Project Status

Ms. Hardt and Mr. Collins, Project Co-chairs, called the meeting to order. All participants and guests were introduced.

Mr. Collins moved that the Minutes of the June meeting be approved as submitted. Mr. Bill Reisenberger seconded the motion and the minutes were approved.

Mr. Collins distributed copies of the motion on direct pay permits and stressed the importance of direct pay permits for the business community and the states to simplify the administration of the tax for the vendor. Mr. Collins reported that most of the states provide for direct pay permits already.

Mr. Steve Olivier, Chevron-Texaco, spoke in support of the motion as a tool that has helped business and has benefited the states by providing a streamlined audit process. Mr. Bruce Christensen, South Dakota reported that direct pay permits are currently available in South Dakota. Mr. Collins made a motion to accept the project's recommendation on direct pay permits. Mr. Harry Fox seconded the motion and the motion carried.

Ms. Hardt distributed copies of the motion regarding Customer Refund Procedures. Ms. Hardt indicated that the business community supported the motion and that simplification would encourage businesses to voluntarily participate.

Mr. Wayne Zakrzewski, J.C. Penney Corporation, Inc., spoke in favor of the motion and indicated that the motion limited the incentive for customers to bring class action suits against the retailers where there are only small benefits to the customers and large benefits to legal counsel.

Mr. Rich Prem, Amazon.com, agreed that the motion provided benefits to the business community. Overtaxing is an expensive option and settlements are often much more than the tax is dispute.

Ms. Debra Bierbaum, AT&T, advised the members that the proposed procedures allowed the customer to come to the business before they do anything else. She also reported that about one half of the states have similar language for the wireless industry that will reduce the burden on collection on that industry.

Ms. Hardt made a motion to accept the projects recommendation on Customer Refund procedure. Mr. Scott Peterson seconded the motion and the motion carried.

Ms. Hardt called upon the leaders of the various work groups to give progress reports. She also advised the leaders that individual teleconferences would be scheduled with each of them to discuss timelines for completion of their work. Ms. Harrell reported that the Bundling group had discussed at this meeting the bundling of "free" gifts with tangible personal property. A white paper is being prepared to discuss the different elements of bundled transactions.

Mr. Riesenberger reported that the sourcing and leasing group had discussed three topics:

Mr. Kimmett reported that the telecommunications group was working off the TTRI study. A questionnaire is being drafted and will be circulated to identify what states are taxing in this area and what definitions they need. Definitions of "Internet", and "Internet services" will be discussed at the next meeting. Mr. Kimmett also indicated that they would be bringing in the cable industry to the discussion at the next meeting.

Ms Fletcher reported that the digital property group had spent time revisiting the definition of tangible personal property, services and whether a third "bucket" for digital property was needed. The true object test was also discussed as well as the possible overlapping of what groups is doing. She also reported that the group was still in the idea phase.

Mr. Collins reported on the progress of the local government study group. He reported that the project members had received a proposed amendment to paragraph 302 regarding state administration of taxes. A compromise has been reached to allow for an additional clarifying statement to be added at the end of the paragraph that allows for a single entity to perform the administrative duties. Mr. Robert (Sonny) Brasfield, Association of County Commisions of Alabama and Ms. Bettye Griggs, Birmingham, Alabama spoke in favor or the suggested changes.

Mr. Wayne Zakrzewski reported on the cost of collection study. He reported that they are still trying to raise the funding and that they had over one half of the money pledged.

Mr. Castelda asked for an update on the pilot program. Mr. Collins reported that the pilot is still operating with several vendors who are collecting under certified service providers for four states. The pilot is scheduled to be over the end of September but vendors want to continue until such time as a permanent procedure is in place.

Ms. Hardt reported that the next meeting would be in September. The time and place will be announced at a later time.

Ms. Hardt and Mr. Collins, Project Co-chairs, called the meeting to order at 10:00 a.m. All participants and guests were introduced.

Mr. Peterson moved that the minutes of the May Project meeting be amended to correct one typographical error by changing a reference to "Ms. Zakrzewski" to "Mr. Zakrzewski" and be approved as amended. Mr. Collins seconded the motion, and the minutes as amended were approved.

Ms. Hardt reported that white papers had been prepared and distributed entitled "State and Local Tax Collection Liability Customer Refund Remedy Procedures" and "Taxes Affected by SSTP Act and Agreement". The project will take up the customer refund remedy paper at its July meeting. Mr. Peterson moved that the white paper on "Taxes Affected by SSTP Act and Agreement" be forwarded to the implementing states for their consideration. Mr. Fox seconded the motion and the motion passed.

Ms. Hardt reported that the Food Marketing Institute (FMI) had proposed further changes to the definition of "prepared food" that was adopted earlier by the implementing states. FMI proposed removing the phrase "food heated by the seller", defining the term "plates" to exclude packaging materials, removing the term "napkins", including the term "salad bar", replacing the term "sliced" with "cut", and requiring (rather than allowing) states to exclude from the definition "Prepared Food" 1) bakery items, 2) food requiring cooking as recommended by the FDA 3) food sold in an unheated state by weight or volume, and 4) food sold by sellers with a NAICS classification of 311 sector .

Elizabeth Tansing representing FMI, Larry Gilstore of Meiers, Brandon Scholz of the Wisconsin Grocers Association and Nancy Christenson of the Minnesota Grocers Association provided public comment. Issues raised included "simple fairness and equity " between the grocer and the manufacturer as well as the grocer and the restaurant.

Mr. Collins moved that the project recommend to the implementing states that the definition of "Prepared Food" be amended to include a definition of plates and the term "sliced" be amended to "cut". Mr. Collins also asked Mr. Warren Townsend of Wal-mart Stores whether his stores could "deal" with the definition as approved by the implementing states. Mr. Townsend reported yes.

Ms. Engh of Minnesota spoke in favor of the motion. She indicated that Minnesota has already adopted the language and that further mandating Minnesota to exclude food sold in an unheated state by weight or volume from the definition of prepared food would cost $10 million annually.

Ms. Hardt called upon the leaders of the various work groups to give progress reports. Mr. Reisenberger reported that the Sourcing Group had worked with the floral industry to discuss the sourcing of wire transactions. A draft paper has been prepared regarding direct mail printers. They have also been discussing the sourcing of leased rail cars. Mr. Reisenberger also reported that Ms. Chumley has compiled the result of the lease survey. Copies have been distributed. All comments should be forward to Ms. Chumley. The results will be discussed at the July project meeting.

Mr. Kimmett reported that the initial meeting of the Telcom group has been held. They will be working on additional definitions including "internet" and "internet access". They will also seek input from the cable industry and welcome all interested parties to join the work group.

Ms. Harrell reported that the bundling group had drafted a basic plan for handling the bundling of taxable tangible products with exempt tangible products. They will move forward to address the bundling of tangible products with services and bundling of taxable services with exempt services. A teleconference will be held the last week of June.

Mr. Johnson reported on the preamble and the definition matrix. Copies of the proposed preamble will be distributed at the June implementing states meeting. He and Mr. Mastin have worked with the subgroups to determine different options available for the matrix. Drafts of the matrix will be available later today.

Ms. Fletcher reported that TPP workgroup would now be known as the Digital Property Workgroup. They have discussed nine major areas of activities that can occur. Efforts are underway to define these areas. The workgroup will suggest a minor change to the term " delivered electronically" at the July meeting to recognize delivery through a download or a load and leave method.

Mr. Zakrzewski reported the cost of collection study will cost $875,000 and will be conducted by PricewaterhouseCoopers. Approximately one half of the money has been raised from business and government. The Council on State Taxation (COST) has agreed to collect and distribute these funds. The contracting body has not been established. MTC may be considered.

Ms. Griggs reported that the Local Government Study Group had been formed and met. Their concerns include state administration of local taxes, audits, one tax base, one rate per jurisdiction, and enforcement and accountability issues.

Mr. Peterson of the Nominating Committee reported that there were two slots vacant on the Project's Steering Committee. Nancy Taylor and Johnnie Burton have left their positions in state government. Mr. Peterson moved that Charlotte Quarles of Kentucky and Tom Kimmett of Pennsylvania be appointed to the Steering Committee to fill those vacancies. Mr. Collins seconded the motion and the motion was approved.

Ms. Hardt asked for public comment. Mr. Damien Littlejohn, auditor for the City of Birmingham, Alabama reminded the members that in lean economic times that states often squeeze local governments and that there was a direct relationship between the amount of money received by the local governments and the amount of services provided.

Mr. King Wolf of eFile Solutions, Inc. advised that 5 states have locally collected taxes and that forcing local governments to adopt 1 rate will be very difficult for some local governments to adopt due to the fiscal impact. He urged both sides to work together.

Ms. Hardt announced that July Project and Implementing States meetings will be held July 10-11 in Salt Lake City. The format will be similar to the June meetings.

This will allow those states that currently exempt marinated meats, stuffed pork chops and other raw meats that are prepared by the seller under the current definition but would require cooking by the consumer the ability to continue to exempt those items. Mr. Fox moved that the project accept the amendments to the proposed solution and forward the white paper as amended to the implementing states for their consideration. Ms. Burton seconded the motion. The motion carried with Minnesota voting nay.

Ms. Fletcher provided a progress report on the tangible personal property and digital property definitions. She reported that much discussion and debate has taken place as to whether canned software should be included in the definition of tangible personal property. The work group will be exploring whether it may be more efficient to define canned software. New York will be providing suggested language. A teleconference will be scheduled before the holidays. Ms. Hardt requested that the work group complete their work by the January meeting.

Mr. Peterson reported on the lease and rental definitions. The work group hopes to finalize the definition of lease and forward the definition to the states along with a survey to determine its affect on each state. The work group is also working on the definition of sale/leasebacks that will allow the states to toggle on or off that provision. Mr. Vancovering and others are working have compiled a list of issues related to the lease/rental of motor vehicles. Additional work is needed in this area. The working group has also drafted definitions for "sale" and "use". These definitions will be coming out soon and will be distributed with a survey to all the states. Mr. Peterson reported that the work might be completed in January.

Mr. Reisenberger reported that the working group has met with members of the printing and direct mail industries regarding the current sourcing rules and to determine whether the MPU document could work for mass mailing and direct mailings. The industry is putting together examples and will forward to the group for discussion. Mr. Reisenberger also indicated that no additional work had been done on drop shipments or donations other that the surveys.

Mr. Noble provided an update on tax rates, holidays, caps and thresholds. He intends to have the white paper ready in January. Mr. Noble also reported on the status of uniform returns. He indicated that there was a debate as to whether the return was providing enough simplification and modernization. Additional work is to be done on this issue. A teleconference will be held before the January meeting.

Mr. Bucks reported on the status of the cost of collection study. A request for proposals has been sent out and 5 proposals have been received. A subcommittee of 3 private sector and 3 public sector members has been appointed to rank the proposals. The steering committee will make a selection on January 11, 2002. He reported that the spirit of cooperation between the private and public sectors is high.

Mr. Rook reported on the status of medical equipment and drugs. The white paper on drugs will be updated and posted on the list serve soon. Mr. Rook feels that the white paper will be ready to be forwarded to the implementing states in January. Additional work is needed on the medical equipment white paper. It is requested that each state study the current draft and have the fiscal impact ready by the January meeting. Each state should bring a representative that is knowledgeable in this area.

Ms. Hardt reported that a subcommittee has been formed to discuss the need for protection for businesses in possible class action suits. The subcommittee will meet prior to and at the January meeting.

Ms. Hardt asked if any member of the public wished to offer comment before the Project. Mr. Jim Stanley, Assistant City Attorney for Birmingham, Alabama, shared his thoughts and concerns on state administration of local taxes. He reported that 5 states allow local jurisdictions to collect their own taxes. In those jurisdictions, local sales tax account for up to 40% of the local general fund receipts. He is concerned that state administration will cost the local jurisdictions significant revenues. He indicated that he would like to see a provision that would allow the local jurisdiction to audit on the states' behalf. He is in favor of e-commerce retailers collecting the tax and leveling the playing field as well as tax simplification.

Ms. Harrell gave an update on the bundling issues. She indicated that due to the bundling provision contained in the current definition of sales price, the definition of bundling would be reworked. She also reported that 25 states had responded to the survey and requested that all remaining states do so. The work group is looking for specific examples of how states are handling bundled transactions including: tangible with services, tangible with tangible, and services with services. She reported that the group will recommend that the bundling recommendations be sent out in the form of a rule to promote consistency. A teleconference will be held on December 20.

Ms. Hardt advised the leaders of the work groups to finish their work on rounding, drugs, multiple rates, caps and thesholds. The agenda for the January meeting will include medical equipment, tangible personal property, bundling, sourcing, class action lawsuits and exemption administrations as it relates to audits.

Ms. Hardt announced that the January meeting is scheduled for January 23-24 at the Marriott - Canal Street, New Orleans. She also indicated that the implementing states meeting would most likely follow on the 25th at the same location.

There being no further business before the Project, the meeting was adjourned.

Ms. Hardt and Mr. Collins, Project Co-chairs, called the meeting to order at 1:00 p.m.

Mr. Johnson moved that the minutes of the August 2001 Project meeting be approved. Mr. Peterson seconded the motion, and the minutes were approved as presented without amendment.

Ms. Hardt noted that several work groups were ready to discuss draft proposals with the states. Ms. Hardt first called upon Ms. Fletcher to discuss the proposal for a definition of tangible personal property (TPP). Ms. Fletcher noted that the work group had formulated a revised version of the definition previously presented to the states for discussion. The new proposal retains the proposed definition of TPP except that it has been modified to indicate that digital property is considered TPP when such property is stored on a tangible storage media (i.e., tapes and disks). Ms. Fletcher stated that several additional definitions relative to the definition of TPP are under consideration to address custom software issues (i.e., what is classified as a product and what is a service). Finally, Ms. Fletcher asked each state to give consideration to the proposed draft definition and stated that a follow-up teleconference would be scheduled to receive suggestions and feedback from all states. A template for feedback will be sent to the states.

Mr. Fox reviewed the work of the Audit work group. The work group met with Ms. Wicks to discuss exemption administration and what information will be needed for audit. Further coordination must be done. The Audit work group has updated its issue paper to reflect all discussions to date.

Mr. Riesenberger reviewed the issue paper on bad debts. The paper has been updated to reflect that a business does not have to wait until it files a federal return to claim a bad debt. A business can claim a bad debt by following standards of deductibility under the federal Internal Revenue Code.

Mr. Riesenberger also reviewed the Sourcing Work Group's discussion with the printing industry. The industry has identified five scenarios it wants addressed. Mr. Riesenberger indicated he expected these scenarios to be addressed comparably to a Multiple Points of Use certificate.

Mr. Riesenberger also indicated the Sourcing Work Group has more work to do on drop shipments and leasing of movable property. The group will continue to develop its issue paper.

Mr. Peterson reported on the Lease and Rental sub-group work. The sub-group has finalized definitions of lease/rental and sales. The sub-group developed a list of activities remaining including motor vehicles (Mr. Van Coevering will lead) and sales/leaseback (Ms. Kim will lead).

Ms. Harrell reported on the activities of the Bundling sub-group. The discussion was more about principles and concepts; there is much work that remains.

Mr. Zakrzewski advised that the membership of the steering committee for the Cost of Collection Study is finalized. The Request for Proposal has been issued and there were eight participants in the bidders' conference on October 22, 2001. The bids are due on November 13, 2001, with an expected award date in January 2002. The preliminary report is due 150 days from the award.

Ms. Hardt discussed future meeting places with the next meeting scheduled for December 3 - 4, 2001 in Denver.

Ms. Hardt asked if any member of the public wished to offer comment before the Project. No comment was offered.

Hardt announced that the Work Groups, after discussions with and at the request of the public, had decided to wait until Phase II of the Project to finalize a definition of tangible personal property. This definition will be removed from the Phase I Streamlined Sales and Use Tax Agreement (Agreement).

Paragraph 304 State and Local Tax Bases will also be modified to allow existing variations in the state and local tax bases until January 1, 2006. At that time, all participating states would be required to have the same state and local tax base.

Item 3 of Paragraph 308 State and Local Tax Levies will be modified to allow for existing state rates on products until January 1, 2006. At that time, all participating states will be required to have one state rate per state.

Hardt stated the Work Groups will continue to have discussions on several remaining issues and comments from the public. The outcome of these discussions will be reflected in the revised Agreement and Uniform Sales and Use Tax Administration Act (Act) to be published on the website next week. Public comment will be accepted on the Agreement and the Act until December 12, 2000. A teleconference vote by participating states on these two documents is tentatively planned for the week of December 18.

Streamlined Sales Tax Project Meeting, September 15, 2000, Nashville, Tennessee

Co-Chair Charles Collins called the meeting to order and welcomed all attendees at 9:30a.m. First-time attendees introduced themselves.

NCSL staff reported that the state of Alabama joined the Project through an executive order. The Project now officially comprises 27 participating members and 12 observer states. It was also reported that the California legislature passed the model NCSL legislation authorizing the state to participate in the Project. The legislation is awaiting Governor's action.

The Rate Group discussed the time notice required from local governments and state before making a rate or an exemption change effective. They recommend 60 days notice and changes effective on the first day of a calendar quarter for local governments and the same rule expressed as legislative intent for the state. The electronic remittance coupon would be extended by a couple of lines to include gross receipts and exemption amounts. The group recommends offering both ACH credit and debit options. There are still some concerns about using FIPS data and zip plus four to identify situs but it was agreed that this would suffice at the start of the system. It has to be clear that a central registration system could be used but had to offer the option to relate only to sales and use tax and not necessarily tie the registrant to any other taxes. Options to address special districts delineation are still being explored, as is the design of a uniform reporting form for vendors not using the technology solutions.

The Sourcing Group reported that the sourcing rule was drastically simplified. The transaction will be sourced in the following order, defaulting to the next step if the previous one is not applicable:

The Group dropped the "known use" concept. Regarding bad debts: recovery of bad debts already refunded or credited will be done on a pro-rata basis, tax being calculated on the amount recovered and not on the original amount.

The Tax Base Group explained its basic approach to definitions: "..the group is taking a broad approach to drafting definitions of core terms and exemptions for two reasons. First, it is critical that vendors be able to tell from looking at an invoice what is taxable and what isn't without considering 46 different states' and local jurisdictions' definitions. Second, it is necessary to identify exemptions as exemptions rather than exclusions within definitions to establish an exempt product classification code that will be incorporated in the Streamlined Sales Tax System's certified software." The group made progress working on a definition of food and is still considering how to handle "bundled" sales.

The Technology Group worked mostly on Model 3 (proprietary system). They are leaning towards no certification requirement but rather towards a contractual arrangement between states and vendors, spelling out audit rules (statistical sampling), compliance tests, assessments, graduated system of penalties etc. They discussed "paying for the system" and so far have arrived at two principles: the burden will be uniform for the states, and the compensation will come from the revenue generated by the system.

The co-Chair announced a public hearing in Chicago on September 29 to comment on various issues. The Project needs to determine exactly what issues will be up for public comments on Sept.29. Jack Kopald, Tennessee, made the following motion:

Motion seconded by Johnnie Burton, Wyoming.
Motion passed by voice vote. No dissent heard.

There will be a second public hearing in Chicago on October 26th. Definitions finalized by the Base Group and agreed to by the Project will be up for comments at that time, along with whatever other recommendations may be appropriate.

During the public comment period of the Project meeting, the following members of the audience commented:

The Streamlined Sales Tax Project held its sixth meeting in Chicago, Illinois on July 13-14, 2000. Approximately 60 persons representing about 30 states attended the sessions. In addition, about 20 private sector persons attended various parts of the meeting open to the public.

As of this date, there are 23 "participant states" that have indicated their intent through legislative or executive action. There are also 13 "observer states" engaged in the Project discussions. States participating in their first meeting in July were West Virginia, Pennsylvania, Alabama and Mississippi.

The meetings consisted of a series of individual Work Group meetings on July 13 to continue work on the issues before each group. A portion of each group involved private sector participants to review and offer comments on the work of each group to date. A Project Meeting was held on July 14 to receive public input on the project as a whole as well as to hear progress reports and plans from each of the Work Groups. Governor Leavitt of Utah spoke to the Project to encourage them to think boldly and to radically redesign the sales tax administration system.

The Tax Base and Exemption Work Group has developed a "white paper" on a redesigned exemption administration process. The process under consideration will have two essential features for dealing with exempt purchasers and exemptions by use: (1) A buyer will claim the exemption by completion of a standard set of information (on paper or electronically) indicating the identity of the purchaser and the reason for exemption; (2) A seller will not be held liable or responsible for verifying the validity of the claimed exemption or the "good faith" of the purchaser. The obligation will be on the state to police any potential exemption abuse through the information provided when the exemption is claimed. The Work Group expects to have the white paper available for public release prior to the August meeting.

The Tax Base Work Group is also working on a set of uniform definitions for key aspects of the sales tax. The first focus is on key terms in any sales tax, e.g., sale, gross receipts, delivery, tangible personal property, etc. The second phase of the work will be to develop uniform definitions for commonly exempted items, starting with food and clothing.

The Tax Rates, Returns, Registration and Remittances Work Group is continuing to refine its preliminary recommendations. Key aspects currently under consideration by the Group are reviewed below. Preliminary recommendations may be released before the August meeting.

The Sourcing and Other Simplification Work Group is working on three principle products: (1) a uniform rounding rule; (2) a uniform bad debt deduction rule; and (3) a uniform sourcing rule. The Group is working with a rule calling for "arithmetic" rounding , i.e., over 0.5 rounds to the next digit. It also has a uniform bad debt allowance in draft form. The Group is also near a final proposal for sourcing tangible property to the state of destination. A proposal for sourcing services and digital products will require further work. Certain principles and alternative approaches were reviewed with private sector representatives. Comments were received, and the private sector will also attempt to develop language to implement a simple approach to destination sourcing for such services and products. The Work Group expects to have further products available prior to the August meeting.

The Technology Work Group reviewed the various "model specifications" with private sector representatives. It is continuing its work on standards for certifying service providers (CSPs) and an appropriate privacy standard.

The next Project sessions are scheduled for August 16-18, 2000 in San Antonio, Texas. The session will begin Wednesday afternoon with individual Work Group sessions. Current plans call for a "combined" Work Group meeting (open to the public) on Thursday morning and individual Work Groups that afternoon. A portion of each Group meeting will be open to the public. The Project Meeting will be held on Friday, August 18 in the morning.

Tentative plans call for scheduling a 1-day review session with Tax Commissioners and Governor's staff on September 6, 2000, likely in Chicago. This would be followed by a public comment session on the first-stage recommendations on September 28, also in Chicago.

56 representatives of 30 states involved in the Streamlined Sales Tax Project gathered in Chicago, Illinois, on May 25-26, 2000, to continue discussions toward the formation and implementation of a simplified and modernized sales tax system. The Project is an effort created by state governments that has as its primary goal simplification of the current sales tax system that will allow for efficient collection of the sales tax in the existing and new economies.

At the Chicago meeting, Project members heard from representatives of the retail industry and state legislators who implored the Project to forge ahead in its efforts to streamline the sales tax system. A representative of the National Retail Federation expressed the NRF’s support of the Project’s effort and also offered the NRF’s expertise to the Project as it begins to formulate model legislation for implementation of the new system. State Sen. Steven Rauschenberger (R-IL) strongly urged the Project to move swiftly and purposely to avoid the consequences of federal intervention in state tax systems. The Project also heard testimony from representatives of the Committee on State Taxation and the American Automobile Leasing Association, who expressed their views with the Project's mission.

A panel discussion was also held at the meeting. Wayne Eggert (Lucent Technologies), David Bullington (Wal-Mart), and Chip McClure (Sears) provided Project members with their insights regarding the critical elements of a new simplified sales tax system. These comments focused primarily on simplification of tax rates and definitions—issues already being addressed by the Project Work Groups. Messrs. Eggert, Bullington, and McClure also met separately with the Tax Base and Tax Rate Work Groups to assist in working through several critical issues.

The Project also approved the formation and implementation of a pilot project. The purpose of the pilot is to test the capabilities of existing tax collection software under current law. The pilot will commence in October 2000 and will run for several months. Kansas, Michigan, North Carolina, and Wisconsin have confirmed their participation in the pilot. Other states may choose to join at a later date. A formal Request for Proposal will be written by North Carolina and issued by mid-June to software companies interested in testing tax collection software in the pilot. The Request for Proposal will be posted on the Project website.

Also, the Project will proceed with developing a database of individuals and companies that would like to volunteer their expertise to the Project. Both the Steering Committee and the Work Groups have found the expertise offered at previous meetings by technology companies and retailers to be a valuable asset in their efforts to address technical issues. The database information will be used to contact individuals who may be able to assist Work Groups at future meetings on specific issues or topics. An application form for individuals who wish to volunteer their time is available on the Project website.

The next meeting of the Project will be held on June 29-30, 2000 in Chicago, Illinois.

Sixty-two representatives from approximately 30 states gathered in St. Louis on April 26-27 for the 4th meeting of the Streamlined Sales Tax Project. The Project is a cooperative effort of states and localities to respond to repeated calls for simplification of the sales tax and concerns about the impact of applying the current system to the burgeoning electronic commerce world.

Begun in September 1999, the Project goal is to develop a radically simplified sales and use tax system that eases the burden of sales and use tax compliance for all types of retailers, particularly those operating on a multistate basis. The Project also intends to facilitate the application of new and existing technologies to the tax compliance process. Immediate efforts are focused on developing a series of strategic simplifications that can be presented to state legislatures in 2001 and the development of one or more pilot projects to test various technology applications and their impact on tax compliance.

At the St. Louis meeting, project participants met with representatives of a range of private sector companies and interests involved in developing technology applications to facilitate sales and use tax compliance. Discussions centered on the ability of the technologies to deal with the complexities of the current system and the types of legal and structural simplifications that would have the greatest impact on easing the burden of sales tax administration as well as assisting to achieve easier and greater sales tax compliance. The Project also heard public testimony from several associations representing various types of business enterprises on the need for greater uniformity in state sales taxes as well as issues in applying technology to tax administration.

The four Project Work Groups also continued their discussion of various simplification issues and proposals. The Work Groups include:

Key issues being addressed in the work groups include simplified exemption administration and processing, uniform tax base definitions, using technology to accommodate local option use taxes, insuring the privacy of consumers and the security of tax-related information, sourcing interstate transactions, uniform bad debt procedures and simplified returns and remittances.

The next meeting of the Streamlined Sales Tax System Project is scheduled for May 25-26 (Th./Fri.) in Chicago, Illinois. A public comment period will be provided at this and each Project Meeting during which interested parties may comment on the Project’s design initiatives and accompanying issues with the Project States.

Streamlined Sales Tax System for the 21^st Century Project Conference Call Meeting Minutes, Friday, December 22, 2000

Co-Chairs Charles Collins and Diane Hardt called the meeting to order and welcomed all attendees at 10:00 a.m. Roll call of participating states, observing states and the public was taken.

Upon a motion by Charles Collins and a second by Scott Peterson, minutes of the September 15 and November 28, 2000 Project Meetings were unanimously approved.

Collins indicated that Project members had reviewed all the suggestions made at the National Conference of State Legislatures’ public testimony held on December 12, 2000. The suggestions and recommendations were incorporated into the Act and the Agreement wherever possible.

There will be no Project Meeting in January 2001. The Steering Committee will meet in early January to set meeting times and locations for the February, March and April Project Meetings.

It was noted that the latest version of the Streamlined Sales and Use Tax Agreement contains a change to Page 13, Paragraph 2. The opening sentence for Paragraph 2 now reads "The following definitions are categories that can be excluded from the definition of the term ‘food and food ingredients’ and are mutually exclusive of each other."

Charles Collins (North Carolina) made the following motion on the Uniform Sales and Use Tax Administration Act and Streamlined Sales and Use Tax Agreement. The motion was seconded by Jack Kopald (Tennessee).

A role call vote was taken by Diane Hardt. Participating states voting in favor of the motion were:

Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, Wyoming.

There were no dissenting votes. Mississippi and Illinois did not participate in the role call vote.

Tom McMahon thanked everyone for the hard work on the Project. He indicated he thought new language had been added to Page 14 of the Agreement that specified a special treatment for food sold through a vending machine. Because of this language, he opposed the Agreement as written and requested the language referring to vending machines be removed.

Deborah Bierbaum expressed concern that the wireless industry was being treated differently than other industries. She indicated she opposed the wireless industry being held to a different standard.

With no further public comment or business to be addressed, the meeting was adjourned.