Streamlined Sales Tax Advisory Council

January 19, 2007, Meeting Minutes

Hoover State Office Building

Present: Kristi Magill, Mark Schuling, Monti Miller, Andy Warren, Jay Turner , Jim Henter, Jerry Fleagle, Jim Miller, Dave Casey, Larry Paxton, Darwin Clupper and Jeff Aten. Warren Townsend attended via telephone.

I. Welcome, Introductions & Opening Comments

Mark Schuling and Kristi Magill opened the meeting at 10:05 a.m. by welcoming everyone and thanked them for their participation. Mark noted that the Council has obligations to the Legislature and thanked the Sub-Committee for their work.

II. National Meetings in Seattle , Washington ( December 10-14, 2006 )

A. Business Advisory Council (BAC)

Warren Townsend updated the Council on the BAC meeting in Seattle noting discussion of the following issues:

  • MPU (multiple points of use) – Business agreed to revisions and that the proposal be forwarded to the Governing Board.
  • Digital products

B. State & Local Advisory Council (SLAC)

Dave Casey noted several issues discussed at the SLAC meeting in Seattle.

  • Bundled Transactions – Sent to Governing Board for approval. This was resolved at the Governing Board meeting.
  • MPU (Multiple Points of Use) – This was resolved at the Governing Board meeting.
  • Direct Mail Sourcing – A representative came to the SLAC meeting to discuss. For Iowa purposes, the department doesn't see this as a problem.
  • Digital Products (electronic downloading) – Dave believes a resolution is close. SLAC will be looking at this between now and next Governing Board meeting. (FYI: The department's Policy/Technical bill has language drafted to impose tax on digital products limited to individuals only. It's intended to level the playing field for retailers.)
  • Healthcare List – There are a number of items on the list and new items continue to be added.
  • Purchasers Liability Relief – Approved by SLAC
  • Replacement Taxes – Still being discussed by SLAC

C. Governing Board

  • The Governing Board voted to repeal Section 312 (MPU) and adopt the rule related to computer software only.
  • Purchaser Liability Relief – Currently, the seller is relieved if a state's taxability matrix is incorrect. Purchasers' liability relief applies to incorrect databases, along with incorrect taxability matrix.
  • Telecommunication Sourcing Amendment – This was just some clean up language to Section 309 related to ancillary services.
  • Amendments from Ohio – Since some states have Legislatures that meet every other year, an amendment to allow a 2-year time frame to get in compliance with the Agreement was proposed by Ohio. This was approved by the Governing Board.
  • Fur Clothing (replacement taxes) – Some states created a separate excise tax when clothing is exempt. Situations exist for some states like Minnesota and New Jersey that have a separate definition for fur clothing. The Governing Board approved a definition of fur clothing which will allow Minnesota and New Jersey to tax fur clothing as part of their sales tax laws.

Kristi expressed a concern regarding replacement taxes. Dave explained what the department did with the hotel/motel sales tax by moving it to excise tax and that is would be considered a replacement tax. The department felt it had a good reason to do this. This issue is still being discussed by SLAC.

  • Bundled Transactions – Dave covered Article III – Rule 330. This was passed and approved by the Governing Board. This is the final version.
  • Certified Automated System compensation to retailer purchasing a CAS product (Taxware). There was discussion of a credit good for 24 months for 1.5% of the tax collected. Kristi inquired about installation. Was there anything in the contract for installation costs? Larry Paxton and Dave Casey weren't sure, they will check.
  • Governing Board approved various rules from SLAC and interpretation documents from the Compliance Review and Interpretations Committee.

III. Update on Legislation & Rules

Dave provided a handout and gave a brief overview of the amendments to the agreement that will require legislative change.

Rules are currently being reviewed by the department and will be sent to the Council for review when ready.

IV. Update on Registration & Revenue Tracking

Larry Paxton reported 1,070 registrations and provided a breakdown by models. David Thompson, National Streamlined IT Director, is verifying registrants. Collections for the first quarter of the fiscal year were $1,469,000. This number is higher than projected and is mostly model 4 revenue.

V. Analysis Required by Iowa State Legislature Regarding Impact on Iowa Businesses.

The Sub-Committee provided the Council with a paper entitled Issue Brief – Assistance for Iowa Retailers Affected by Streamlined Sales Tax. The council discussed possible options. Other states are looking at the issue, we believe Iowa is further ahead in the process at this point.

Jeff Aten has had discussion with Avalara & Exactor and they are willing to listen to us and do whatever we want because they know it will bring in other states. Kristi expressed its worth exploring.

The Council agreed it should be kept simple whatever avenue is taken. Vendor discount or a credit back to the retailer based on percentage of collections was discussed. The department will draft a proposal for review by the Council that would provide a couple of alternatives for the Legislature.

VI. Annual Report to the Iowa General Assembly for 2006

The Council discussed the 2006 Report and offered suggested changes. Mark will make the changes and provide the Council with the opportunity to approve the final changes.

VII. Future Streamlined Sales Tax National Meetings:

Stacey Johnson continues to be a board member on BAC, but is no longer a member of the Advisory Council.

SLAC meeting scheduled for Chicago in February. The two main topics on that agenda will be replacement taxes & direct mail sourcing. The department feels these are not big issues for us. Therefore, the department will not be attending. Kristi is planning to attend.

A. Charlotte , NC – March 14-17 meeting and amendment information is out on the national website. The department will have a conference call with Representative Rants and Senator Dotzler before the meeting.

B. Detroit , MI – Saturday meetings are scheduled so Legislators can be involved. Also, The Governing Board is trying to hold meetings in member states or states trying to pass legislation.

C. Kansas City , KS – Same as B.

VIII. Set Next Advisory Council Meeting

The next Iowa Advisory Council meeting is scheduled for April 2, 2007 at 10:00 a.m.

IX. Adjournment

Meeting adjourned at 11:55 a.m.