The effort to develop a multi-state agreement on simplifying sales and use taxes has made significant progress over the last four months.
Twenty-five states are working together to develop a multi-state agreement and model state legislation. All of these states passed legislation over the last year authorizing their participation. The legislation also spelled out who would represent the state in negotiations. So far, Alabama is the only state specifying that a county and city official be part of the state delegation.
At a meeting in Salt Lake City, Utah Nov. 28–29, 2001, the states formally came together as the Streamlined Sales Tax Implementing States (SSTIS). At the inaugural meeting, the group debated and adopted operating rules and elected leaders. The Implementing States elected Rep. Matthew Kisher of Tennessee and Revenue Commissioner Bruce Johnson of Utah to serve as co-chairs.
The group set an ambitious schedule of reviewing, approving or modifying proposals developed by states sales tax officials under the Streamlined Sales Tax Project (SSTP). The sales tax project has been working for two years on uniform and simplified sales tax definitions.
The SSTIS set an ambitious timetable with a goal of drafting a final interstate agreement by the end of the summer. States could begin drafting conforming legislation in the fall of 2002 and have it considered in their next legislative session. To meet this timetable, the Implementing States plan to meet every four to six weeks.
The second Implementing States meeting took place in late January in New Orleans. To serve as a starting point for the final interstate agreement, the group adopted many of the definitions and terms previously developed by tax officials in the SSTP. The provisions included:
- state administration of state and local sales and use taxes
- limits on state and local rates and rate change
- seller registration
- uniform sourcing rules
- uniform exemption procedures
- uniform tax returns
- privacy protections
- amnesty for participating voluntary sellers, and
- outline of models for participation through technology.
The Implementing States met again in Dallas March 15–16 and adopted uniform definitions of food and several subcategories of food. The subcategories included prepared foods, candy and soft drinks. Whether food is taxed would still be determined by each state. The group also adopted rules on telecommunications sourcing.
The implementing states are scheduled to meet in Dearborn, Mich. April 12–13.
The group will consider the following issues:
- sales tax holidays
- sales tax caps and thresholds
- definitions for leasing
- definitions for tangible personal property, and
- definitions for medical equipment and drugs.
When the implementing states complete their draft interstate agreement, it has to be adopted by three-fifths of the participating states. Several more states are expected to pass legislation and join the SSIS in the next few months. It will be up to each state to draft necessary statutory changes to comply with the terms of the agreement.
County and city officials have been encouraged to participate in the sales tax simplification effort. NACo, the U.S. Conference of Mayors and the National League of Cities have had staff attending some of the SSTP and Implementing States’ meetings. County officials from Alabama, Louisiana and Colorado have been monitoring and attending meetings of the state groups.
