Streamlined Sales Tax Advisory Council

January 21, 2004, Meeting Minutes

Mike Ralston, co-chair, opened the meeting. Mike apologized for the parking problem due to the Legislature being in session.

Federal Legislation Update – David Quam was in San Diego to give an update. This year’s session will be short (less than 100 days). Also, this being an election year, historically nothing significant from a tax perspective usually happens. There is a hearing anticipated to be scheduled on Streamlined Sales Tax by the Senate Finance Committee. There is still concern this legislation will be tied with other pieces of legislation. The states have strong feelings each piece of legislation should be considered on its own. It’s highly unlikely it will pass this year.

RSM McGladrey is writing Senator Grassley expressing their concerns. Kristi offered to write the Senator on behalf of the Committee but no decision was made by the Advisory Council.

Compliance Checklist – We are in the process of a review of Iowa’s legislation to ensure correctness with Agreement. The private sector is helping to conduct this review. Sue Haffield, Kristi Magill, Jason Wilson and Jeff Johnson are the private sector performing this review. Everyone hopes to have it completed by March. States that are completing this process might meet in March to compare notes.

Ohio has introduced legislation to delay their implementation date. The Council had a discussion on effects of delaying the implementation date. We probably won’t have the necessary 10 states or 20% of the population. The chances of it happening before January 2005 are slim. Iowa still has legislative changes that become effective July 2004. Kristi discussed should we pass legislation to delay our implementation date. It’s worthy of discussion. Ann Stocker questioned what would be the impact on the other states? Dave Casey explained that because of the way our legislation was written, we would have to be very careful in how we structure any delaying legislation. Drop dead date for legislation is March. We’ll watch and see what March brings.

Definition of candy – The streamline definition currently says if the product has flour in the ingredients, it is not candy. This issue was discussed and not resolved. We may use an Administrative Rule to resolve.

Taxability Matrix – This is the list that will indicate whether certain items are taxable or not. It was decided that only items included in the Agreement would be on the matrix. The matrix will need to be in place close to implementation date. Retailers in San Diego are still expecting states to work on items not included in the agreement.

Exemption Certificates – Still not much change.

Discussed audits and certification process for Certified Service Providers software.

Rod informed the Council the RFP for Certified Service Providers or Certified Software providers is now due in June rather than March. Rod didn’t know the number of vendor’s interested. Three have been mentioned. Review of bids in September with awarding of contracts now scheduled for the December 04/January 05 timeframe. Thirty-two states gave reports. A number of states didn’t get vendor compensation in legislation properly.

Sales Tax Holidays – A lot of issues regarding computers and school supplies. Not an issue for Iowa.

Teleconferences – It is anticipated there will be bi-weekly teleconferences on the following topics:

Registration System – One registration vendor was trying to create the e-file application to allow retailers to register. That vendor has stopped working on the application. It’s unknown as to why. They’re under no contract obligation. There was discussion on why only one vendor with the primary reason being it will not be a profitable venture.

Dave Casey explained the following legislation issues:

Policy Bill to Legislative Fiscal Bureau, some minor changes. We haven’t received a final. The above mentioned changes are included in our Policy Bill.

Rules are out on the Web site. Darwin’s working on new rules. Most rules on Web site are updates of current rules. We will start working on new rules related to streamline.

Technology workshop in Nashville was very productive and answered a lot of questions. However, still a lot unanswered. We’re fairly comfortable, so we’ll still move forward to have our system tested and ready by 7/1.

Jurisdiction databases – Three vendors have approached us. Watchsystems from Louisiana wants consortium of states that are ready. We have concerns with this. Do we have legal authority to create a consortium? Iowa will contact states that might be interested via listservs.

Education Plan – The department handed out a very rough draft of Education Plan. It’s not to be considered to be all inclusive. Feedback to identify all issues both internal and external. We need to identify ways to move information out. ICN was mentioned to video and rebroadcast. There are two departmental mass mailings; the next one would be in July, which would be too late.

We want training and information to be timely. If implementation date is pushed back, we’ll delay training. Council should provide feedback to Donald.

Legislative Report and Letter to Speaker Rants & Majority Leader Iverson – Mike had talked previously to Rants and Iverson. Representative Thomas R. Sands has replaced Representative Van Fossen as one of Iowa’s designees to SST Implementing States Committee. A presentation by Don and Kristi to a joint Ways and Means Committee meeting will be arranged. Stacey will help set that up.

It was suggested that hardcopies of agendas and minutes be attached to the report. A motion was made by Steve Roberts to accept the report, seconded by Jim Henter. Motion carried unanimously. Report will go over today or tomorrow.

The Council continued review of the Agreement starting with Section 321. Next meeting we will start with Section 901.

Identified agenda items for next meeting:

March 3, 2004 at 10:00 – 12:30 in the Hoover State Office Building rooms 429 & 430. Diane will send a meeting notice as soon as possible.

Meeting adjourned.