Streamlined Sales Tax Advisory Council

June 29, 2006, Meeting Minutes

Hoover State Office Building

I. Welcome & Opening Comments

Mark Schuling opened the meeting at 10:05 a.m., welcomed everyone and stated the meeting would be an informational meeting and that the Council would need to address new legislation this fall with a follow up report to the legislature by January.

Kristi Magill indicated she was just back from a nine-week long period of work related travel and was looking forward to information to bring her current.

II. Update on Governing Board Meeting in Indianapolis

Kristi updated the Council on the meeting in Indianapolis. Meetings held were SST Governing Board meeting, plus BAC and other workgroups. She indicated there were two noteworthy items for the Iowa SST Advisory Council. The first item was the contract drafted for CSPs. At our last meeting, the Council had concerns regarding the definition of voluntary seller in Section D of the draft. That issue was resolved and that was accomplished by using the definition used for unemployment compensation guidelines.

The second item was CSP financial assistance. SLAC was assigned a project to determine impact on state businesses. Diane Hardt asked for clarification from that meeting. No specific directives have gone out to the States for a study, but it will probably be an agenda item for Bismarck.

Don indicated several amendments (OH & UT) on sourcing were given in Indianapolis, but all were defeated. A lot of administrative type issues were handled in Indianapolis such as amendments to bylaws or rules, expanded the definition of states specifically for Puerto Rico, and set budget for states for the next fiscal year.

III. Update on SLAC & BAC Meetings in Des Moines

The Des Moines meeting dealt more with technical issues. Project teams were working on: bundling, digital goods, categorizing durable medical equipment and mobility enhancing equipment. Prepared foods was on the table, but was addressed through the Compliance Review and Interpretations Committee. Larry Paxton will provide Kristi with the final paper concerning prepared foods when available.

Warren Townsend updated the Council on the BAC meeting. Between the Des Moines meeting and June 28 th there was a push to finalize papers for discussion at the upcoming meeting in Bismarck, North Dakota. Warren wished more Council members had been in attendance.

The Southeastern Association of Tax Administrators (SEATA) meeting is scheduled for July 17-18-19 in Memphis , Tennessee.

July 19-20 Various Workgroups and SST SLAC meetings will also be held in Memphis.

The schedule for Bismarck , North Dakota , is:

8/28 a.m. BAC

8/28 p.m. Implementing States & Executive Committee

8/29-31 SST Governing Board

8/30 & 31 SLAC

Warren indicated BAC is looking at States who are not on board. He discussed amnesty and two federal SSTP bills. These bills differ on small business dollar thresholds, one supported by Amazon and the other supported by eBay.

IV. Update on Legislation & Rules

Dave Casey provided a handout with legislative information and discussed it with the Council. Diane will provide a copy when she e-mails the minutes.

The department has updated a number of its rules, including the excise tax change pertaining to hotel/motel and construction equipment.

As part of the 2006 Legislative Session, a legislative request was made to the Director of Revenue and the Council for recommendations to be made by 1/1/07 for the following:

•  Determine the number of sellers impacted by the SST Agreement.

•  What additional administrative burden exists for these sellers?

•  Recommendations to address the additional burden.

Kristi and Mark agreed the information in the Cost of Collection study might be useful in this determination.

All amendments from the Phoenix meeting are incorporated into this year's legislation. States have two legislative sessions to get amendments through. A letter indicating we are in compliance and our legislation is updated will need to be provided to the Governing Board. The Vermont petition for membership will be up for approval at the August Governing Board meeting.

Dave Casey reminded the Council that the department will have an annual SST bill every year to stay in compliance with amendments to the Agreement.

Kristi indicated the letter to the Governing Board expressing the Council's position on CSP issues did not get sent before the meeting Indianapolis. Some of the issues were addressed at the meeting so the information in the letter is outdated. Kristi asked the Council for permission to change the letter to recognize the Governing Boards efforts and to reinforce the need to move down that path and that meaningful progress is being made. There were no objections to Kristi's changes to the letter. Warren also offered that smaller business have been impacted by SST. Dick Koberg agreed with Warren. A final draft with revisions will be circulated. She will have the letter to the Governing Board for the Bismarck meeting.

V. Update on Registration and Revenue Tracking

Larry Paxton reported 669 streamlined registrations have been received. Of those 669, 147 signed up as Model 1's using CSPs and 68 as Model 2's using certified automated software. The majority of these companies have not been filing with the department.

Rod provided the registration update and noted that a change was made to provide indicator SST allowance to the seller.

SST Collections Report has true SST Retailers and Retailers (in 2002) who came forward but are not registered. It truly reflects what additional revenue collected from SST project. We're not counting retailers already remitting with the department. Larry reported the collection of $1,144,000 so far since last October.

The Council discussed registration panels and links. Larry has been contacting Iowa based retailers regarding registration just to clarify they are registering correctly. The Council expressed that as a marketing concept, people need to understand SSTP before they register. Larry will discuss providing information on what model 1 and model 2's mean at the Executive Committee meetings.

Amnesty does not start until model 1 and model 2 contracts have been signed. The amnesty clock has started ticking on model 4s effective 10/1/05.

VI. Next Governing Board Meeting in Bismarck

Warren already informed the Council of the schedule for Bismarck. If anyone interested in the Bismarck meeting information, please contact Diane.Stoecker@iowa.gov or taxexchange.org.

VII. Changes to Delegates in Governing Board

Rod Erickson and Don Cooper are both retiring within the next two weeks. Mark thanked them for all the work they've done on the project. Lucy Hardy from the Attorney's General retired on June 15, 2006. She has served the Revenue department for a number of years and the Council. Steve Roberts moved that a resolution from the Advisory Council recognizing their services to this Council and State of Iowa be made. Kristi Magill and Dick Koberg seconded and there were no objections from the Council.

There are four delegates to the Governing Board: two from the legislative branch which are House Speaker Christopher Rants and Senator William Dotzler and two from the Department of Revenue which are the Director (Don Cooper was serving for the Director) and Dave Casey. Mark Schuling will replace Don and the remaining delegates will stay the same.

VIII. Set Next Meeting

Mark suggested mid-September. The minutes will be sent as soon as possible and provide proposed meeting dates at the same time.

Don discussed the Governing Board headquarters being housed in Iowa and that the Department made an offer to house rent free.

Casey indicated that the Executive Committee of the Governing Board will basically continue with the same leadership under Senator Cook. Don has resigned from the Finance Committee and a new member will replace him in Bismarck.

Dick Koberg wondered it we know how many potential businesses would register. The department does not know. Kristi suggested that the industries might gather that information. Don indicated no set goals to have a certain number of businesses by a certain time have been made. The Council discussed the projected revenue loss from the University of Kentucky study, but it would be difficult to rely on since there are too many assumptions that might be made. Kristi might check it out with industry groups at a future meeting.

IX. Adjournment

Mark and Kristi adjourned the meeting at 11:28 AM.