Streamlining State and Local Sales Taxes by dfhdhdhdhjr


									  Streamlined Sales Tax
Opportunity and Challenges

    King Woolf – Revenue
       Recovery Group
  Introduction and Background
 45 states plus District of Columbia impose sales
  and use taxes
 Over 7,000 local jurisdictions impose sales and
  use taxes…administered by the state except in
  AL, CO, LA and AZ
 Retailers required to collect and remit sales tax
  to states where retailer has physical presence
 Use tax is owed by consumer when retailer does
  not collect the sales tax
Why doesn’t seller always collect sales tax?

  For decades, states have sought to require out-
   of-state retailers to collect their tax

  1992 Supreme Court decision in Quill Corp. v.
   North Dakota held: requiring collection of tax by
   out-of-state retailers with no physical
   presence in a state would be burden on
   interstate commerce and would therefore
   violate Commerce Clause of U.S. Constitution
Remote sales: Big Picture Issues

Compliance with sales tax laws by multi-
 state corporations is too complex
Significant losses of revenue expected
 due to growth in electronic commerce
 and inability of states to administer use
 tax with consumers
Local merchants suffer from lack of level
 playing field
Odd Fellows
Main street retailers and states joined
Seek federal legislation
Require remote sellers to collect and
 remit the tax
Without streamlining and simplification
 Congress will not change the law
Expanding the burden
Public perceptions (tax increase)
             Streamline’s goals

 Create a simpler system for administering the
  various state and local sales taxes
 Make processes uniform if they cannot be
  made simple
 Balance the interests of a state’s sovereignty
  with the interests of simplicity and uniformity
 Leverage the use of technology to ease the
  retailer’s tax collection burden
      SSUTA: Key Features

State level administration of local sales
 and use taxes
Rate simplification
   One general state rate per state, with a second
    rate (which could be zero) on food and drugs
   One single local rate per jurisdiction
No caps and thresholds
          SSUTA: Key Features

Common state and local tax bases within a
Uniform sourcing rule for goods and services
   Destination based, but states can choose origin
    sourcing for intrastate delivered products and direct
Uniform sourcing rule for
   Telecommunications
   Lease or rental of property
   Direct mail
            SSUTA: Key Features
                    Uniform Definitions
   Food and food ingredients     Drugs
   Prepared food                 Durable Medical
   Candy                          Equipment
   Soft drinks                   Computer Software
   Dietary supplement            Prewritten Computer
   Clothing                       Software
   Lease or rental               Delivered Electronically
   Tangible personal property    Load and Leave
   Bundled Transaction           Sales Price
                                  Specified digital products
                                                                 Streamlined State Status 01-01-11

                                            MT              ND
                      OR                                                                                                             VT
                                ID                                                                                                        NH
                                                            SD                         WI         MI                            NY         MA
                                             WY                                                                                       CT RI

                                                                             IA                                            PA
                           NV                                NE
                                      UT                                                    IL   IN                                  DE
                 CA                               CO                                                             WV                  MD
                                                                  KS                                                       VA         DC
                                                                                  MO                   KY
                                 AZ                                    OK
                                             NM                                   AR                                  SC

                                                                                            MS   AL          GA
                                                            TX                    LA


Full Member States                               Non-sales tax states
Associate Member States – flex to full           Project states – Not Advisory
Advisory States – Not Conforming                 Non-participating state
Status of Federal Legislation?
It will be introduced “Soon”
Actual vs Projected SSTP
Revenues (million’s)
AR:       $5 vs          $296
KY:       $9 vs          $224
OK:       $15 vs         $296
TN:       $12 vs         $748

Source: Streamline Executive Director report 2011
      SSUTA: Key Features

State level administration of local sales
 and use taxes
Common state and local tax bases within
 a state
Local vs Central Administration?
Local governments want complete
 control and autonomy of revenue policy
 and implementation
Multi parish businesses want minimal
 burden of compliance
Streamlined Sales Tax


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