The SC Tax Realignment Commission (TRAC) Holds its Fifth by by654321


									The SC Tax Realignment Commission (TRAC)
Holds its Fifth Meeting

At its December 2 meeting the Commission heard a presentation from Charles Collins
from ADP Taxware on Streamlining Sales Tax and Sales Tax Collection. The effort that
became the Streamlined Sales Tax Governing Board began in March 2000. The goal of
this effort is to find solutions for the complexity in state sales tax systems that resulted in
the U.S. Supreme Court holding (Bellas Hess v. Illionis and Quill Corp. v. North Dakota)
that a state may not require a seller that does not have a physical presence in the state to
collect tax on sales into the state. The Court ruled that the existing system was too
complicated to impose on a business that did not have a physical presence in the state.
The Court said Congress has the authority to allow states to require remote sellers to
collect tax.

The result of this work is the Streamlined Sales and Use Tax Agreement. The purpose of
the Agreement is to simplify and modernize sales and use tax administration in order to
substantially reduce the burden of tax compliance. The Agreement focuses on improving
sales and use tax administration systems for all sellers and for all types of commerce. To
date, 23 states have adopted the simplification measures in the Agreement (representing
over 31 percent of the population) and more states are moving to adopt the simplification
measure. To visit their website:

South Carolina is not a part of the agreement (membership is $20,000 annually) and
Commission Chairman Maybank noted there was little interest when he was director of
the state Department of Revenue. Current DOR Director Ray Stevens told the
Commission he would ask his staff to study the feasibility of joining and look at a cost-
benefit analysis of doing so. He agreed to report back within 60 days.

The Commission also heard a presentation on Broadening the Tax Base from Robert M.
Cline, Ph.D. of Ernst & Young LLP. Dr. Cline reported they have been involved with a
number of states in recent years looking to reform their tax structures and seeking a more
stable source of business tax revenue. His presentation, which will be available on the
TRAC Web site, went into great detail about the particulars of many reforms, both
successful and unsuccessful efforts.

He noted that Michigan once tried to implement a sales tax on all services that lasted less
than 24 hours. Backlash from the business community was so swift and severe it was
immediately suspended. Chairman Maybank commented that “SC is never going to
impose a blanket tax on services,” which ended the discussion.

The Commission remains somewhat focused on sales tax and sales tax exemptions and
agreed to consider forming subcommittees at the next meeting on January 6. Also at the
January meeting, the commission will hear presentations on the fair tax, local option tax
and the tourism/hospitality taxes.

For more information on TRAC and to view today’s presentations, visit their web site:

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