IMPLEMENTATION OF FEDERAL STATE TAX COLLECTION ACT OF 1972.

SEC. 2116. IMPLEMENTATION OF FEDERAL STATE TAX COLLECTION ACT OF 1972. (a) Election by States To Participate.— Section 204(b)(2) of the Federal-State Tax Collection Act of 1972 is amended to read as follows: “(2) the first January 1 which is more than one year after the first date on which at least one State has notified the Secretary of the Treasury or his delegate of an election to enter into an agreement under section 6363 of such Code.” (b) Adjustments to Qualified Resident Taxes for Purposes of Federal Collection of State Individual Income Taxes.— (1) Qualified resident tax based on taxable income.— (A) Required adjustments.— Section 6362(b)(1) (relating to required adjustments) is amended— (i) by striking out “and” at the end of subparagraph (B), (ii) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “, and”, and (iii) by adding at the end thereof the following new subparagraph: “(D) if a credit is allowed against such tax for State or local sales tax in accordance with paragraph (2)(C), by adding an amount equal to the amount of his deduction under section 164(a)(4) for such sales tax.” (B) Permitted adjustments.— Section 6362(b)(2) (relating to permitted adjustments) is amended by adding at the end thereof the following new subparagraph: “(C) A credit is allowed against such tax for all or a portion of any general sales tax imposed by the same State or a political subdivision thereof with respect to sales to the tax-payer or his dependents.” (2) Qualifield resident tax which is a percentage of the federal tax.— (A) Permitted adjustments.— Section 6362 (c)(3) (relating to permitted adjustments) is amended— (i) by striking out “both” and inserting in lieu thereof “all”, (ii) by striking out “and” at the end of subparagraph (A), 90 STAT. 1911 (iii) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and”, and (iv) by adding at the end thereof the following new subparagraph: “(C) if a credit is allowed against such tax for State or local sales tax in accordance with paragraph (4)(B), the liability for tax is increased by the increase in such liability which would result from including as an item of income an amount equal to the amount of his deduction under section 164(a)(4) for such sales tax.” (B) Further permitted adjustments.— Section 6362(c)(4) (relating to further permitted adjustments) is amended to read as follows: “(4) Further permitted adjustments.— A tax which otherwise. meets the requirements of paragraphs (1) and (2) shall not be deemed to fail to meet such requirements solely because it provides for one or both of the following adjustments: “(A) A credit determined under rules prescribed by the Secretary is allowed against such tax for income tax paid to another State or a political subdivision thereof. “(B) A credit is allowed against such tax for all or a portion of any general sales tax imposed by the same State or a political subdivision thereof with respect to sales to the taxpayer or his dependents.” (c) Prohibition on Charges for Federal Collection of State Income Taxes.— Section 6361(a) (relating to general rules for Federal collection and administration of State individual income taxes) is amended by inserting, after the first sentence thereof, the following: “No fee or other charge shall be imposed upon any State for the collection or administration of the qualified State individual income taxes of such State or any other State.”. (d) Effective Date.— The amendments made by this section shall take effect on the date of the enactment of this Act.