The Fair Tax Act of 2005, Part XXI
Today we’ll start with the beginning of chapter 4, Sec. 401:
`SEC. 401 AUTHORITY FOR STATES TO COLLECT TAX.
`(a) In General- The tax imposed by section 101 on gross payments for the use or consumption of taxable property or services within a State shall be administered, collected, and remitted to the United States Treasury by such State if the State is an administering State.
`(b) Administering State- For purposes of this section, the term `administering State’ means any State–
`(1) which maintains a sales tax, and
`(2) which enters into a cooperative agreement with the Secretary containing reasonable provisions governing the administration by such State of the taxes imposed by the subtitle and the remittance to the United States in a timely manner of taxes collected under this chapter.
`(c) Cooperative Agreements- The agreement under subsection (b)(2) shall include provisions for the expeditious transfer of funds, contact officers, dispute resolution, information exchange, confidentiality, taxpayer rights, and other matters of importance. The agreement shall not contain extraneous matters.
`(d) Timely Remittance of Tax-
`(1) IN GENERAL- Administering States shall remit and pay over taxes collected under this subtitle on behalf of the United States (less the administration fee allowable under paragraph (2)) not later than 5 days after receipt. Interest at 150 percent of the Federal short-term rate shall be paid with respect to amounts remitted after the due date.
`(2) ADMINISTRATION FEE- An administering State may retain an administration fee equal to one-quarter of 1 percent of the amounts otherwise required to be remitted to the United States under this chapter by the administering State.
The states (if they wish to) will enter into an agreement with the Federal Government that irons out the details of how they would remit taxes to the Treasury Department, and the rules they would follow in their own states to play by the rules of this bill. The states get the same administration fee that businesses get for being tax remitters (I found out from a tax preparer friend of mine that this administration fee actually is something in use today for retailers remitting state sales taxes). There are also some penalties for remitting late. Next time well see how the bill covers what would happen if a state failed to do its job administering the tax.
