companies, partnerships, and corporations that are owned in similar percentages by the same persons.
(15) (a) "Sales price" applies to the measure subject to sales tax or use tax and means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, rented, or valued in money, whether received in money or otherwise, without any deduction for the following:
(i) the seller's cost of property sold;
(ii) the cost of materials used, labor or service costs, interest, losses, all costs of transportation to the seller, and any other expense of the seller;
(iii) charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
(iv) delivery charges;
(v) installation charges;
(vi) the value of exempt personal property given to the purchaser when taxable and exempt personal property have been bundled together and sold by the seller as a single product or piece of merchandise.
(b) The term excludes the actual trade-in value allowed on tangible personal property and manufacturer rebates for motor vehicles exchanged at the time of the transaction.
(c) The term does not include:
(i) discounts, including cash, terms, or coupons that are not reimbursed by a third party or are allowed by a seller and taken by a purchaser on a sale;
(ii) interest, financing, or carrying charges from credit extended on the sale of personal property or services if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser; and
(iii) any tax legally imposed directly on the consumer that is separately stated on the invoice, bill of sale, or similar document given to the purchaser.
(16) "Sales tax" means the tax imposed under [section 3].
(17) "Subcontractor" means a person who has an agreement with a contractor or another subcontractor to perform any part of the contractor's or other subcontractor's obligation for furnishing services or materials for the construction, alteration, improvement, or repair of real property in this state.
(18) "Surety bond" means a bond or undertaking executed by a surety company authorized to do business in this state.
(19) "Tangible personal property" means any property that is not real or intangible and includes any controlled substance designated as a dangerous drug pursuant to Title 50, chapter 32, parts 1 and 2, that is not sold pursuant to a written prescription of or through a licensed practitioner, as defined in 37-14-102.
(20) "Taxpayer" means the purchaser of tangible personal property, admissions, or services that are subject to taxation under [sections 1 through 12].
(21) "Tertiary production" means the crude oil recovered from a petroleum reservoir by means of a tertiary enhanced recovery project to which one or more tertiary enhanced recovery techniques meeting the certification requirements of the Montana board of oil and gas conservation or the United States government are being applied.
(22) "Transportable home" means a manufactured home, modular home, or prebuilt home.
(23) "Use tax" means the tax imposed under [section 3].
(24) "Vendor" means any person engaged in the business of selling at retail or wholesale tangible personal property, admissions, or services that are subject to taxation under [sections 1 through 12]. The term includes a vehicle dealer licensed under Title 61, chapter 4.
(25) "Well site" means an area within a 250-foot radius of an oil or gas wellbore.
(26) "Wholesale sale" means a sale of tangible personal property or services for subsequent sale.
NEW SECTION. Section 2. Short title -- administration -- confidentiality. (1) [Sections 1 through 12] may be cited as the "Selective Sales Tax and Use Tax Act of 2003".
(2) The department shall administer the provisions of [sections 1 through 12].
(3) The department may provide for the issuance, affixing, and payment of revenue stamps or the issuance of tokens or other devices to more efficiently secure the payment and collection of and accounting for taxes imposed by [sections 1 through 12].
(4) A notice required to be mailed by the department under [sections 1 through 12] is sufficient if mailed to the address shown on the records of the department.
(5) (a) It is unlawful for an employee of the department or any other public official or public employee to divulge or otherwise make known information that is disclosed in a report or return required to be filed under [sections 1 through 12] or information that concerns the affairs of the person making the return and that is acquired from the person's records, officers, or employees in an examination or audit. This subsection may not be construed to prohibit the department from publishing statistics if they are classified in a way that does not disclose the identity and content of any particular report or return. A person violating the provisions of this section is subject to the penalty provided in 15-31-511.
(b) The department may allow the following:
(i) delivery to the taxpayer or the taxpayer's legal representative upon written request of a copy of any return or report in connection with the taxpayer's tax return;
(ii) inspection by the attorney general of the report or return of a person who brings an action against the state or against whom an action is contemplated or has been instituted by this state;
(iii) introduction into evidence of any report or return or information from a report or return in any administrative or proceeding to which the taxpayer is a party;
(iv) furnishing of information to the United States government, the District of Columbia, any state allowing similar privileges to the department, or to the multistate tax commission for relay to tax officials of cooperating states. Information furnished under this subsection (5)(b)(iv) may be used only for tax purposes.
(v) sharing of information with local government entities or other state agencies.
(c) The department shall provide all information requested by the legislative audit division, the legislative fiscal division, or legislative services division, provided the requesting division agrees to the confidentiality provisions of 15-31-511.
(d) The following are prohibited:
(i) failure or refusal to make a return or payment required by [sections 1 through 12];
(ii) making a false return or statement;
(iii) evading the payment of any tax due;
(iv) aiding or abetting another person in an attempt to evade payment of the tax due; or
(v) knowingly attesting to a false or fraudulent return.
(e) The district court of the county in which a violation of this subsection (5) is alleged to have occurred has jurisdiction over the alleged violation.
NEW SECTION. Section 3. Imposition of sales tax or use tax -- rate. (1) Except as provided in subsections (3) and (4), there is imposed a tax of 4% upon the following:
(a) the sales price of every retail sale of tangible personal property in this state;
(b) the gross rental paid for the lease or contract transferring possession of tangible personal property if the transfer of possession would be taxable if the property was sold;
(c) the sales price paid for:
(i) intrastate telephone and telegraph services, including the consideration paid for the rental or leasing of any equipment or services incidental to the services; and
(ii) intrastate calls that originate and terminate in a single state and are billed to a customer with a place of primary use in this state from mobile telecommunications services as provided by the Mobile Telecommunications Sourcing Act, 4 U.S.C. 116 through 126;
(d) the sales price paid to carriers for intrastate transportation of passengers;
(e) the sales price paid to public utilities, as defined in 69-3-101, or to a person who sells oil, natural gas, or electricity for domestic, industrial, or commercial consumption;
(f) the sales price paid for storing, using, or consuming tangible personal property; and
(g) the sales price of computer hardware, including the basic set of operating instructions called system software that is necessary to the basic operation of the computer hardware, and hardware media used to transfer computer software programs.
(2) For the purposes of subsection (1)(c), the definitions and provisions of the Mobile Telecommunications Sourcing Act apply.
(3) (a) The tax imposed under subsection (1) of this section must be indexed according to the formula in subsection (3)(b).
(b) If, not later than March 31 of any year, the governor certifies that the unappropriated general fund balance at the end of the current fiscal year, minus any expected shortfall in revenue, if any, to fully fund the state's portion of the elementary and high school BASE funding program for the following school fiscal year, will exceed $35 million, the tax must be reduced to 0.5% effective July 1 immediately following certification.
(4) Upon the governor's certification under subsection (3), the department shall reduce the rate of tax imposed under subsection (1) to 0.5%.
(5) The tax imposed by [sections 1 through 12] is in addition to all other licenses and taxes provided by law.
(6) The tax rate imposed upon a transaction subject to the Uniform Sales and Use Tax Administration Act must be consistent with the uniform sourcing rule provided in the Streamlined Sales and Use Tax Agreement.
NEW SECTION. Section 4. Exemptions. (1) The sales or leases described this section are exempt from the tax imposed by [sections 1 through 12].
(2) Sales of services and tangible personal property that this state is prohibited from taxing under the law or constitution of the United States or the law or constitution of this state is exempt.
(3) Sales of services and tangible personal property exempt under this section include but are not limited to:
(a) interstate transportation of freight or passengers;
(b) the sale of railroad rolling stock, including locomotives purchased by interstate railroads, aircraft purchased by interstate air carriers that are holders of valid United States civil aeronautics board permits or authorities, and trucks, truck tractors, trailers, semitrailers, and passenger buses in excess of 10,000 pounds gross vehicle weight that are purchased by common or contract interstate carriers or that are operating in interstate commerce under exemption clauses in federal law if the truck, truck tractor, trailer, semitrailer, or passenger bus in excess of 10,000 pounds gross vehicle weight is used in interstate commerce;
(c) the lease of a motor vehicle, with or without a trailer, if the lease is computed from the gross receipts of the operation and the operator is operating under a valid interstate authority or permit;
(d) a sale to joint apprenticeship and training programs approved by the United States department of labor;
(e) to comply with the Food Security Act of 1985, sales of food purchased with food stamps; and
(f) the sale of food purchased under the special supplemental food program for women, infants, and children as specified in 42 U.S.C. 1786.
(4) For the purpose of exempting sales of services and tangible personal property consumed in production, the following are exempt:
(a) the sale of tangible personal property to a person engaged in the business of manufacturing, processing, or compounding when the tangible personal property purchased becomes an ingredient or component of the tangible personal property manufactured, processed, or compounded for sale or use and the sale of containers, labels, or shipping cases used for the tangible personal property manufactured, processed, or compounded. This subsection applies to chemicals and catalysts used directly in manufacturing, processing, or compounding that are consumed or destroyed during that process.
(b) the sale of:
(i) livestock;
(ii) feeds for use in feeding livestock or poultry for marketing purposes;
(iii) seeds, roots, bulbs, and small plants;
(iv) fertilizer applied to land; and
(v) the products of the planting or fertilizing to be sold. The exemption provided in this subsection (4)(b) applies to but is not limited to the sale of seeds, roots, bulbs, and small plants planted in and fertilizer applied to land subject to a state or federal crop set-aside program;
(c) the sale of intrastate transportation of raw farm products to processing or manufacturing plants;
(d) the sale of power or fuel to a person engaged in the business of manufacturing, processing, or agriculture if the power or fuel is consumed directly in manufacturing, processing, or agriculture;
(e) the sale of power or fuel to a person engaged in the transportation business if the power or fuel is consumed directly in generating motive power for actual transportation purposes, except power or fuel that is not taxed as gasoline, gasohol, or special fuel under Title 15, chapter 70, if the power or fuel is used to propel a motor vehicle, as defined in 61-1-102;
(f) all wholesale sales of a controlled substance designated as a dangerous drug pursuant to Title 50, chapter 32, parts 1 and 2, that is not sold pursuant to a written prescription of or through a licensed practitioner, as defined in 50-32-101; and
(g) the sale of fuel for use as boiler fuel in the production of electricity.
(5) For the purpose of exempting the sale of services and tangible personal property sold to government, a charitable or nonprofit organization, an irrigation district, or a district established to control weeds, mosquitoes, or other pests, the following are exempt:
(a) all sales to this state or a political subdivision of this state;
(b) all sales made to religious organizations and nonprofit organizations that provide meals or services to senior citizens in or for the conduct of the regular religious, charitable, or senior citizen functions and activities;
(c) all sales of meals made to persons in the regular conduct of senior citizen center functions and activities;
(d) occasional sales made by religious or charitable organizations for fundraising purposes for the conduct of regular religious or charitable functions and activities and not in the course of any regular business. For the purposes of this subsection (5)(d), "regular business" means the habitual or regular activity of the organization, excluding any incidental or occasional operation.
(e) the sales price of admission to and user fees for publicly owned recreational facilities, such as swimming pools, athletic facilities, and recreation centers; and
(f) labor or service charges, including transportation and travel, for the repair, alteration, or improvement of real property or tangible personal property that is owned by or incorporated in projects under contract to this state or any of its political subdivisions.
(6) For the purpose of exempting sales of services and tangible personal property that are alternatively taxed, the following are exempt:
(a) the sale of a transportable home after the tax has been paid once;
(b) the sale of gasoline, gasohol, or special fuels taxed under Title 15, chapter 70.
(7) For the purpose of exempting sales of services and tangible personal property that are essential human goods and services, the following are exempt:
(a) intrastate transportation of sick, injured, or deceased persons by ambulance or hearse;
(b) the sale of:
(i) prescription drugs for human relief, insulin for human relief, and any syringe, needle, or other device necessary for the administration of a prescription drug or insulin; and
(ii) oxygen and oxygen concentrators for medical use, blood plasma, prosthetic devices, hearing aids, crutches, wheelchairs, eyeglasses, and contact lenses;
(c) the sale of all noncapitalized equipment and disposable supplies that are used in the direct medical or dental care of a patient. The exemption in this subsection (7)(c) does not include capitalized equipment or office supplies used in the normal course of business.
(d) the sale of water delivered by pipeline or truck.
(8) For the purpose of exempting sales of services provided primarily to businesses, the following are exempt:
(a) interstate or intrastate transportation of drilling rigs, including charges for the movement or conveyance of the drilling rig to or away from the well site, and the loading, unloading, assembly, or disassembly of the drilling rig; and
(b) the foreclosure upon a lien or the repossession of a motor vehicle on which an action is filed.
(9) For the purpose of exempting sales of services and tangible personal property as an economic incentive, the following are exempt:
(a) intrastate transportation of:
(i) employees to or from work if the transportation is paid or contracted for by the employee or employer; and
(ii) freight and property, including oil and natural gas by pipeline;
(b) the sale of the services of professional engineers, geologists, or members of similar professions, including the sales price paid for all services to real or tangible personal property leading to building location, drilling, and all related activities that must be completed prior to setting the production casing, including coring, logging, and testing done prior to the setting of production casing for the drilling of any oil or gas well. The exemption in this subsection (9)(b) also applies to seismographic and geophysical surveying, stratigraphic testing, coring, logging, and testing calculated to reveal the existence of geologic conditions favorable to the accumulation of oil or gas.
(c) the sale of school yearbooks and newspapers;
(d) the sale of carbon dioxide and other gases used in tertiary production;
(e) the sale of lodging services provided by a person known to the trade and public as a licensed guide or outfitter, including but not limited to sleeping accommodations, placement of tents, snow shelters, base camps, temporary structures that are dismantled or abandoned after use, and all other forms of temporary shelter;
(f) the sale of farm implements. For purposes of this subsection (9)(f), "farm implements" means tractors or other machinery designed or adapted and used exclusively for agricultural operations and specifically excludes snowmobiles, lawn tractors, all-terrain vehicles, and the repair of or replacement parts for farm implements.
(g) the sale or lease of an aircraft and the tangible personal property permanently affixed or attached as a component part of the aircraft, including but not limited to repair or replacement materials or parts and the sale of all services used for aircraft repair, remodeling, and maintenance services if the services are performed on an aircraft or an aircraft engine or on the component materials or parts of an aircraft or aircraft engine. For purposes of this subsection (9)(g), "aircraft" means aircraft used in a scheduled interstate federal aviation administration air carrier operation.
(h) the sale of the service of transmitting radio waves to a one-way paging unit owned or rented by a service subscriber, if the messages received are displayed or played on a paging unit as voice, tone and voice, numeric, or alphanumeric, including mail services purchased with the pager.
(10) The department shall review the exemption provided under subsections (9)(b) and (9)(g), analyze the benefit for the state, and report to the revenue and transportation interim committee on or before December 1, 2004.
(11) For the purpose of avoiding application of the sales tax or use tax more than once on the same article of tangible property for the same taxpayer, the trade-in value of tangible personal property must be excluded from the sales price of new tangible personal property whenever trade-in and purchase occur in the same transaction.
NEW SECTION. Section 5. License -- fee -- penalties. (1) Every vendor shall obtain from the department a sales tax license to conduct business in this state. An out-of-state vendor not otherwise subject to [sections 1 through 12] may apply for a license from the department and shall collect and remit the state sales tax or use tax imposed by [section 3].
(2) A sales tax license may be granted only upon application stating the name and address of the applicant, the character of the business in which the applicant proposes to engage, the location of the proposed business, and other information that the department requires.
(3) A license fee of $60 must be paid by each new vendor, except a remote vendor that is not required to register in this state and that is using a certified automated system or a certified service provider. Failure of a vendor to file a return when due may result in forfeiture of the sales tax license. The department shall charge $60 for reinstating a forfeited license.
(4) A separate license is required for each place of business.
(5) Each license must be uniquely numbered and must:
(a) contain the name and residence of the licensee;
(b) indicate the place and character of the business of the licensee; and
(c) be posted in a conspicuous place at the place of business for which it is issued.
(6) A license is not transferable.
(7) A person who discontinues business shall notify the department, return the sales tax license for cancellation, and preserve all business records in this state until the department issues a receipt showing that all taxes due from the person have been paid.
(8) A license issued under this section is valid unless revoked by the department.
(9) (a) The department may, after providing notice and an opportunity for a hearing, revoke the license of a vendor violating any provision of [sections 1 through 12].
(b) The department may not issue a new sales tax license to the vendor unless the vendor applying for the license has filed with the department:
(i) a license application; and
(ii) all past-due returns, if any, and remitted in full all taxes and, if any, penalties and interest due.
(10) The department may, after providing notice and an opportunity for a hearing, suspend the license of a vendor who violates any provision of [sections 1 through 12] until the vendor is in compliance with the provisions of [sections 1 through 12].
(11) Notwithstanding subsection (1) and pursuant to department rules, a vendor that purchases wholesale goods for use in manufacturing, processing, or compounding as provided in [section 4] and that does not engage in the retail sale of goods and services is not required to obtain a sales tax license.
(12) The department may enter into a licensing agreement with an entity that is not otherwise required to obtain a license under [sections 1 through 12] and that has one or more independent sales contractors working in this state. An entity licensed pursuant to this subsection shall collect and remit the tax imposed under [sections 1 through 12] on all taxable sales transactions occurring between entities and the independent sales contractor. An entity licensed under this subsection is subject to all collection and enforcement provisions imposed by [sections 1 through 12].
NEW SECTION. Section 6. Compliance -- collection procedures. (1) (a) Each vendor shall on or before the last day of each month file a return showing the preceding month's gross sales and remit all taxes due under [sections 1 through 12] to the department.
(b) The return must contain the information and be made in the manner prescribed by rule by the department.
(2) The department may, for good cause, allow an extension for filing a return and paying the taxes, but an extension may not be for more than 90 days.
(3) If the total tax to be remitted by a vendor during any month is less than $150 and the department has agreed in writing, the taxpayer may file the return and remit the tax collected quarterly or annually. A return made under this subsection must be filed and the collected taxes remitted on or before the last day of the month following the end of the quarter or year for which the tax is collected.
(4) If the accounting methods regularly used by a vendor are such that reports of sales made during a calendar month would impose an unnecessary hardship, the department may, after receiving a formal request filed by the vendor, accept reports at intervals more convenient to the vendor.
(5) A person that purchases goods or services taxable under [sections 1 through 12] that does not pay to the vendor the tax owed shall, on or before the last day of each month, file a return showing the gross purchases made by the person on which the tax due was not paid during the preceding month and remit all taxes due to the department. The return must contain the information required by and be made on a form provided by the department.
(6) Every person liable for collecting and remitting sales taxes or use taxes under [sections 1 through 12] shall preserve for 3 years, at the person's principal place of business, all records necessary to determine the amount of tax for which the person is liable under [sections 1 through 12]. The records required under this subsection must be available for examination by the department during regular business hours or as arranged by mutual consent of the person and department.
(7) If a person liable for collecting and remitting sales taxes or use taxes under [sections 1 through 12] fails to comply with subsection (6), the person bears the burden of proof in a challenge to the correctness of any assessment of taxes imposed by the department for the period for which records were not preserved.
(8) If a vendor fails to file a return as required by [sections 1 through 12], the department shall give written notice by mail to the vendor to file a return on or before the last day of the month following the notice of delinquency. If the vendor, subsequent to the notice, fails or refuses to file a return, the department shall make a return from the best information available. A return made by the department is considered to be correct, and the tax due is a deficiency and is subject to penalties and interest as provided under [sections 1 through 12].
(9) The department shall preserve returns and reports for 3 years.
(10) A vendor that ceases to engage in business shall file a return within 30 days after discontinuing or selling the business.
(11) Taxes collected under subsections (15) and (16) are due and payable and must be remitted in full by the county treasurer to the department monthly or as required by the department, together with reports required by the department.
(12) When applying for registration, every new owner of a motorcycle shall produce either:
(a) a receipt from the department showing that the sales tax or use tax has been paid;
(b) a receipt on forms provided by the department showing that the motorcycle was purchased from a motorcycle dealer licensed in this state and that the dealer has collected the sales tax or use tax; or
(c) a certificate from the department that a sales tax or use tax is not due.
(13) As soon as practicable after a return is filed under [sections 1 through 12], the department shall examine it and if it appears that the tax to be remitted is incorrect, the department shall recompute the tax owed. If the amount of tax remitted with the return exceeds the amount due, the excess must be refunded to the person who remitted the tax or credited against any subsequent liability of the person who submitted the return.
(14) Taxes paid on gross receipts represented by accounts found to be worthless may be credited against subsequent liability of the vendor. The vendor may not take the credit for any bad debt until the vendor has used the customary debt collection procedures as documented in writing by the vendor and has written off the debt for federal tax purposes. If the previously worthless account is collected by the vendor after a credit has been taken on the account, the tax paid on the amount collected must be remitted to the department.
(15) (a) Except as provided in subsection (23), a vendor may not collect taxes imposed by [sections 1 through 12] upon the sale of a motor vehicle, housetrailer, trailer, or semitrailer as those terms are defined in Title 61, chapter 1.
(b) The sales tax or use tax imposed on a vehicle described in subsection (15)(a) must be collected by the county treasurer when the vehicle is first registered in this state by the owner of the vehicle. The county treasurer shall collect and remit to the department the taxes collected under this subsection (15).
(16) Except as provided in subsection (23), the tax imposed upon the sale or use of a motor vehicle, housetrailer, trailer, or semitrailer, as those terms are defined in Title 61, chapter 1, purchased as a gift must be collected from the donee when the vehicle is first registered in the state by the donee. The value of the vehicle as a gift under this subsection (16) is the fair market value of the gift when it was given to the donee.
(17) Except as provided in subsection (18), a motor vehicle vendor or a vendor of housetrailers, trailers, or semitrailers is not required to pay a sales tax or use tax on a motor vehicle, housetrailer, trailer, or semitrailer that is registered in the vendor's name, is included as a part of the vendor's inventory, and is held principally in the conduct of the vendor's business for sale, demonstration, or delivery prior to sale or use.
(18) A motor vehicle vendor is liable for payment of a sales tax or use tax on the transfer of a motor vehicle with less than 1,000 miles on the odometer that the vendor purchases if:
(a) the vendor is not a dealer licensed under Title 61, chapter 4;
(b) the vehicle was transferred with a manufacturer's statement of origin or manufacturer's certificate of origin from a licensed dealer; and
(c) the vehicle was transferred into the dealer's inventory for sale, demonstration, or delivery.
(19) A person regularly engaged in the business of making loans or a financial institution, as defined in 32-4-101, that forecloses a lien or repossesses a motor vehicle on which the person or financial institution has filed a lien or an insurance company that acquires ownership of a motor vehicle pursuant to a damage settlement is not liable for payment of a sales tax or use tax, penalties, or interest due under this subsection for that vehicle.
(20) The taxes are due and payable on the last day of the month following the month in which they were collected or as required by the department as specified in [sections 1 through 12].
(21) (a) If a sale is made on a credit, contract, or conditional basis and title does not pass until a future date, there must be paid with each payment the proportional amount of the total tax due.
(b) If a vendor discontinues business, the tax must be computed and paid on the outstanding amount of all credit, installment, and conditional sales.
(22) If a vendor collects tax in excess of the amount imposed by [sections 1 through 12], the vendor shall remit the excess to the department.
(23) Notwithstanding subsection (15), the tax imposed under [sections 1 through 12] upon the sale of motorcycles and motor-driven cycles, as defined in Title 61, chapter 1, and off-highway vehicles, as defined in 23-2-801, must be collected by the vendor in the manner prescribed by this section.
(24) Whenever the department has reason to believe the collection of any tax, penalty, or interest will be jeopardized by delay, the department shall immediately levy a jeopardy assessment and the amount assessed is immediately due and payable. Notice of the assessment must be given to the vendor personally or by mail. If the jeopardy assessment is not paid within 10 days after the service of notice upon the vendor, the deficiency penalty and interest provided in [section 9(2)] attaches to the amount of the jeopardy assessment.
(25) (a) The department may contract with a collection agency for collection services on deficiencies of sales taxes or use taxes occurring under [sections 1 through 12].
(b) All taxes collected by a collection agency under this section must be deposited in the state general fund.
(c) There is statutorily appropriated, as provided in 17-7-502, from the state general fund to the department the amount necessary to administer this subsection (25).
NEW SECTION. Section 7. Direct payment of sales tax -- permit required -- authorization -- rules. (1) Upon application by a person liable for the payment of a sales tax or use tax under [sections 1 through 12], the department may issue to the applicant a direct payment permit. The holder of a direct payment permit shall make direct payment to the department of any sales tax or use tax imposed under [sections 1 through 12]. The department's decision is not appealable. The direct payment permit must be signed by an authorized representative of the department. A direct payment permit issued under this subsection may be revoked by the department 90 days after written notice is provided to the permitholder.
(2) When purchasing goods or services subject to sales tax or use tax, the holder of a direct payment permit shall provide to the vendor proof that the permitholder has a direct payment permit. The proof of the direct payment permit must state that the permitholder assumes all obligations to pay the sales tax or use tax due, if any, under [sections 1 through 12] directly to the department.
(3) Receiving proof of the direct payment permit under subsection (2) discharges the vendor from any duty to collect or liability for sales taxes or use taxes owed by the permitholder. A permitholder may be audited by the department once in each calendar year.
(4) The department shall promulgate rules necessary to implement the provisions of this section.
NEW SECTION. Section 8. Voluntary disclosure. (1) The department may enter into a voluntary disclosure agreement with any person that has sufficient contact with this state to qualify the person as a vendor under [sections 1 through 12].
(2) Application for voluntary disclosure must be made on forms provided by the department. The forms must include a report of transactions taxable under [sections 1 through 12]. The report must cover a period of not more than the 3 years immediately preceding the application.
(3) An agreement that includes authorization to audit must be signed by the applicant and an authorized agent of the department.
(4) The department may not enter into a voluntary disclosure agreement with any person that is being audited by the department or the internal revenue service.
(5) For good cause, the department may waive penalties and interest applicable to any tax liability under [sections 1 through 12] that is voluntarily disclosed in a voluntary disclosure agreement.
NEW SECTION. Section 9. Enforcement. (1) If the amount of tax paid under [sections 1 through 12] is less than the amount due, the difference, together with interest at the rate of 1% per month or fraction of a month from the time the return was due, must be paid by the vendor or any person liable for the payment of the tax within 10 days after notice of the deficiency is provided to the taxpayer and demand for payment is made by the department.
(2) (a) If the sales tax or use tax on a vehicle is not paid within 50 days after the date of the sale, or in the case of a motor vehicle brought into this state, 50 days after the vehicle is brought into the state if the owner of the vehicle submits to the county treasurer an affidavit and any other satisfactory proof to verify the date the vehicle was brought into the state:
(i) interest accrues at the rate of 1% per month or fraction of a month from the 50th day after the date of sale until the date of payment of all sales taxes or use taxes, interest, and penalties due. When the vehicle is registered, the county treasurer shall collect the tax, interest, and penalties due, if any, under this subsection and forward the amount collected to the department for credit to the state general fund; and
(ii) a penalty is imposed for late payment of the sales tax or use tax. The late-payment penalty is:
(A) $25 if paid more than 50 days and less than 60 days after the date of sale; or
(B) the greater of $25 or 10% of the tax due if paid more than 60 days after the date of sale.
(b) The tax is considered to be delinquent if the taxpayer or the taxpayer's agent knew or reasonably should have known that the tax liability was not paid within the 50-day period.
(c) The department may credit or waive interest imposed by this subsection (2) as part of a settlement or for any other good cause.
(3) (a) If any part of the deficiency is due to negligence or intentional disregard of the law but without intent to defraud, there is an additional penalty of 10% of the amount of the deficiency, plus interest as provided in subsection (2).
(b) The deficiency under this subsection (3) in tax paid and, if any, the interest and penalty must be paid by the vendor or the person liable for the payment of the sales tax or use tax under [sections 1 through 12] within 10 days after the department notifies the vendor or person liable and demands payment.
(4) (a) If any part of the deficiency is due to fraud with intent to evade, there is an additional penalty of 25% of the deficiency, plus interest as provided in subsection (2).
(b) The deficiency under this subsection (4) in tax paid and, if any, the interest and penalty must be paid by the vendor or the person liable for the payment of the sales tax or use tax under [sections 1 through 12] 10 days after the department notifies the vendor or person liable and demands payment.
(5) A vendor may not advertise or state directly or indirectly to the public that the taxes imposed by [sections 1 through 12] are assumed by the vendor or that the tax will not be considered in the price or, if added, will be refunded.
(6) A vendor that under the pretense of collecting the taxes imposed by [sections 1 through 12] collects and retains an excessive amount or that intentionally fails to remit to the department the full amount of taxes collected when due is guilty of:
(a) a misdemeanor if the amount of taxes collected is $500 or less. A vendor found guilty under this subsection (6)(a) may be fined not more than $750, imprisoned in the county jail for not more than 6 months, or both.
(b) a felony if the amount of taxes collected exceeds $500. A vendor found guilty under this subsection (6)(b) may be fined not more than $5,000, imprisoned for not more than 3 years, or both.
(7) A person who files a false or fraudulent return is subject to the provisions of 45-7-210.
(8) A person who violates any provision of [sections 1 through 12] for which there is not a specific penalty is guilty of a misdemeanor. Each violation is a separate offense.
(9) Upon request of the department, the attorney general may institute proceedings to restrain and enjoin a person from:
(a) acting as a vendor until the person has received a license as required by [section 5]; or
(b) continuing to act as a vendor if the person has not remitted to the department when due all taxes and, if any, all interest and penalties imposed by [sections 1 through 12].
(10) The tax due under [sections 1 through 12] constitutes a debt to the state from the persons who are parties to the transaction, other than any vendor or other seller who is prohibited or not authorized by law to collect any tax under [sections 1 through 12], and is a lien from the date the tax is due on all the real and personal property of the parties to the transaction. The lien does not apply to a purchaser who paid the tax to the vendor. Notice of the lien must be filed with the secretary of state. The lien does not have preference over preexisting indebtedness but has priority from the date of filing or recording. The department shall cancel a lien filed under this subsection within 60 days after taxes due are paid or collected. The department is not required to perfect a lien under this subsection regardless of the type of property involved.
(11) (a) The tax due, together with interest, penalties, and costs, if any, may be collected by appropriate judicial proceedings or the department may seize and sell at public auction as much of the delinquent taxpayer's property as is necessary to pay all the tax and, if any, interest, penalties, and costs.
(b) Notice of the auction must be published for 4 weeks in a newspaper published in the county of the delinquent taxpayer's residence.
NEW SECTION. Section 10. Taxpayer remedies. (1) Except as provided by this subsection, a person who feels aggrieved by the payment of the taxes, penalty, or interest imposed under [sections 1 through 12] may not appeal a decision of the state tax appeal board until all taxes and, if any, penalty and interest have been paid. The court to which the decision of the board is appealed may, for good cause, stay enforcement of the board's order assessing and levying the tax while the appeal is pending. The court's stay of enforcement does not affect the accruing of interest upon any tax due.
(2) Any tax, penalty, or interest that has been erroneously paid, collected, or computed must be credited against any future tax liability of the taxpayer or refunded to the taxpayer.
(3) (a) A credit or refund is not allowed after 3 years from the date of overpayment. The receipt of a claim for a refund by the department tolls the statute of limitations. All refund requests received by the department must be approved or denied within 90 days of receipt. A refund or credit erroneously made or allowed may be recovered in an action brought by the department in any court of competent jurisdiction.
(b) A taxpayer is entitled to receive an offsetting credit for any overpaid sales tax or use tax identified by an audit that is within the scope of the audit period, without regard to the limitation period for requesting refunds.
(4) If a mobile telecommunications service customer believes that the amount of tax, assessment, or assignment of place of primary use or taxing jurisdiction included in the customer's billing is erroneous, the customer shall notify the customer's telecommunications service provider in writing. The written notification must include the street address of the customer's place of primary use, the account name and number, a description of the error claimed by the customer, and any other information that the service provider reasonably requires to process the request. Within 60 days of receiving a written notice under this subsection, the service provider shall review its records to determine the customer's taxing jurisdiction. If the review shows that the amount of tax, assessment, or assignment of place of primary use or taxing jurisdiction is in error, the service provider shall correct the error and refund or credit the amount of tax erroneously billed to the customer for a period not to exceed 3 years. If the review shows that the amount of tax, assessment, or assignment of place of primary use or taxing jurisdiction are correct, the service provider shall provide a written explanation to the customer. The procedures in this subsection are the first step in a remedy available to a customer for a billing dispute. A cause of action based upon the billing dispute may not be filed until the customer has reasonably exercised the rights and followed the procedures provided in this subsection.
NEW SECTION. Section 11. Distribution. (1) All taxes, penalties, and interest collected by the department pursuant to [sections 1 through 12] must be transferred to the state treasurer for deposit in a sales tax and use tax account in the state special revenue fund.
(2) Sales tax and use tax revenue that is payable to the department under [sections 1 through 12] during each fiscal year must be recognized as revenue collected during that fiscal year for accounting purposes.
(3) (a) Subject to the provisions of subsection (6), the state treasurer shall transfer from the sales tax and use tax account to the state general fund the following:
(i) from [the applicability date of this section] through June 30, 2004, 71.5% of the balance of the account; and
(ii) beginning July 1, 2004, 70% of the balance of the account.
(b) Subsequent to the transfer under subsection (3)(a), the state treasurer shall distribute from the account 1% of the amount remaining as follows:
(i) beginning [on the applicability date of this section] through June 30, 2004, $20,000 and beginning July 1, 2004, $40,000 annually to each county in equal monthly installments; and
(ii) the remainder to each county in the proportion that the total population of the county bears to the total population of the state.
(c) Subsequent to the transfers under subsection (3)(b), the state treasurer shall distribute the balance of the account to each county and to incorporated cities and towns by computing the percentage that total sales taxes and use taxes collected by vendors in each county, including incorporated cities and towns located in the county, bears to total sales taxes or use taxes collected by vendors in all counties, including the incorporated cities and towns in all counties. Subject to subsection (7), the percentage of the balance calculated under this subsection (3)(c) must be distributed within each county as follows:
(i) to each county in the proportion that the population of the county situated outside the corporate limits of its cities and towns bears to the total population of the county including cities and towns; and
(ii) to each city and town within the county in the proportion the population of the city or town bears to the population of the county.
(4) A vendor shall annually provide the department information indicating the amount of tax collected under [sections 1 through 12] from sales of propane, butane, liquefied gas, and compressed natural gas. Upon verification by the department, the state treasurer shall annually transfer from the state general fund to the highway revenue account created under 15-70-101 10% of the amount collected statewide under [sections 1 through 12] on sales of propane, butane, liquefied gas, and compressed natural gas.
(5) In addition to the distribution provided for in subsection (3), beginning [on the applicability date of this section] through June 30, 2004, 29.5% and beginning July 1, 2004, 31% of sales taxes or use taxes collected from out-of-state vendors must be distributed to counties, cities, and towns in the same percentages as determined in subsection (3)(c).
(6) If the tax imposed under [section 3] is reduced to 0.5% under [section 3(3) and (4)], beginning September 1 of the year in which the reduction occurs, the distributions to the state general fund under subsection (3)(a) must be reduced to 65%.
(7) (a) If an annexation occurs, the department of revenue shall determine whether the proportion of sales tax or use tax to be distributed to the county in which the annexation takes place will be reduced by more than 5% solely as a result of the annexation. If the reduction exceeds 5%, then the distribution for the affected municipality and county must occur as provided in subsections (7)(b) through (7)(d).
(b) Beginning with the month following the month in which the annexation occurs and continuing through the remainder of the fiscal year in which the annexation occurs, the annexing municipality receives credit for 35% of the population of the area to be annexed with the remainder credited to the county.
(c) In each of the succeeding 4 fiscal years, the annexing municipality receives credit for an additional 25% of the remaining 65% of the population of the area annexed, with the remainder credited to the county.
(d) The department of revenue shall proportionally adjust credits for population under this subsection (7) for the remainder of the period based upon new population figures if a federal census occurs before the period under subsection (7)(b) ends.
NEW SECTION. Section 12. Imposition of sales tax or use tax for construction. (1) A contractor who furnishes tangible personal property or services under contract or in the development of real property is the consumer or user of the tangible personal property or services within the meaning of [sections 1 through 12].
(2) A subcontractor who contracts with a contractor is liable for any sales tax or use tax. The contractor shall withhold the amount of sales tax or use tax imposed under [section 3] from the payments due to a nonresident subcontractor arising out of the contract entered into between the subcontractor and contractor. The contractor shall withhold the payments until the subcontractor furnishes the contractor with a certificate issued by the department showing that all sales taxes and use taxes accruing by reason of the contract have been paid. The department may demand the withholdings at any time to satisfy the sales tax or use tax liability of the subcontractor, and any balance of the amount withheld must be released by the department to the subcontractor. A contractor that fails to withhold payments or refuses to remit the amount withheld upon demand by the department is liable for any sales taxes or use taxes due to the state from the nonresident subcontractor. This subsection does not apply to a subcontractor that is hired to provide labor only to alter, construct, improve, or repair real property.
(3) A nonresident contractor shall file with the department a surety bond or legal security equal to 4% of the payments due under the contract or an amount determined by the department. The bond must be conditioned upon the payment of all sales taxes or use taxes that become due and payable to this state under the contract or in the real property development. The security required under this subsection does not apply to a nonresident contractor that has furnished a surety bond pursuant to subsection (6).
(4) A resident or nonresident contractor that hires a nonresident subcontractor shall register each project with the department not less than 15 days following the start of a project pursuant to a contract. A nonresident contractor shall provide a properly executed bond as required under subsection (3) or a cash deposit of not less than 4% of the total payments due under the contract. The cash deposit must be refunded to the contractor upon the department's receipt of a properly executed surety bond or upon satisfactory completion of the project. If a contractor that is required to register under this subsection fails to register with the department within the time period required, a penalty of 1% of the total payments due under the contract must be added to the amount of sales taxes and use taxes due. The department may, for good cause, waive all or part of the penalty.
(5) A person that is a party to or performing work on a contract subject to the security provisions of this section may be enjoined from commencing or continuing any work until approved security has been filed with the department. Any legal action under this subsection brought in the name of the state must be filed by the attorney general or by a county attorney. The state is not required to post security in seeking a restraining order or preliminary injunction under this subsection.
(6) In lieu of filing the bond or security required under this section, a nonresident contractor may file and maintain with the department a surety bond or legal security in the amount of $1,000,000. The bond must be conditioned upon the payment of all sales taxes or use taxes that become due and payable to this state under any of the contractor's contracts or in any of the contractor's real property developments in this state. A nonresident contractor electing to file a bond or security under this subsection shall maintain the bond or security until the contractor is no longer required to file any bond or security under [sections 1 through 12] or until a bond or security is filed under subsection (3).
(7) If a nonresident subcontractor contracts with a contractor and posts with the department a surety bond certified as sufficient by the department conditioned upon payment when due of all sales taxes and use taxes in the performance of the contract, the withholding provisions of subsection (2) do not apply.
(8) (a) Whenever a nonresident contractor or nonresident subcontractor furnishes a surety bond for the faithful performance of a contract or subcontract, there is imposed an additional obligation upon the surety company to this state that the nonresident contractor pays all sales taxes and use taxes that become due in the performance of the contract. In the case of a nonresident contractor, this additional obligation includes liability to pay the department all sales taxes and use taxes that have not been paid to a licensed vendor or the department by the nonresident contractor.
(b) A nonresident contractor or the contractor's surety company is authorized to recover from a nonresident subcontractor the amount of sales taxes or use taxes due on purchases made by the nonresident subcontractor that were paid to the department by the nonresident contractor or the surety company.
(c) As an alternative to recovery pursuant to subsection (8)(b), a nonresident contractor may withhold from payments made under the contract the amount of taxes paid by the contractor due from but not paid by the nonresident subcontractor.
(9) The liability of the surety company under this section is limited to 4% of the contract price.
(10) The additional obligation upon the surety company ceases 6 months after the completion of the contract and the acceptance of the work and services performed unless written notice of unpaid sales taxes or use taxes is given to the surety company by the department.
NEW SECTION. Section 13. Short title. [Sections 13 through 20] may be cited as the "Uniform Sales and Use Tax Administration Act".
NEW SECTION. Section 14. Definitions. As used in [sections 13 through 20]:
(1) "Agreement" means the Streamlined Sales and Use Tax Agreement.
(2) "Person" means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity.
(3) "Seller" means any person making sales, leases, or rentals of personal property or services.
(4) "State" means any state of the United States and includes the District of Columbia.
NEW SECTION. Section 15. Authority to enter agreement. (1) The department is authorized and directed to enter into the agreement with one or more states to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and for all types of commerce. In furtherance of the agreement, the department is authorized to act jointly with other states that are members of the agreement to establish standards for certification of a certified service provider and a certified automated system and to establish performance standards for multistate sellers.
(2) The department is further authorized to take other actions reasonably required to implement the provisions of [sections 13 through 20]. Other actions authorized by this section include but are not limited to the adoption of rules and the joint procurement, with other member states, of goods and services in furtherance of the agreement.
(3) The director of revenue or the director's designee is authorized to represent this state before the other states that are signatories to the agreement.
NEW SECTION. Section 16. Relationship to state law. A provision of the agreement, in whole or in part, does not invalidate or amend any law of this state. Implementation of any condition of the agreement in this state, whether adopted before, at, or after membership of this state in the agreement, must be by action of this state.
NEW SECTION. Section 17. Agreement requirements. (1) The department may not enter into the agreement unless the agreement requires that as a condition of participation each state shall abide by the requirements of subsections (2) through (11).
(2) The agreement must set restrictions to achieve over time more uniform state rates through the following:
(a) limiting the number of state rates;
(b) limiting the application of maximums on the amount of state tax that is due on a transaction; and
(c) limiting the application of thresholds on the application of state tax.
(3) The agreement must establish uniform standards for the following:
(a) the sourcing of transactions to taxing jurisdictions;
(b) the administration of exempt sales;
(c) the allowances that a seller may take for bad debts; and
(d) sales and use tax returns and remittances.
(4) The agreement must require states to develop and adopt uniform definitions of sales and use tax terms. The definitions must enable a state to preserve its ability to make policy choices not inconsistent with the uniform definitions.
(5) The agreement must provide a central, electronic registration system that allows a seller to register to collect and remit sales and use taxes for all signatory states.
(6) The agreement must provide that registration with the central registration system and the collection of sales and use taxes in the signatory states will not be used as a factor in determining whether the seller has nexus with a state for any tax.
(7) The agreement must provide for reduction of the burdens of complying with local sales and use taxes through the following:
(a) restricting and eliminating variances between the state and local tax bases;
(b) requiring states to administer any sales and use taxes levied by local jurisdictions within the state so that sellers collecting and remitting the taxes will not have to register or file returns with, remit funds to, or be subject to independent audits from local taxing jurisdictions;
(c) restricting the frequency of changes in the local sales and use tax rates and setting effective dates for the application of local jurisdictional boundary changes to local sales and use taxes; and
(d) providing notice of changes in local sales and use tax rates and of changes in the boundaries of local taxing jurisdictions.
(8) The agreement must outline any monetary allowances that are to be provided by the states to sellers or certified service providers.
(9) The agreement must require each state to certify compliance with the terms of the agreement prior to joining and to maintain compliance, under the laws of the member state, with all provisions of the agreement while a member.
(10) The agreement must require each state to adopt a uniform policy for certified service providers that protects the privacy of consumers and maintains the confidentiality of tax information.
(11) The agreement must provide for the appointment of an advisory council of private sector representatives and an advisory council of nonmember state representatives to consult with in the administration of the agreement.
NEW SECTION. Section 18. Cooperating sovereigns. The agreement is an accord among individual cooperating sovereigns in furtherance of their governmental functions. The agreement provides a mechanism among the member states to establish and maintain a cooperative, simplified system for the application and administration of sales and use taxes under the adopted law of each member state.
NEW SECTION. Section 19. Limited binding and beneficial effect. (1) The agreement binds and inures only to the benefit of this state and the other member states. No person, other than a member state, is an intended beneficiary of the agreement. Any benefit to a person other than a state is established by the law of this state and the other member states and not by the terms of the agreement.
(2) Consistent with subsection (1), no person has any cause of action or defense under the agreement or by virtue of this state's approval of the agreement. No person may challenge, in any action brought under any provision of law, any action or inaction by any department, agency, or other instrumentality of this state or any political subdivision of this state on the ground that the action or inaction is inconsistent with the agreement.
(3) No law of this state, or the application of a law of this state, may be declared invalid as to any person or circumstance on the ground that the provision or application is inconsistent with the agreement.
NEW SECTION. Section 20. Seller and third-party liability. (1) A certified service provider is the agent of a seller with whom the certified service provider has contracted for the collection and remittance of sales and use taxes. As the seller's agent, the certified service provider is liable for any sales and use tax due each member state on all sales transactions that it processes for the seller, except as set out in this section.
(2) A seller that contracts with a certified service provider is not liable to the state for sales or use tax due on any transaction processed by the certified service provider unless the seller misrepresented the type of items that it sells or committed fraud. In the absence of probable cause to believe that the seller has committed fraud or made a material misrepresentation, the seller is not subject to audit on the transaction processed by the certified service provider. A seller is subject to audit for any transaction not processed by the certified service provider. The member states acting jointly may perform a system check of the seller and review the seller's procedures to determine if the certified service provider's system is functioning properly and the extent to which the seller's transactions are being processed by the certified service provider.
(3) A person that provides a certified automated system is responsible for the proper functioning of that system and is liable to the state for underpayments of tax attributable to errors in the functioning of the certified automated system. A seller that uses a certified automated system remains responsible and is liable to the state for reporting and remitting tax.
(4) A seller that has a proprietary system for determining the amount of tax due on a transaction and has signed an agreement establishing a performance standard for that system is liable for the failure of the system to meet the performance standard.
Section 21. Section 5-12-303, MCA, is amended to read:
"5-12-303. Fiscal analysis information from state agencies. (1) The legislative fiscal analyst may investigate and examine the costs and revenue of state government activities and may examine and obtain copies of the records, books, and files of any state agency, including confidential records.
(2) When confidential records and information are obtained from a state agency, the legislative fiscal analyst and staff must be subject to the same penalties for unauthorized disclosure of the confidential records and information provided for under the laws administered by the state agency. The legislative fiscal analyst shall develop policies to prevent the unauthorized disclosure of confidential records and information obtained from state agencies.
(3) The legislative fiscal analyst may not obtain copies of individual income tax records protected under 15-30-303. The department of revenue shall make individual income tax data available by removing names, addresses, occupations, social security numbers, and taxpayer identification numbers. The department of revenue may not alter the data in any other way. The data is subject to the same restrictions on disclosure as are individual income tax returns.
(4)(3) Within 1 day after the legislative finance committee presents its budget analysis to the legislature, the budget director and the legislative fiscal analyst shall exchange expenditure and disbursement recommendations by second-level expenditure detail and by funding sources detailed by accounting entity. This information must be filed in the respective offices and be made available to the legislature and the public. In preparing the budget analysis for the next biennium for submission to the legislature, the legislative fiscal analyst shall use the base budget, the present law base, and new proposals as defined in 17-7-102.
(5)(4) This section does not authorize publication or public disclosure of information if the law prohibits publication or disclosure."
Section 22. Section 7-13-308, MCA, is amended to read:
"7-13-308. Revenue bonds and obligations. (1) A joint district may borrow money for any purpose provided in this part and issue bonds, including refunding bonds, in a form and upon terms as it may determine the joint district determines, payable from any revenue of the joint district, including revenue from:
(a) service charges authorized in 7-13-307;
(b) grants or contributions from the state or federal government; or
(c) other sources.
(2) The bonds may be issued by resolution of the joint district without an election and without any limitation of the amount, except that bonds may not be issued at any time if the total amount of principal and interest to become due in any year on the bonds and on any then-outstanding bonds for which revenue from the same source or sources is pledged exceeds the amount of the revenue to be received in that year as estimated in the resolution authorizing the issuance of the bonds. The board shall take all action necessary and possible to impose, maintain, and collect rates, charges, rentals, and taxes, if any are pledged, sufficient to make the revenue from the pledged source in a year at least equal to the amount of the principal and interest due in that year.
(3) The bonds may be sold at public or private sale and may bear interest as provided in 17-5-102. Except as otherwise provided in this part, bonds issued pursuant to this part by a joint district may be payable in principal and interest solely from revenues of the joint district and must state on their face the applicable limitations or restrictions regarding the source from which the principal and interest are payable.
(4) Bonds issued by a joint district under this part are issued for an essential public and governmental purpose by a political subdivision, within the meaning of 15-30-111(2)(a) as defined in 2-9-101.
(5) For the security of any bond, the joint district may by resolution make and enter into any covenant, agreement, or indenture. The sums required from time to time to pay principal and interest and to create and maintain a reserve for the bonds may be paid from any revenue referred to in this part prior to the payment of current costs of operation and maintenance of the solid waste management system."
Section 23. Section 7-14-1133, MCA, is amended to read:
"7-14-1133. Bonds and obligations. (1) Except for providing financial support to a private development organization, including a corporation organized under Title 32, chapter 4, whose purpose is to advance the economic development of its jurisdiction and of the state and its citizens, an authority may borrow money for any of its corporate purposes and issue bonds, including refunding bonds, for any of its corporate purposes. The bonds may be in the form and upon terms as it determines, payable out of any revenue of the authority, including revenue derived from:
(a) any port or transportation and storage facility;
(b) taxes levied pursuant to 7-14-1131 or 67-10-402;
(c) grants or contributions from the federal government; or
(d) other sources.
(2) The bonds may be issued by resolution of the authority, without an election and without any limitation of amount, except that bonds may not be issued at any time if the total amount of principal and interest to become due in any year on the bonds and on any then outstanding bonds for which revenue from the same source is pledged exceeds the amount of revenue to be received in that year, as estimated in the resolution authorizing the issuance of the bonds. The authority shall take all action necessary and possible to impose, maintain, and collect rates, charges, and rentals and to request taxes, if any are pledged, sufficient to make the revenue from the pledged source in such that year at least equal to the amount of principal and interest due in that year.
(3) The bonds may be sold at public or private sale and may bear interest as provided in 17-5-102. Except as otherwise provided in this part, any bonds issued pursuant to this part by an authority may be payable as to principal and interest solely from revenue of the authority or from particular port, transportation, storage, or other facilities of the authority. The bonds must state on their face the applicable limitations or restrictions regarding the source from which principal and interest are payable.
(4) Bonds issued by an authority, county, or municipality pursuant to the provisions of this part are declared to be issued for an essential public and governmental purpose by a political subdivision, within the meaning of 15-30-111(2)(a) as defined in 2-9-101.
(5) (a) For the security of bonds, the authority, county, or municipality may by resolution make and enter into any covenant, agreement, or indenture and may exercise any additional powers authorized to be exercised by a municipality under Title 7, chapter 7, parts 44 and 45. The sums required from time to time to pay principal and interest and to create and maintain a reserve for the bonds may be paid from any revenue referred to in this part, prior to the payment of current costs of operation and maintenance of the facilities.
(b) As further security for the bonds, the authority, with the approval of the governing body of the county or municipality that created the authority, may pledge, lease, sell, mortgage, or grant a security interest in all or any portion of its port, transportation, storage, or other facilities, whether or not the facilities are financed by the bonds. The instrument effecting the pledge, lease, sale, mortgage, or security interest may contain any agreements and provisions customarily contained in instruments securing bonds, as the commissioners of the authority consider advisable. The provisions must be consistent with this part and are subject to and must be in accordance with the laws of this state governing mortgages, trust indentures, security agreements, or instruments. The instrument may provide that in the event of a default in the payment of principal or interest on the bonds or in the performance of any agreement contained in the proceedings authorizing the bonds or instrument, the payment or performance may be enforced by mandamus or by the appointment of a receiver in equity. The receiver may collect charges, rental, or fees and may apply the revenue from the mortgaged property or collateral in accordance with the proceedings or the provisions of the instrument.
(6) Nothing in this section or 7-14-1134 may be construed to limit the use of port authority revenue, including federal and state money as described in 7-14-1136, to make grants and loans or to otherwise provide financial and other support to private development organizations, including corporations organized under the provisions of the development corporation act in Title 32, chapter 4. The credit of the state, county, or municipal governments or their agencies or authorities may not be pledged to provide financial support to the development organizations."
Section 24. Section 7-14-1636, MCA, is amended to read:
"7-14-1636. Bonds and obligations. (1) An authority may borrow money for any of its corporate purposes and issue bonds for its purposes, including refunding bonds, in a form and upon terms as it determines, payable out of any revenue of the authority, including revenue derived from:
(a) a railroad;
(b) taxes levied pursuant to 7-14-1632;
(c) grants or contributions from the federal government; or
(d) other sources.
(2) The bonds may be issued by resolution of the authority, without an election and without any limitation of amount, except that bonds may not be issued at any time if the total amount of principal and interest to become due in a year on the bonds and on any then-outstanding bonds for which revenue from the same source is pledged exceeds the amount of the revenue to be received in that year, as estimated in the resolution authorizing the issuance of the bonds. The authority shall take all action necessary and possible to impose, maintain, and collect rates, charges, and rentals and to request taxes, if any are pledged, sufficient to make the revenue from the pledged source in the year at least equal to the amount of principal and interest due in that year.
(3) The bonds may be sold at public or private sale and may bear interest as provided in 17-5-102. Bonds issued by an authority pursuant to this part may be payable as to principal and interest solely from revenue of the authority and must state on their face the applicable limitations or restrictions regarding the source from which the principal and interest are payable.
(4) Bonds issued by an authority pursuant to the provisions of this part are declared to be issued for an essential public and governmental purpose by a political subdivision, within the meaning of 15-30-111(2)(a) as defined in 2-9-101.
(5) For the security of the bonds, the authority may by resolution make and enter into any covenant, agreement, or indenture and may exercise any additional powers authorized to be exercised by a municipality under Title 7, chapter 7, parts 44 and 45. The sums required from time to time to pay principal and interest and to create and maintain a reserve for the bonds may be paid from the revenue referred to in this part, prior to the payment of current costs of operation and maintenance of the facilities."
Section 25. Section 7-34-2416, MCA, is amended to read:
"7-34-2416. Tax-exempt status of bonds. Bonds issued by a county pursuant to the provisions of 7-34-2411 and 7-34-2413 through 7-34-2418 are declared to be issued for an essential public and governmental purpose by a political subdivision, within the meaning of 15-30-111(2)(a) as defined in 2-9-101."