Sales and Use Taxes: Streamlined Sales Tax System (Portfolio 1270)

Bloomberg Tax Portfolio, Sales and Use Taxes: Streamlined Sales Tax System, No. 1270, provides comprehensive discussions on a wide range of issues dealing with the development and implementation of the streamlined sales tax system. To view this Portfolio, visit Bloomberg Tax for a free trial.

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Description

Bloomberg Tax Portfolio, Sales and Use Taxes: Streamlined Sales Tax System, No. 1270, provides comprehensive discussions on a wide range of issues dealing with the development and implementation of the streamlined sales tax system.

The Portfolio explains the consummation of the streamlined sales tax effort and the relationships between various groups key to the process. Additionally, the Portfolio details the components of the Streamlined Sales and Use Tax Agreement and how the states must apply them.

The Portfolio provides analysis of the governance of the Agreement, highlighting state and retailer concerns, and concludes with a review of post-SSUTA nexus provisions enacted by the states and a summary of proposed federal legislation.

Subscribers to the Internet version of the Portfolio will find late-breaking developments reported in the Bloomberg Tax Daily Tax Report - State.

This Portfolio may be cited as Rosen and Haffield, 1270 T.M., Sales and Use Taxes: Streamlined Sales Tax System. Within the Multistate Tax Portfolio Series, however, references to the Portfolio will include only the Portfolio numbers and titles.

Authors

Arthur R. Rosen, Esq.

Mr. Rosen is a partner in the law firm of McDermott Will & Emery, where his practice focuses on tax planning and litigation relating to state and local tax matters. He has served as the Deputy Counsel to the New York State Department of Taxation and Finance, Tax Counsel to the New York State Senate Tax Committee and Counsel to the N.Y. Governor's Temporary Sales Tax Commission. Mr. Rosen has held executive tax management positions at Xerox Corp. and AT&T. Mr. Rosen has held leadership positions in professional tax organizations including the New York State Bar Association tax section, the NYU Tax Society, and the National Association of State Bar tax sections. He is past chair of the State and Local Tax Committee of the American Bar Association tax section. Mr. Rosen was the creator and editor of the newsletter Inside New York Taxes, was co-editor of the newsletter New York Tax Highlights and of New York Tax Cases. He has written scores of articles that have appeared in numerous professional publications, has made hundreds of presentations on state and local tax matters, and founded and chairs the New York University course entitled “Introduction to State and Local Taxes.” He is a member of the American College of Tax Counsel and is listed in The Best Lawyers in America.

Susan K. Haffield

Susan Haffield is a partner in the Minneapolis office of PricewaterhouseCoopers. She serves as the state and local tax practice site leader and specializes in sales and use tax. Susan provides consulting services focusing on tax strategy and planning, audit defense, refund analysis, process automation, and e-commerce. She has also been actively involved with the Streamlined Sales Tax Project since its inception and has published several articles on the subject. Susan is actively involved with many business and taxpayer organizations such as the, Minnesota Chamber of Commerce, Minnesota Center for Fiscal Excellence, and Minnesota Society of CPA's. She is also a frequent speaker for organizations such as Council On State Taxation, Institute for Professionals in Taxation, Tax Executive Institute, and New York University. Susan graduated from Moorhead State University in Accounting and Business Administration. She began her career with Arthur Andersen and has also worked in the tax department at Cargill Inc.

Table of Contents

Detailed Analysis
1270.01. INTRODUCTION
A. Overview
B. Historical Background
1270.02. ORGANIZATIONAL SUMMARY/STRUCTURE OF SIMPLIFICATION EFFORT
A. Origins of Simplification Effort
B. Streamlined Sales Tax Project (SSTP)
C. Streamlined Sales Tax Implementing States (SSTIS)
D. Streamlined Sales Tax Conforming States (SSTCS)
E. Evolution of Governing Board
1. Full Members
2. Contingent Members
3. Associate Members
4. Advisor States
F. Streamlined Sales Tax Governing Board Duties and Responsibilities
G. Advisory Councils
1. State and Local Advisory Council (SLAC)
2. Business Advisory Council (BAC)
H. Committees
1. Executive Committee
2. Compliance Review and Interpretations Committee
3. Nominating Committee
4. Finance Committee
5. Issue Resolution Committee
6. Audit Committee
7. Certification Committee
8. Registration Committee
9. Federal Legislation Implementation Committee
1270.03. STREAMLINED SALES AND USE TAX AGREEMENT SIMPLIFICATION PROVISIONS
A. General Principles
B. Uniform Definitions
1. Uniform Administrative Definitions
a. Delivery Charges
b. Direct Mail
c. Lease or Rental
d. Retail Sale or Sale at Retail
e. Sales Price/Purchase Price
f. Purchase Price
g. Tangible Personal Property
h. Bundled Transaction
2. Uniform Product Definitions
a. Food and Food Ingredients
(1) Bottled Water
(2) Soft Drinks
(3) Vending Machine Sales
(4) Candy
(5) Dietary Supplements
(6) Prepared Food
b. Clothing
(1) Essential Clothing
(2) Fur Clothing
(3) Protective Equipment
(4) Sport or Recreational Equipment
c. Computers and Related Items
(1) Prewritten Computer Software
(2) Computer Software Maintenance Contract
d. Digital Products
e. Healthcare
(1) Durable Medical Equipment
(2) Grooming and Hygiene Products
(3) Mobility Enhancing Equipment
(4) Over-the-Counter-Drug
(5) Prescription
(6) Prosthetic Device
(7) Drug
f. Telecommunications
3. Sales Tax Holiday Definitions
a. Administrative Definitions
b. Product Definitions
C. Exemptions
D. Provisions Impacting Local Taxes
1. State-Level Administration
2. Uniform State and Local Tax Base
3. Tax Rate and Boundary Simplification
4. Exceptions to Single Rate Requirement
E. Caps and Thresholds
F. Sales Tax Holidays
G. Rate Database (Rate and Boundary Files)
H. Rate and Boundary Notifications
I. Sourcing
1. General Sourcing Rule
2. Election for Origin-Based Sourcing
3. Sourcing for Leased Property
4. General Rule: Leased Property/Periodic Payments
5. General Rule: Leases/Lump-Sum; Non-Recurring Payments
6. Mobile Property Not Used in Interstate Commerce
7. Mobile Property Used in Interstate Commerce
8. Direct Mail
9. Telecommunications
10. Services
11. Multiple Points of Use [Removed from Agreement in 2006]
J. Administration and Compliance
1. Uniform Returns
2. Uniform Fund Remittances
3. Uniform Bad Debt Recovery
4. Uniform Rounding
5. Direct Pay Permits
6. Customer Refund Procedures
1270.04. STATE MEMBERSHIP AND MEMBERSHIP REQUIREMENTS
A. Introduction
B. Rules and Procedures
C. Annual Certification Requirement
D. Other Documents (e.g., Interpretive Opinions, Rules, Issue Papers, and Disclosed Practices)
1. Issue Papers
2. Interpretive Opinions and Interpretive Rules
3. Disclosed Practices
E. Compliance Technology
1. Service and Software Solutions
2. Service/Software Implementation Concerns
3. Confidentiality and Privacy Protections - Model 1
F. Taxability Matrix
G. Amnesty Requirement
H. Impact on Sellers and Purchasers
1. Replacement Taxes
2. Vendor Compensation
1270.05. POST SSUTA NEXUS DEVELOPMENTS
A. State Efforts to Expand Nexus
B. Click-Through Nexus
C. Reporting and Notification Regimes
D. Economic Nexus
E. Model Legislation
1270.06. FEDERAL LEGISLATION
A. Overview
B. Marketplace Fairness Act
C. Remote Transactions Parity Act
D. Online Sales Simplification Act
E. No Regulation Without Representation Act

Working Papers

Item Description Sheet
Worksheet 1 Streamlined Sales and Use Tax Agreement, as amended through Dec. 19, 2017
Worksheet 2 Streamlined Sales Tax Governing Board, Rules and Procedures, as amended through Oct. 11, 2017
Worksheet 3 Bylaws of the Streamlined Sales Tax Governing Board, as amended through May 24, 2012
Worksheet 4 Streamlined Sales and Use Tax Agreement – Certificate of Exemption
Worksheet 5 Sample Template of Streamlined Sales Tax Taxability Matrix (Version: 2017)
Worksheet 6 S.976 - Marketplace Fairness Act of 2017
Worksheet 7 H.R. 2775 - Remote Transactions Parity Act of 2017
Worksheet 8 Discussion Draft of Online Sales Simplification Act of 2016