Streamlined Sales Tax Advisory Council

March 29, 2006, Meeting Minutes

Hoover State Office Building

I. Opening Comments

Mark Schuling thanked everyone for coming and indicated that he appreciates the Council's commitment and attendance.

Kristi Magill handed out copies of the contract drafted for the certified service providers (CSPs) to be discussed later in the meeting

II. Finalize Annual Report to the 2006 General Assembly & Letter to Governing Board Regarding CSP Issues

Revised versions of the report to the Legislature and letter to the Governing Board from both Mark and Kristi were e-mailed to the Council prior to the meeting. In order to finalize these documents, the Council engaged in a lengthy discussion. Mark thought the letter to the Governing Board did not address where Iowa wants to end up. Kristi was concerned that the history needed to be included in the letter. After thoroughly discussing the history, vendor compensation, CSPs, and the cost of collection study, the Council agreed to have the letter go out under Kristi's signature after changes as noted by the Council are incorporated.

Mark basically had the same issues with the 2006 report to the General Assembly. Mark voiced his concerns regarding the history and language included. There was concern by Council members regarding compensation for retailers. Compromise was agreed to by all parties. Mark and Kristi will work on the changes and share the finalize version with the Council.

III. Updates on Chicago Executive Committee

a. Certification of CSP's

Certification of CSP's from Iowa 's perspective as of last Friday: 7 states have certified Taxware and 3 states have certified Exactor. Iowa has issues with both these vendors. Jeff Aten is getting a file on Thursday which could potentially resolve our issues. Avalara is just now coming on strong but their systems need to be tested.

The Governing Board approved moving forward with the contract for July 1, 2006, even though some states still have issues with the contract. It is hoped that CSP's will be up and running but compensation won't be known.

b. Compensation

Work with four potential CSP companies providing compensation structures known as compensation models. The final vote will be at the Indianapolis meeting.

The Council discussed Iowa's issues with Taxware and Exacta. Jeff was confident we won't have a problem resolving our issues. States will certify even if they still need to work through some contract issues. In the contract, Kristi pointed out (page 6) C1. There's a concern that if a business signs up for a CSP for 3 years, that the CSP contract is only for 2 years. Don indicated that the drafting committee is working on a daily basis with CSP's on details of the contract.

Volunteer seller issue was discussed. There was discussion of developing a bright line test for nexus or non-nexus determination for purposes of compensation only. A payroll provision would be very difficult to administer. Kristi thinks the number of days in the state is a very good bright line. Don and Kristi also discussed amnesty.

IV. Update on Atlanta Meeting

At the Business Advisory Council (BAC) meeting, a lot of dialogue centered on around the Ohio sourcing issue. Texas used Utah to introduce their amendment regarding the sourcing issue, which wasn't received well by businesses or states.

Standard definitions in agreements are getting interpreted differently.

Larry Paxton mentioned the updating of the national Web site and that the exemption certificate form and instructions have been agreed on by most member states.

V. Update on Legislation & Rules

Rules that implemented 2005 corrective legislation have been filed with the Rules Coordinator. They're being published in the administrative bulletin. 2006 Code changes to be effective in 2008 were worked on by Dave Casey and Darwin Clupper with the bill drafter yesterday. These are based on amendments to the agreement and are now approved.

VI. Update on Registration and Revenue Tracking

Larry reported 491 registrations as of the March 24, 2006, report and included a breakdown in the number in each model.

Revenue generated from streamline registrations hasn't changed since the last Council meeting. This will be updated at the end of this quarter. The Council discussed the businesses that have been registering. Were they the ones streamline was targeting? Rod indicated we could do an analysis using business class codes, etc.

VII. Preview of Indianapolis Governing Board Meeting

Issues to be discussed will be:

  • Proposed amendments to the Agreement
  • Sourcing issues (Don's projection is it probably won't result in any change)
  • Compensation recommendation by the Executive Committee. Approval process on compensation methodology and CSP contract.
  • State dues possibly exceeding $20,000 annually depend on final budget. Process to approve Governing Board's Budget.
  • Rules Interpretation committee is reviewing several requests.
  • Issues on Interpretation on prepared foods
  • Certification process not only CSPs but automated software process (CAS)

BAC issues to discuss are:

  • Dues structure
  • Member structure and openings
  • Web site
  • Process for reporting back to the Governing Board concerning verifying all members are represented

VIII. Set Next Meeting

The State and Local Advisory Council (SLAC) and Business Advisory Council (BAC) will be meeting in Des Moines on May 11 and 12 at the Embassy Suites.

Kristi noted that the BAC has an open meeting.

Here's the information received from FTA regarding this meeting:

To: SST Participants

The next meeting of the State and Local Advisory Council to the Streamlined Sales Tax Agreement has been set for Thursday and Friday, May 11 and 12, 2006, in Des Moines, Iowa.  The Council will meet all day on Thursday, May 11 and until 12 noon on Friday, May 12.  Topics to be discussed include purchaser use tax issues, audit, bundling, MPUs, digital goods, software maintenance, medical equipment and rules derived from issue papers.  An agenda is forthcoming.

The Business Advisory Council is scheduled to meet on Wednesday, May 10, but the exact times have not been determined.  Questions about the BAC should be addressed to Steve Kranz of the Council on State Taxation at skranz@statetax.org There will be a $75 registration fee for the BAC meeting.  That fee may be paid via online registration (see below.)  If you do not pay this fee online, you should bring the BAC registration fee to the meeting.

The meeting will be held at the Embassy Suites – On the River, located at 101 East Locust Street in downtown Des Moines.  The hotel is about 5 miles from the airport.  The hotel runs a courtesy shuttle, apparently on an hourly basis at “the top of the hour.”  There is a courtesy phone at baggage claim to call the shuttle.  Cab fare is roughly $10 to the hotel.

A block of rooms has been set aside at the Embassy Suites at the rate of $119 per night plus tax.  You should make your reservations directly with the hotel by calling 515/244-1700 or 800/562-2779.  Be certain to indicate you are with the FTA Streamlined Sales Tax meeting to receive the group rate.  The deadline for making hotel reservations is April 17, 2006.  The hotel has a 24-hour cancellation policy. [Note:  I will pass along a URL that will allow you to make hotel reservations online when I receive it.]

The registration fee for the SLAC meeting is $175.  This will cover lunch on Thursday and breaks on both days of the meeting as well as a reception on Thursday evening to honor one of our Founding Brothers, Don Cooper of the Iowa Department of Revenue, who will be retiring from state service in the not-too-distant future.  The hotel serves a “complimentary cook-to-order” breakfast, so no breakfasts are included as part of the meeting registration.

You can register and/or pay online at http://www.taxexchange.org/meet/0506sales.taf .  In addition, a registration form is attached to this message.  Paper registrations should be faxed to 202/624-7888.  An additional $50 fee will be assessed for on-site registration.

Thank you for your continued support of this effort.  Please contact Diane Hardt dhardt@dor.state.wi.us or Marshall Stranburg stranbum@dor.state.fl.us if you have questions about the meeting.

Harley Duncan
harley.duncan@taxadmin.org
Ph. 202/624-5891

Our Council will meet again the end of May. We will propose 2 dates and confirm with the Council.

IX. Adjournment

Mark adjourned the meeting.