I 116TH CONGRESS 1ST SESSION H. R. 4311 To protect consumers from discriminatory State taxes on motor vehicle rentals. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 12, 2019 Mr. COHEN (for himself and Mr. CHABOT) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To protect consumers from discriminatory State taxes on motor vehicle rentals. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘End Discriminatory 4 State Taxes for Automobile Renters Act of 2019’’. 5 SEC. 2. FINDINGS; PURPOSE. 6 (a) FINDINGS.—Congress finds the following: 7 (1) Congress has prohibited economic protec- 8 tionism by State and local governments that unduly 9 burden or discriminate against interstate commerce 10 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 2 •HR 4311 IH and transportation under the authority granted by 1 the Commerce Clause of the Constitution by enact- 2 ing laws such as the Railroad Revitalization and 3 Regulatory Reform Act of 1976, the Motor Carrier 4 Act of 1980, the Bus Regulatory Reform Act of 5 1982, and the Airport and Airway Improvement Act 6 of 1982. 7 (2) In Gibbons v. Ogden, 22 U.S. 1 (1824), a 8 case challenging the exclusive right of navigating the 9 waters of New York granted by that State, the Su- 10 preme Court affirmed that it is the sole right of 11 Congress to regulate commerce between the States 12 under what Chief Justice John Marshall recognized 13 as the dormant Commerce Clause. 14 (3) Since 1990, over 100 discriminatory taxes 15 have been imposed by State and local governments 16 on motor vehicle rentals in violation of the dormant 17 Commerce Clause. 18 (b) PURPOSE.—The purpose of this Act is to prohibit 19 prospectively, and provide a remedy for, tax discrimination 20 by a State or Locality against the rental of motor vehicles. 21 SEC. 3. PROHIBITION ON DISCRIMINATION. 22 (a) IN GENERAL.—Chapter 805 of title 49, United 23 States Code, is amended by adding at the end the fol- 24 lowing: 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 3 •HR 4311 IH ‘‘§ 80505. Tax discrimination against motor vehicle 1 rental property 2 ‘‘(a) DEFINITIONS.—In this section: 3 ‘‘(1) ASSESSMENT AND ASSESSMENT JURISDIC- 4 TION.— 5 ‘‘(A) ASSESSMENT.—The term ‘assess- 6 ment’ has the meaning given that term in sec- 7 tion 11501(a)(1). 8 ‘‘(B) ASSESSMENT JURISDICTION.—The 9 term ‘assessment jurisdiction’ has the meaning 10 given that term in section 11501(a)(2). 11 ‘‘(2) COMMERCIAL AND INDUSTRIAL PROP- 12 ERTY.—The term ‘commercial and industrial prop- 13 erty’ means property, other than motor vehicle rent- 14 al property and land used primarily for agricultural 15 purposes or timber growing, which is devoted to a 16 commercial or industrial use. 17 ‘‘(3) COMMERCIAL AND INDUSTRIAL TAX- 18 PAYERS.—The term ‘other commercial and indus- 19 trial taxpayers’ means persons of entities who are 20 engaged in a trade or business, other than the trade 21 or business of renting motor vehicles, within a State 22 or Locality. 23 ‘‘(4) COVERED PERSON.—The term ‘covered 24 person’ means a person who— 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 4 •HR 4311 IH ‘‘(A) rents motor vehicles to another per- 1 son; 2 ‘‘(B) is engaged in the business of renting 3 motor vehicles; 4 ‘‘(C) owns motor vehicle rental property; 5 ‘‘(D) rents a motor vehicle from another 6 person; or 7 ‘‘(E) purchases motor vehicle rental prop- 8 erty. 9 ‘‘(5) DISCRIMINATORY TAX.—The term ‘dis- 10 criminatory tax’ includes the following: 11 ‘‘(A) A tax discriminates against the rental 12 of motor vehicles if a State or Locality imposes 13 the tax on, or with respect to— 14 ‘‘(i) the rental of motor vehicles but 15 the tax is not a generally applicable tax on, 16 or with respect to, more than 51 percent of 17 the rentals of other tangible personal prop- 18 erty within the State or Locality; or 19 ‘‘(ii) the rental of motor vehicles at a 20 tax rate that exceeds the generally applica- 21 ble tax rate on at least 51 percent of the 22 rentals of other tangible personal property 23 within the same State or Locality. 24 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 5 •HR 4311 IH ‘‘(B) A tax discriminates against the busi- 1 ness of renting motor vehicles if a State or Lo- 2 cality imposes the tax on, or with respect to— 3 ‘‘(i) the business of renting motor ve- 4 hicles but the tax is not a generally appli- 5 cable tax on, or with respect to, more than 6 51 percent of the businesses of other com- 7 mercial and industrial taxpayers within the 8 State or Locality; or 9 ‘‘(ii) the business of renting motor ve- 10 hicles at a tax rate that exceeds the gen- 11 erally applicable tax rate on at least 51 12 percent of the business of commercial and 13 industrial taxpayers within the State or 14 Local jurisdiction. 15 ‘‘(C) A tax discriminates against motor ve- 16 hicle rental property if a State or Locality— 17 ‘‘(i) assesses motor vehicle rental 18 property at a value that has a higher ratio 19 to the true market value of the property 20 than the ratio of the assessed value to the 21 true market value applicable to commercial 22 and industrial property in the same assess- 23 ment jurisdiction; 24 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 6 •HR 4311 IH ‘‘(ii) levies or collects a tax on an as- 1 sessment that may not be made under 2 clause (i); or 3 ‘‘(iii) levies or collects an ad valorem 4 property tax on motor vehicle rental prop- 5 erty at a generally applicable tax rate that 6 exceeds the tax rate applicable to commer- 7 cial and industrial property in the same as- 8 sessment jurisdiction. 9 ‘‘(6) LOCAL OR LOCALITY.—The terms ‘Local’ 10 and ‘Locality’ mean a political subdivision of any 11 State, or any governmental entity or person acting 12 on behalf of such Locality, with the authority to im- 13 pose, levy, or collect taxes. 14 ‘‘(7) MOTOR VEHICLE.—The term ‘motor vehi- 15 cle’ has the meaning given that term in section 16 13102(16). 17 ‘‘(8) MOTOR VEHICLE RENTAL PROPERTY.— 18 The term ‘motor vehicle rental property’ means 19 property owned or used by a person engaged in the 20 business of renting motor vehicles and used to pro- 21 vide rentals of motor vehicles. 22 ‘‘(9) RENTAL OF MOTOR VEHICLES.—The term 23 ‘rental of motor vehicles’ means the rental of a 24 motor vehicle that is given by the owner of the 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 7 •HR 4311 IH motor vehicle for exclusive use to another for not 1 longer than 180 days for valuable consideration and 2 only includes the rental of motor vehicles with a pre- 3 arranged driver or motor vehicles without a driver, 4 but shall not include taxi cab service as defined by 5 section 13102(22). 6 ‘‘(10) RENTAL OF OTHER TANGIBLE OR PER- 7 SONAL PROPERTY.—The term ‘rental of other tan- 8 gible or personal property’ means any rental of tan- 9 gible or personal property, other than the rental of 10 motor vehicles. 11 ‘‘(11) STATE.—The term ‘State’ means any of 12 the several States, the District of Columbia, or any 13 territory or possession of the United States, or any 14 governmental entity or person acting on behalf of 15 such State, and with the authority to impose, levy, 16 or collect taxes. 17 ‘‘(12) TAX.—Except as otherwise specifically 18 provided below, the term ‘tax’ means any type of 19 charge required by statute, regulation, or agreement 20 to be paid or furnished to a State or Locality, re- 21 gardless of whether such charge is denominated as 22 a tax, a fee, or any other type of exaction. The term 23 ‘tax’ does not include any charge imposed by a State 24 or Locality with respect to a concession agreement 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 8 •HR 4311 IH at a federally assisted airport (provided the agree- 1 ment does not violate the revenue diversion provi- 2 sions of section 40116(d)), or the registration, li- 3 censing, or inspection of motor vehicles, if the 4 charge is imposed generally with respect to motor 5 vehicles, without regard to whether such vehicles are 6 used in the business of renting motor vehicles within 7 the State or Locality. 8 ‘‘(13) TAX BASE.—The term ‘tax base’ means 9 the receipts, income, value, weight, or other measure 10 of a tax to which the rate is applied. The ‘tax base’ 11 of a tax imposed on a per unit basis is the unit. 12 ‘‘(14) GENERALLY APPLICABLE TAX.—The 13 term ‘generally applicable tax’ may be determined 14 by— 15 ‘‘(A) the gross receipts of rentals of other 16 tangible personal property or other commercial 17 and industrial taxpayers within the State or Lo- 18 cality to which the tax is imposed by the State 19 or Locality compared to the gross receipts of 20 rentals of other tangible personal property or 21 other commercial and industrial taxpayers with- 22 in the State or Locality; or 23 ‘‘(B) another method used to determine 24 whether more than 51 percent of rentals of 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 9 •HR 4311 IH other tangible personal property or other com- 1 mercial and industrial taxpayers is subject to 2 the tax. 3 ‘‘(b) UNREASONABLE BURDENS AND DISCRIMINA- 4 TION AGAINST INTERSTATE COMMERCE.— 5 ‘‘(1) IN GENERAL.—The following acts unrea- 6 sonably burden and discriminate against interstate 7 commerce, and a State or Locality may not do any 8 of them: 9 ‘‘(A) Levy or collect a discriminatory tax 10 on the rental of motor vehicles. 11 ‘‘(B) Levy or collect a discriminatory tax 12 on the business of renting motor vehicles. 13 ‘‘(C) Levy or collect a discriminatory tax 14 on motor vehicle rental property. 15 ‘‘(2) EXCLUSION.—Discriminatory taxes are 16 not prohibited under this section if the tax is im- 17 posed as of the date of the enactment of this section, 18 does not lapse, the tax rate does not increase, and 19 the tax base for such tax does not change. 20 ‘‘(c) REMEDIES.— 21 ‘‘(1) IN GENERAL.—Notwithstanding section 22 1341 of title 28, a covered person aggrieved of a vio- 23 lation of subsection (b) may bring a civil action in 24 a district court of the United States seeking dam- 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 10 •HR 4311 IH ages, injunctive relief, other legal or equitable relief, 1 or declaratory relief. 2 ‘‘(2) RELIEF.—In granting relief against a tax 3 levied or collected in violation of subsection (b), if 4 the tax is a discriminatory tax the court shall strike 5 only the discriminatory or excessive portion of the 6 tax. 7 ‘‘(3) BURDEN OF PROOF.— 8 ‘‘(A) IN GENERAL.—Except as provided in 9 subparagraph (B), a covered person shall have 10 the burden of proving, by a preponderance of 11 the evidence, that the levying or collecting of a 12 tax violates subsection (b). 13 ‘‘(B) EQUIVALENT OF OTHER TAXES.—If 14 the court determines that the levying or col- 15 lecting of a tax violates subsection (b), the 16 State or Locality shall have the burden of prov- 17 ing, by a preponderance of the evidence, that 18 the tax is the equivalent of a tax imposed on 19 other commercial and industrial taxpayers 20 under paragraph (2). 21 ‘‘(4) OTHER REMEDIES.—Nothing in this sub- 22 section shall limit any cause of action or remedy 23 available under any other provision of Federal or 24 State law. 25 VerDate Sep 11 2014 04:14 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS 11 •HR 4311 IH ‘‘(d) LIMITATIONS.—This section shall not be con- 1 strued to constitute the consent of Congress to State or 2 Local taxation that would be prohibited in the absence of 3 this section.’’. 4 (b) CLERICAL AMENDMENT.—The table of sections 5 for chapter 805 of title 49, United States Code, is amend- 6 ed by inserting after the item relating to section 80504 7 the following: 8 ‘‘80505. Tax discrimination against motor vehicle rental property.’’. Æ VerDate Sep 11 2014 20:19 Sep 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H4311.IH H4311 kjohnson on DSK79L0C42 with BILLS