Streamlined Sales Tax Advisory Council

June 3, 2004, Meeting Minutes

Co-chairs Kristi Magill and Mike Ralston initiated the conference call with updates to the agenda. Updates consisted of adding Amnesty under III. Tampa Meeting Update, V. Uniform Leasing, VI. Sourcing, changing Other Updates to VII.

I. Educational Issues

Wayne Cooper updated the Council on the educational sessions. To date, 142 presentations have been completed with 1,600 people attending these sessions. The biggest issue is sourcing. Wayne is concerned about the retailers not attending. They don’t seem to be paying a lot of attention to the sessions.

Dave Krutzfeldt also expressed disappointment in the number of people at the session that he attended. He felt the presentation was good and the presenter was available for questions after the session.

The Department will continue its outreach program. The Department will have frequently-asked-questions (FAQ’s) from these meetings on the Web site.

II. Food Database

Brian Johnson and Jerry Fleagle met with Wayne Cooper to review the database and update for July 1, 2004. Jerry is also reviewing old and new rules on the Web.

Changed items will be listed on the Iowa Grocer’s Web site. The definition of candy is still concerning Jerry. The Department will link our Web site to the Grocer’s Web site. The Department’s Web site will have a summary of the changes. The definition of candy also keeps coming up at the national level. States are holding fast to their definition. There has been no discussion about chocolate chips as candy. Jerry’s concerned about baking ingredients being classified as candy. This will be addressed in the Administrative Rules. Don will contact other states and the national co-chairs. Don will provide their feedback to the Council.

III. Tampa Meeting

Don Cooper summarized the meeting for the Council. Topics discussed in Tampa were:

a. Compliance Review – No additional feedback has been provided about Iowa’s Compliance Review.
b. Taxability Matrix – We are on target. There are other states that still need to complete this matrix.
c. Rate/Jurisdiction Database – This database will be ready mid to late summer. It will be zip code plus 4.
d. Exemption Administration Paper – This is not an issue for Iowa.
e. Candy Definition – States are holding fast to their definition.
f. Sales Tax Holidays – This is not an issue for Iowa.
g. Bundling Issue – Bundling is not in Streamlined Sales Tax Agreement. If put in the agreement later, states will need to adopt through the legislative process. States voted on bundling for tangible personal property – The business side was not happy. Business wants something on TPP and services. It’s a controversial issue.
h. Registration System – This is being developed by MTC.
i. Telecommunication – This deals with the definition of digital equivalent of tangible personal property. (Iowa may need conforming legislation depending upon what’s put into the agreement.)
j. Sales Tax Buy Down – The states are indifferent. Iowa just got an exemption this legislative session. This was a hot topic in the business meeting.
k. RFP Status Report – Some work done on the RFP. A document of technical standards was approved in Tampa. This document is confidential.
l. Governing Board – The Governing Board is not in place and timing is an issue. Don predicts January 1, 2005, or July 1, 2005, before the Governing Board is in place.

Status of Other States – Michigan is close to getting legislation passed. Population percentage will be attained by January 1, 2005…certainly no later than July 1, 2005.

Conforming States Committee – This is a transition group to work on administrative issues prior to the Governing Board being in place. This Committee is comprised of states who have already passed legislation. The Committee discussed the Table of Areas of SSUTA Requiring Operational Implementation. Don will e-mail this table to the Council. Don volunteered for Funding Structure Committee. He will provide the Council with feedback from the Chicago Conforming States Meeting in early August. It was recommended that Representative Sands and Senator McKibben attend the meeting in Chicago.

Amnesty Issue – Some states didn’t address amnesty in their conforming legislation. This is not an issue for Iowa because it was in our legislation. Those states will be going back to put it in legislation. There was no discussion on procedural side of amnesty. It was suggested each conforming state address this issue. Iowa’s positions on what constitutes an audit differ from other states. We consider a nexus questionnaire an audit.

IV. Compliance Transition at National Level – There is going to be some degree of flexibility for all states (no standards). If taxpayers aren’t in conformance on day one, states are not going to start assessing penalties. States will take a reasonable approach. Mike suggested the Council review the minutes from our last conference call regarding this issue and provides feedback to him.

V. Uniform Leasing – Kristi mentioned the law of unintended consequences. Leasing is now the sale of tangible property. This change means that leasing of a uniform by a food manufacturer will not be exempt after July 1, 2004. The Department will be looking at various other changes related to the change in how leasing is handled.

VI. Sourcing – Stacey Johnson is getting a lot of contacts from businesses and Legislators. Kansas Department of Revenue backed off and is providing a relaxed enforcement. We’ll look into this issue for next meeting.

VII. Other Updates

There was some discussion on the Council providing a letter to the Legislature to update them on the project. The Council agreed to wait until after the next meeting.

Mike mentioned the Department is hosting the Midwestern States Association of Tax Administrators (MSATA) annual conference in August. Steve Krantz from COST and Diane Hardt, co-chair, of the National Streamlined Sales Tax Project will be speakers at the conference.

Rules Update – Darwin has been working on rules regarding sales tax as they relate to Streamlined Sales Tax Legislation. There are a number of rules of immediate importance resulting from SST transition. These drafts are on the department Web site. Darwin would appreciate comments.

An August meeting in the Hoover Building will be determined by Kristi and Mike.

The call was adjourned.