Streamlined Sales Tax Project (SSTP) Update SEATA 2005

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Streamlined Sales Tax Project (SSTP) Update SEATA 2005 Diane L. Hardt, WI DOR, Co-Chair, SSTP Scott Peterson, SD DOR, Co-Chair, SSTP Steve Kranz, COST Charles Collins, Taxware New Orleans, LA Agenda SSTP Review & Update (Agreement Amendments) Compliance Update Technology Update Governing Board Business Advisory Council Update 1

Streamlined Sales Tax Simplify administration of sales tax Affects all sellers and all types of commerce 43 States & DC involved in SSTP Business community and service providers providing input Improve compliance from existing taxpayers and address remote collection issues Utilizes simplification, uniformity & technology Establish an Interstate Agreement Amendments to Agreement on April 16, 2005 Multiple points of use All computer software Uniform exemption certificate Telecommunication definitions 2

Amendments to Agreement on April 16, 2005 Drop shipment provisions Third party vendor (drop shipper) may claim a resale exemption Amendments to Agreement on April 16, 2005 Exemption administration Timeline for relieving seller if seller obtains a fully completed exemption certificate (90 days subsequent to date of sale) 3

Amendments to Agreement on April 16, 2005 Exemption administration Timeline for relieving seller upon request for substantiation by member states (120 days subsequent to request for substantiation) Amendments to Agreement on April 16, 2005 Exemption administration No renewal of blanket certificates or update of exemption certificate information when there is a recurring business relationship between buyer and seller (one sale transaction within a period of 12 consecutive months) 4

Amendments to Agreement on April 16, 2005 Bundling and sales price definitions Buydown provisions Committee to analyze compensation issues Associate membership Business Advisory Council Pending Issues Digital equivalent definitions Use tax Audit Compensation Exemption Administration Issues 5

Interstate Agreement Ten states with at least 20% of the total population of all states imposing a state sales tax Certificates of Compliance; business reviews Meeting on July 1, 2005 Three-fourths vote of other petitioning states to be a member Associate Membership (Agreement amended April 05) Effective dates between July 1, 2005 and December 31, 2007 Conforming legislation but not each requirement No vote on amendments or interpretations of the Agreement Voluntary collections for Member States; not required to collect for associate members 6

Governing Board Chart Full Members IN July 1, 2005 2.22 IA July 1, 2005 1.07 KS July 1, 2005.98 KY July 1, 2005 1.47 MI July 1, 2005 3.62 MN July 1, 2005 1.79 NE July 1, 2005.62 NC July 1, 2005 2.93 OK July 1, 2005 1.26 SD July 1, 2005.28 WV July 1, 2005.66 Governing Board Chart States Compliant July 1, 2005 16.90 % (Associate Members Until Date Noted) NJ October 1, 2005 3.06 ND October 1, 2005.23 NV October 1, 2005 (Expected).73 UT July 1, 2006.81 TN July 1, 2007 2.07 OH January 1, 2008 4.14 AR.97 WY.18 Members and Associates 29.09 % 7

Effective Dates Interstate agreement: 10-01-2005 Amnesty: 10-01-2005 to 9-30-2006 Contracts for Certified Service Providers Initial operation of Governing Board Technology Update Central registration system Certified service providers Database matching rate to local jurisdiction Database of boundary information for local jurisdictions Taxability matrix 8

Central Registration System Purpose of the Streamlined Sales Tax Registration System (SSTR) to implement a webbased system to enable taxpayers to volunteer to register to participate in Streamlined Sales Tax. Taxpayers can use SSTR for new voluntary registrations and updates. SSTR is pass-through system in that the states will incorporate data into their state system. SSTR will maintain all taxpayer information for specific business processes. XML file schema used to exchange data between the SSTR system and states. Central registration system Issued RFP in Spring 2005. Received 9 responses to RFP. Contracted with TaxWatch from Louisiana. A committee of states along with FTA has been appointed to work with TaxWatch. 9

Central registration system Selected URL s and set up web pages Made a decision to allow multiple names per FEIN or SS number Made a decision to eliminate the PUSH method of transmission Distributed a draft of the terms & conditions page including privacy statement Distributed a draft of FAQ/Help Text for sellers Started to set up conference calls with states for help on transmission & other technical areas. Schema changes for the registration finalized at the June Streamlined TIGERS Sales meeting Tax Project Certified service providers Issued RFP in the fall of 2004. Received 12 responses to the RFP. An evaluation team narrowed the list to 7. In March 2005 a new evaluation team began developing the certification criteria, timetable, and strategy. 10

Candidates to be Certified Service Providers Avalera EDS (with Vertex and Microsoft) Exactor (with Sabrix) Taxware Sales Tax Services Salis Paychex Certified service providers Evaluation team of 32 people from 20 states and the Multistate Tax Commission. Team includes policy, audit and computer experts. Each company completed a security selfassessment guide. Each company receives at least one on-site visit. The on-site visits started the week of June 1 and will end the middle of July. The states have started putting together a collection of sample transactions that will be run through each company s system. 11

State Databases Database matching rate to local jurisdiction Database of boundary information for local jurisdictions Taxability matrix Technology Implementation Challenges: State development of databases. State interfaces with central registration system. Continued testing of CSP systems to maintain certification. Continue certification of new CSP candidates. 12

Governing Board Formation on October 1, 2005 Membership up to 4 from eligeble states Administers SSUT Agreement Meets at least annually Executive Committee (4 Officers & 5 Dir) Enters into contracts Governing Board Approves rates and jurisdictional databases Certifies compliance systems and service providers Approves uniform tax returns and exemption certificates Promulgates rules necessary to administer Agreement 13

Governing Board Standing Committees Nominating Compliance Review and Interpretations Finance Issue Resolution Ad hoc committees State and Local Advisory Council Advises Governing Board Membership from each SSTP state & local representation President of Exec. Committee appoints Chair and Vice Chair 14

Business Advisory Council (Agreement amended April 05) Amended provision Role of council Relationship to Governing Board Contacts www@streamlinedsalestax.org dhardt@dor.state.wi.us Scott.peterson@dor.state.sd.us skranz@statetax.org Charles.collins@taxware.com 15