Iowa Streamlined Sales Tax Advisory Council

October 14, 2004 Minutes

Opening Comments

Director Ralston opened the meeting by introducing Paul Benson. Paul is our new supervisor in the Taxpayer Services Section. He is replacing Wayne Cooper who has taken a new job in our Collections area.

Rod requested to move agenda item VI. to the beginning of the meeting.

Rates and Boundary Database Update

The database uses 5 and 9 digit zip codes to look up rates and will calculate the tax due. It goes into production on Monday. Taxpayers wanting to download the database won’t be able to download until mid-week. If anyone has problems trying to download the database, please contact Rod Erickson. The department is still working on a full address lookup database. The department will update the web site quarterly with jurisdictional changes. Rate changes can only occur in January and July.

Rod performed a demonstration of the database, discussed results and different scenarios.

Update from National Meeting in Nashville

Jim Henter developed bumper stickers for the Advisory Council with some of the director’s favorite sayings. Don passed out samples.

Representative Sands and Steve Roberts both attended the meeting in Nashville. Kristi thought it was an interesting meeting for them to attend. She also expressed some frustration with discussions on buy-downs and bundling issues. The working group has finalized a definition of school supplies it will be presented to the Implementing States for a vote to place the definition in the Agreement at the November meeting.

A consensus needs to be reached on the relationship of the Business and Taxpayer Advisory Council to the Governing Board. Copies of the draft language on the formation of the Business and Taxpayer Advisory Council by business and conforming states were handed out.

Kristi explained that there will be two groups under the Governing Board. One to represent state government called State and Local Tax Advisory Council and the other to represent business called Business and Taxpayer Advisory Council. The government version has the Governing Board owning/creating the Business and Taxpayer Advisory Council. The business version wants it to be a separate entity. We need to reconcile this issue. Kristi was soliciting input from the Council. Jerry Fleagle made the motion that the Iowa Streamlined Sales Tax Advisory Council would support the draft language made by business, subject to tweaking. Mike Ralston seconded the motion. The Council unanimously approved the motion.

The sourcing issue continued to be discussed in Nashville. A Senator from Ohio made a presentation to have a different sourcing for intrastate sales vs. interstate sales. Don and Kristi didn’t think that this would go anywhere. The sourcing issue is what’s holding Texas and Washington from being conforming states.

The RFP for the software process is scheduled to be out by November 1, 2004. There will be more questions answered at the November meeting in Chicago. Proposals are due by January 1, 2005. It was mentioned that 30 companies are interested.

Cost of Collection Study Steering Committee – The Direct Marketers Association has vacated their seat on the Steering Committee. Kristi was approached for input of who might fill this vacancy from a small business perspective. Her thoughts were if the survey has been drafted and mailed, what’s left to do? Warren indicated that there is a need to review the surveys and responses. This Steering Committee still has approximately 6 months of meetings before its work is completed. This Steering Committee consisted of: Wal-Mart, JC Penney, Radio Shack, National Retail Association and Direct Marketers Association. Dave Brasher will check into it with his association. Mike gave a charge to the Advisory Council that it’s imperative the Council start thinking about someone who could contribute.

Don handed out and discussed the Conforming States Calendar showing the time table of what’s going to happen between now and October 1, 2005. There will be an Implementing States meeting on November 16, 2004 and Working Group meeting on November 17-18, 2004 in Chicago.

Rules Update

The first set of rules drafted is ready for distribution. They will be placed on the web site. Anyone wanting a complete set, please contact Dave Casey. This first set consists of: Chapter 211 “Definitions”; Chapter 219 “Construction” (not a lot of change); and Chapter 231 “Exemptions Primarily to the Benefit of the Consumer.” The department anticipates these will be filed the first Friday in November.

The second set of rules is drafted and needs to be reviewed internally. This second set consists of : Chapter 212 “Elements Include in and Excluded from a Taxable Sale and Sales Price”; Chapter 213 “Miscellaneous Taxable Sales”; Chapter 214 “ Miscellaneous Nontaxable Transactions”; Chapter 225 “Resale and Processing Exemptions Primarily of Benefit to Retailers”; and Chapter 230 “Exemptions Primarily Benefiting Manufacturers and Other Persons Engaged in Processing.”

Discussion of Iowa Taxpayers Association (ITA) Issues

The Department held a meeting with Stacey Johnson, Kristi Magill, Jason Wilson and Steve Roberts regarding issues the Iowa Taxpayers Association wanted to discuss. After the meeting, the department provided responses to their questions. Don handed out the department’s responses to the Advisory Council. The Council discussed the following:

• LOST for printers shipping throughout the State of Iowa. Don will check with other states and this will be an agenda item for our next meeting.

• Exemption for food manufacturers related to services. Streamlined legislation has changed the tax status of uniform leasing or rental. Stacey Johnson made a motion that the department draft legislation to change uniform leasing or rental back to exempt status. Jerry Fleagle seconded and the Council unanimously approved.

• Items rented by contractors not specifically exempted. Stacey will form a sub-committee and make recommendations for our next meeting.

• Freight/handling. The department will bring forth legislation to change.

Dave Casey cautioned the Council if the Council wants to make legislative changes that the changes are in conformance with streamlined legislation.

Possible Legislative Changes

One possible change the department has identified is the definition of medical products. Since Iowa didn’t adopt the entire SSTP agreement definition on medical products, the department still needs to research this issue to ensure that the law is in conformance with the Agreement.

The Council discussed the proposal of one bill for SSTP clean up and the possibility of Representative Sands introducing the bill. The department hopes to have a draft to the Advisory Council in advance of our next meeting.

Set Next Meeting

The Advisory Council will meet on Thursday, December 16, 2004, from 10:00 a.m. to 2:00 p.m. It was suggested to invite the Legislative Representatives to this meeting where the major agenda item will be legislation. Iowa Taxpayers Association will provide lunch.

Adjournment

The meeting was adjourned.