Presentation on theme: "Proposal to the States and Streamlined Sales Tax Governing Board"— Presentation transcript:
1Proposal to the States and Streamlined Sales Tax Governing Board
2Use Tax ReciprocityBottom Line Up FrontThis method provides a mechanism to collect use tax already owed on internet purchases that was previously uncollectable.
3Use Tax ReciprocityUse Tax LawsStates should address Main Street Fairness via extant authority to collect use tax and regulate commerce within the state.Requires no federal action and no streamlining of laws, therefore states may begin immediately.Creating a single sales data facility used by all use tax states provides the mechanism to collect use tax on internet transactions.
4Tax Collection Technique Use Tax ReciprocityTax Collection TechniqueVendorStatesStatesSales DataTax InvoiceBillPaymentSSTGBConsumer
5Regulation-Reporting Requirement Use Tax ReciprocityRegulation-Reporting RequirementEach state requires companies with a nexus to periodically report sales data.Companies report sales data annually (or certify that it had no transactions in which it did not collect sales tax).How to create the requirement depends on the state:Regulatory change made by Dept. of Revenue and approved by Ways and Means, orLegislation.
6Regulation - Summarized Use Tax ReciprocityRegulation - SummarizedRequire companies with a nexus to report sales data.Require those companies to post on their sale confirmation page that untaxed sales may be subject to use tax.Designate the SSTGB an agent of the State Dept. of Revenue for this purpose, allowing them to collate information on sellers and buyers on a national level.Authorize collection of unpaid use tax on income tax filings.States protect tax revenues by barring the data from being used for any other purpose not related to sales and use tax collection.
7Use Tax ReciprocityInformation NeededBilling name and address - used to identify the purchaser.Shipping address - used to identify the tax jurisdiction.Brief description of goods, usually 1 or 2 words each - to determine taxability.Cost of goods - to determine tax owed.
8The Technique – Data Reporting Use Tax ReciprocityThe Technique – Data ReportingData Extraction – Companies use their sales database to extract a sales summary into a file (.txt or .csv) Upload - Data files will be uploaded to a secure server and pass to the SSTGB.SSTGB uses a CSP or CAS to determine tax liability.
9Follow the Sales Data Vendor CSP Consumer Use Tax ReciprocityFollow the Sales DataVendorCSPConsumerPasses through SSTGBSales DataTotal Tax LiabilityState Dept. of Revenue WebsiteStates
10Paying Use Tax - Consumer Use Tax ReciprocityPaying Use Tax - ConsumerInternet transactions shall continue as normal, without taxation at the point of sale.Consumers will receive a notification of use tax owed concurrent to income tax filing.Consumers’ use tax liability is incorporated into the state income tax form.
11Benefits - States Requires no streamlining or federal action. Levels the playing field.States collect based on authority to collect use tax and regulate/audit its corporations and businesses.Each state enforces compliance of its own businesses, for the benefit of every other state.By working together, each state ensures maximum collections for itself.Removes the need for a small business exemption.No reliance on consumer self-reporting.
12Benefits – States (continued) Creates jobs in local businesses.Increases state government revenue allowing tax relief and preservation of programs.Consumer pays use tax similar to the way businesses pay use tax.Encourages local spending by closing the internet sales tax loophole.
13Benefits - Vendors No implementation costs for vendors. Use Tax ReciprocityBenefits - VendorsNo implementation costs for vendors.Almost no administrative time for vendors (less time than it takes to collect and remit sales tax).Much easier for a business to implement than using CSPs.Must relieve vendor from the liability of incorrectly collecting taxes across many jurisdictions.
14Use Tax ReciprocityPotential CriticismsSecurity and Privacy-Protecting consumers shopping habit infoThese are the same issues that are extant under the current Point of Sale model.
15Use Tax ReciprocityMore on PrivacyNo agent of any state should ever view the purchases of any individual.All tax calculations should be automated in such a way that no one sees the name of any consumer.Tax information remitted to states should only include identifying information and total use tax owed (no information on shopping habits).If a consumer contests his use tax liability, any audit should be performed by an outside agency, and individuals performing the audit should certify that they do not know the person contesting the bill.These rules will protect the states and the SSTGB from invasion of privacy lawsuits.
16Use Tax ReciprocityAmazon LawsAmazon and similar sites will not report sales data if items were sold through an affiliate.All affiliates of Amazon and similar sites will report sales in their respective states.
17Use Tax ReciprocityWhat it is notThis project does not completely replace the need for a national solutionNon-use tax states have little incentive to participate.it creates the ability to collect almost all of the use tax owed.
18Implementation Structure Use Tax ReciprocityImplementation StructureTechniqueSSTGBStatesLicense use of the techniqueStatesStatesContract to perform calculationsJoin the agreement as regulations are implementedCSP
19More on Reporting Regulation Use Tax ReciprocityMore on Reporting RegulationStates should only require companies to report transactions in which the purchaser’s state is also a party to the reciprocity agreement, i.e. both the seller and buyer are regulated by their respective state.
20More on implementation Use Tax ReciprocityMore on implementationSSTGB will require few additional resources, primarily the ability to monitor state implementation and CSP contractors.States will require few additional resources, primarily the ability receive/forward data and mail invoices to consumers once yearly.Collection becomes more efficient as more states join.
21Use Tax ReciprocitySummary & Next ActionsInvestigate creating a reporting regulation in your state.Explore partnerships with a CSP.Follow up at the next meeting.