Streamlined Sales Tax Advisory Council

October 1, 2008, Meeting Minutes

Hoover State Office Building

Present: Mark Schuling, Kristi Magill, Dave Casey, Ann Stocker, Jim Henter, Steve Roberts and Andy Warren. Joining the meeting via telephone were Ross Larson, Jay Turner and Ed Wallace. Representatives from the department were Victoria Daniels, Larry Paxton and Darwin Clupper.

I. Welcome & Opening Comments

Mark Schuling called the meeting to order at 10:04 AM. Introductions were made.

II. National Meetings in Charleston, WV (September)

A. BAC - Kristi indicated that most topics covered at the BAC meetings are blending with the SLAC topics to be discussed later in the meeting. BAC passed revisions to their by-laws at the Charleston meeting. Kristi commented that Joan Wagnon is running the Governing Board meetings very smoothly and reverting unresolved technical issues back to BAC and SLAC to hash out.

Steve Krantz has taken a job with a law firm in D.C., but will continue to participate in the project. Fred Nicely, formerly of the Ohio Department of Taxation, has replaced Steve at COST. Steve is still the president of BAC.

B. SLAC/Governing Board – Dave updated the Advisory Council on the SLAC/Governing Board meeting discussions on the following topics:

Replacement Tax Issue

A good replacement tax verses a bad replacement tax.

Member states are to visit with their Legislators regarding good vs. bad replacement taxes.

The Governing Board voted on a broad Amendment to the Agreement and passed it with a caveat not to finalize until a rule is drafted by SLAC.

Software Maintenance Contract

Working groups had several meetings and they came up with options. Governing Board voted and passed. Basically allows states to come up with a percentage. The Governing Board will require a second vote and then draft rules. This should not affect Iowa as the proposal conforms to Iowa law.

SER (Simplified Electronic Return)

Model 1's and Model 2's (CSP's or CAS's) can file SER. Model 4's cannot at this time.

Dave wanted to use our e-file & pay system that we already have in place for Model 4 filers but was told "No."

IDR has created an internal working group to look at the following:

1.) Exemption information, i.e., why we collect it and how we’re using it. This would be Part II of the SER.

2.) SER for other retailers. This would apply to any retailer whether registered under streamline or directly with the State.

The Governing Board passed it for the first time. A required second vote is still to come. IDR doesn’t agree that this is a simple conversion as was being sold to the Governing Board.

Sponsorship Amendment

Sponsorship Amendment to SSUTA would allow SLAC & BAC to file their own amendments without a state sponsor. This amendment was voted on at the Governing Board but didn't pass.

Status of States

Dave updated the Council on the status of states. There are 19 Member states and 3 Associate states. The following states having some level of activity:

Texas - introducing legislation
Ohio - has legislation
Tennesee - waiting for 2009 – everything is in place
Florida - has been showing interest
Illinois - has some draft legislation

III. Direct Mail

Kristi updated the Council that this impacts almost everyone in business whether you're on the seller side or purchaser side. The Direct Mail Coalition is no longer in existence. Things are now moving in a more positive direction. BAC has a very active Direct Mail Committee focusing on 3 main issues:

1. How to source it
2. How to handle delivery charges
3. Whether or not postage should be included in the tax base

This BAC Direct Mail Committee met with Executive Committee and there is teleconference scheduled for today.

Many states taxability matrix may need to be updated regarding direct mail issues so it’s clearer for businesses. Kristi mentioned that Iowa’s matrix was not a problem.

Delivery Charges on "business correspondence" - CRIC (Compliance, Review and Interpretation Committee) ruling said it depends on what the state determines it to be whether it's tangible personal property or services. The Council had a lengthy discussion on does it get sourced under Section 310 or 313? If this topic impacts you in anyway, this month is the time to make comments to Kristi.

IV. Governing Board Task Force on Small Seller and Compensation

This Task Force is made up of legislators, the business community and states. Harley Duncan is leading the group and it's a study group in the information gathering stage. They've had several web casts with universities and Amazon. Kristi helped set up a small business presentation and Jay Turner helped with this presentation representing medium-size business owners. Jay took questions and provided insight. This task force will meet face-to-face in November in Chicago.

Amazon presenter, Rich Prim, had an interesting suggestion to simplifying. Rather than seller compensation what if a blended state rate was used for small sellers? Kristi thought this was an interesting idea, but how do you define what a small business is?

V. Update on Legislation and Rules

Iowa recertified in August and updated the taxability matrix. The Executive Board had four issues with Iowa’s recertification. The department has responded and CRIC is reviewing. We proposed to address these issues through the rule-making process.

In January, the department will look at amendments passed last year to the SSTUA which may result in a streamlined clean-up bill.

The department is looking at updating our services rules. The Council will have the opportunity to review and comment.

VI. Update on Registration & Revenue Tracking

Larry Paxton updated the Council that streamline has 1,120 registered.

$1.5 Million was collected for July and August of 2008. That was $170,000 more collected than for the same period last year.

VII. 2008 Annual Report to the Legislature.

Kristi and Mark will draft the Annual Report and keep the Council informed via e-mail. A teleconference will be held in January to finalize.

VIII. Future Streamlined Sales Tax National Meetings

National meetings will be twice a fiscal year which starts October 1. SST is looking at a May 2009 meeting in the DC area and an annual meeting in September in Oklahoma (home state of the current vice-president of GB). There's talk of the Governing Board meeting in Rhode Island in December.

SLAC will likely be meeting 60 days before the Governing Board meeting. It will also meet prior to the Governing Board Meetings.

IX. Set Next Advisory Council Meeting

The teleconference in January 2009 will be the next Advisory Council meeting.

X. Adjournment

Mark adjourned the meeting at 11:50 A.M.