RE: Letter regarding the views of the Task Force on the amendments to the Streamlined Sale and Use Tax Agreement set to be considered by the Streamlined Sales Tax Governing Board on August 29th and 30th in Bismarck, North Dakota.
August 23, 2006
The Honorable Dwight Cook
North Dakota Senate
1408 17th Street, SE
Mandan, North Dakota 58554-4895
The Honorable Joan Wagnon
Secretary of Revenue
915 South West Harrison
Topeka, Kansas 66612
Dear Senator Cook and Secretary Wagnon:
As you are aware, the National Conference of State Legislatures (NCSL) Executive Committee on State and Local Taxation of Telecommunications and Electronic Commerce (Task Force) met August 14, 2006, to review and discuss the amendments to the Streamlined Sale and Use Tax Agreement set to be considered by the Streamlined Sales Tax Governing Board on August 29th and 30th in Bismarck, North Dakota. This letter will serve to provide you and the members of the Governing Board with the views of the members of the Task Force with regard to these issues.
The NCSL Task Force supports a separate definition for digital goods, independent of the definition for tangible personal property, to be added to the Streamlined Sales and Use Tax Agreement Library of Definitions. We believe that the decision to tax or not tax any item should be decided by each state’s elected policymakers and not through departmental or administrative interpretation. We would urge the Governing Board to immediately caution state tax departments from interpreting or extending definitions to include other items as such actions violate the intent of the Streamlined Sales and Use Tax Agreement. Therefore, the Task Force supports the intent of the Utah amendment and opposes the Oklahoma amendment.
The Task Force strongly urges that provisions be added to the Streamlined Sales and Use Tax Agreement that would ensure purchasers enjoy the same liability protection granted to sellers using state-published databases, CSP or CAS under Section 306 of the Agreement. Therefore, the Task Force supports the Utah amendment that provides relief to purchasers from liability for tax, penalties and interest as proposed under Section 306B of the amendment. Under the Agreement, sellers and CSPs using published, state-supplied information can not be held liable for the state’s mistakes. We believe that the same consideration should be extended to buyers under similar circumstances. If the state provided information is sufficient for sellers and CSPs to rely upon, it should be sufficient for purchasers sales and use tax determinations. We should not penalize purchasers for our mistakes.
The Task Force urges the Governing Board to reach a consensus with business purchasers that have numerous problems with the existing provisions of the Agreement in “Section 312: Multiple Points of Use (effective on or after January 1, 2008).” In our discussion with these purchasers at the Task Force meeting, we learned that provisions in Section 312 will result in more complexity and difficulties for purchasers in filing and remitting sales and use taxes than exists under current collection system. While the Utah amendment to Section 312 is an effort to
find relief from those provisions in the Agreement, it was our understanding on August 14th that this amendment would be further amended, and therefore, the Task Force could not vote to support it at that time. However, we believe that the Governing Board must find a solution that is acceptable to the purchaser community. The Task Force does not want to have new opposition from purchasers in the states that have yet to comply with the Agreement.
The NCSL Task Force supports the Executive Board amendment to include advisor states (previously the Implementing States) as ex officio members of the Governing Board in matters relating to the Streamlined Sales and Use Tax Agreement. As demonstrated under the current implementing state framework, involvement of nonmember states in the streamlined sales tax effort remains vital to continue the growth and success of sales tax simplification.
The NCSL Task Force supports the consideration of an alternative compensation model for nexus sellers in states to offset the burdens of transitioning from an origin-based sourcing system to a destination-based sourcing system as provided under the Agreement. An alternative compensation model may ensure that states such as Kansas, Ohio, Tennessee, Texas, and Washington remain active, participating members of the streamlined sales tax effort, as well as assist other origin-based states, such as California, to comply with the Agreement.
On behalf of the members of the NCSL Task Force, we express to you our appreciation for taking on the responsibility of building the foundation for a viable streamlined sales tax system. We thank you for taking the concerns of state legislators under consideration and welcome the opportunity to discuss them further with you. Please know that you are always welcome to come before the Task Force with your concerns.
Sincerely,
| Speaker Christopher Rants, Iowa |
Delegate Shelia Hixson, Maryland |
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Co-Chairs of the NCSL Executive Committee Taskforce on State and Local Taxation of Telecommunications & Electronic Commerce |
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CC:
Delegates Streamlined Sales Tax Governing Board
Streamlined Tax Implementing States
State and Local Advisory Council
Business Advisory Council
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