The Executive Committee Task Force on State and Local Taxation of Telecommunications and Electronic Commerce

Summary of the Task Force Meeting in Boston, Massachusetts

August 4-5, 2007

Delegate Sheila Hixson, Maryland, Co-Chair
Representative Christopher Rants, Co-Chair

Streamlined Sales Tax Governing Board – Status Report
Senator Dwight Cook of North Dakota, President of the Streamlined Sales Tax Governing Board, discussed some of the issue coming before the Governing Board in September, including: replacement taxes, alternatives to destination-based sourcing, possible extension of associate member status and the sourcing of direct mail under the Agreement.

Scott Peterson, Executive Director of the Governing Board, reported that over $100 million in previously uncollected sales tax has been collected by the new out-of-state volunteer sellers for the members states of the Governing Board. He also reported that the Governing Board will take up 17 amendments in September, which deal with a number of issues, including: digital products, associate state member status and replacement taxes. The Task Force took action on the following issues:

Digital Products:
The Task Force reaffirmed its long standing position that there should be a separate definition for digital goods, independent of the definition for tangible personal property (TPP), added to the Streamlined Sales and Use Tax Agreement Library of Definitions. The decision to tax digital goods should be made by state legislators and not through interpretation of the state tax department.

Replacement Taxes:
The Task Force members discussed several draft proposals on replacement taxes during the NCSL Annual Meeting in Boston. The Task Force postponed any action on the draft proposals and agreed to form a discussion group of legislators and representatives from the business sector to offer an alternative to the Governing Board at the earliest practical date. Members of the workgroup are: Senator Dwight Cook (ND), Delegate John Doyle (WV), Senator Bramble (UT), Steve Kranz (COST), Deborah Bierbaum (AT&T), Neal Osten (NCSL), Garner Girthoffer (NCSL).

If you are interested in becoming a member of the replacement tax workgroup, contact Neal Osten (neal.osten@ncsl.org;202-624-8660) or Garner Girthoffer (garner.girthoffer@ncsl.org;202-624-7753).

The next Governing Board Meeting is scheduled for September 2007.

Model Legislation: Telecommunications Tax Reform
The Task Force adopted model legislation for state legislatures to establish study commissions to review the taxation of telecommunications services in their state. As each state taxes telecommunications differently, a study bill was deemed the most useful way to assist state legislatures in beginning the process to reform state and local telecommunication taxes. To receive a copy of the model legislation, contact Neal Osten (neal.osten@ncsl.org;202-624-8660) or Garner Girthoffer (garner.girthoffer@ncsl.org;202-624-7753).

Sales Tax Fairness and Simplification Act
The Task Force was pleased to report that Representative William Delahunt (D-MA), with cosponsors Representative Spencer Bachus (R-AL) and Representative Ray LaHood (R-IL), introduced the Sales Tax Fairness and Simplification Act, H.R. 3396, on August 3^rd. The legislation will grant to the states that have complied with the Streamlined Sales and Use Tax Agreement the authority to require remote sellers to collect sales and use taxes (and is identical to legislation introduced in the 109^th Congress).

The Senate version of the Sales Tax Fairness and Simplification Act, S. 34, was introduced by Senator Mike Enzi (R-WY) in May of 2007.

NCSL State & Local Tax Academy Update
Steve Rauschenberger, Immediate Past President of NCSL, provided the Task Force with a update regarding the NCSL State & Local Tax Academy. Mr. Rauschenberger reported that the academy has raised over $150,000 to fund the Tax Academy. NCSL is contacting state leaders to identify legislators and staff as recipients of the Academy scholarships. The first Tax Academy will be held in Washington, D.C. this Fall.

The NCSL State & Local Tax Academy is a program to educate and assist legislators and legislative staff in complying with or joining the Streamlined Sales and Use Tax Agreement, as well as assisting states with reform of telecommunications taxes. For additional information, contact Neal Osten (neal.osten@ncsl.org; 202-624-8660) or Steve Rauschenberger, (senator@srauschenberger.com 847-622-1049 ).

Task Force Policy Statements and Resolutions
The Task Force approved a policy statement and a resolution during the meeting:

Communications Tax Reform; and
NCSL Supports and Urges Enactment of the Sales Tax Fairness and Simplification Act (S. 34 and H.R. 3396) (Action Calendar Resolution).

Members Present: Del. Hixson, MD, Co-Chair; Representative Christopher Rants, IA, Co-Chair; Sen. Bramble, UT; Sen. Cook, ND; Del. Doyle, WV; Sen. Fukunaga, HI; Rep. Jett, OK; Rep. Major, NH; Rep. Steil, PA; Rep. Stone, DE; John O’Brien, TX; Sen. Amstutz, OH; Sen. Bray, MO; Rep. Garcia, CO; Sen. Hanger, VA; Rep. Harper, UT; Sen. McCracken, SD; Sen. Nething, ND; Sen. Rest, MN; Sen. Seabaugh, GA; Sen. Teichman, KS; and Rep. Marostica, CO.