Streamlined Sales Tax ProjectStreamlined Sales Tax Project (SSTP) Streamlined Sales Tax Project (SSTP) Overview Society for Information Management (SIM) April 13, 2005

Streamlined Sales Tax Project Agenda SSTP Overview Wisconsin Legislation Federal Legislation Technology Pending Issues

Streamlined Sales Tax Project Who’s Involved 45 States & DC impose sales tax 42 States & DC involved in SSTP 21 States enacted conforming legislation Business community

Streamlined Sales Tax Project What it does - - Rules State level administration of local sales and use taxes Common state and local tax bases within a state after December 31, 2005 Uniform sourcing rules: destination based

Streamlined Sales Tax Project What it does - - Rules Menu of uniform definitions -- legislatures decide what is taxable or exempt Simplified exemption processing Rate simplification with databases No caps and thresholds after December 31, 2005

Streamlined Sales Tax Project What it does - - Rules Limited scope audits and certification standards Joint audits for large, multi-state businesses Hold harmless provisions if use data bases Uniform return

Streamlined Sales Tax Project What it does - - Rules Sales tax holidays (guidelines and limited defined products) One rounding rule Common customer refund procedures State funding of technology

Streamlined Sales Tax Project Wisconsin Legislation -- Governor’s Budget Bill Adopt uniform definitions Adopt sourcing rules Adopt exemption administration provisions (e.g., relieve seller from burden of proof)

Streamlined Sales Tax Project Wisconsin Legislation -- Governor’s Budget Bill Adopt hold harmless provisions for sellers and providers who uses the state’s taxability matrix and rate/jurisdiction database Effective October 1, 2005 (interstate agreement on January 1, 2006)

Streamlined Sales Tax Project Federal Legislation H.R introduced S introduced Authorization to require collection if adopt provisions of Streamlined Sales and Use Tax Agreement Small business exception Reasonable seller compensation

Streamlined Sales Tax Project Technology Implementation Central registration system Database matching rate to zip codes Taxability matrix

Streamlined Sales Tax Project Technology Implementation Model 1 - Certified Service Provider (CSP) Model 2 - Certified Automated System (CAS) Model 3 - Certification of In-house (Proprietary) System Continue with system “as is”

Streamlined Sales Tax Project States contract with CSPs States test and certify CSP’s systems States compensate CSPs Retailer selects CSP to perform all sales tax functions CSP determines tax due, pays the tax to the states, and files the return with the states Model 1 - Certified Service Provider (CSP)

Streamlined Sales Tax Project CSP is liable for tax due with two exceptions: –errors by the states –fraud by the retailer CSP is subject to audit and periodic system checks Retailer subject to audit on purchases (use tax) Model 1 - Certified Service Provider (CSP)

Streamlined Sales Tax Project Retailer selects CAS from those available Retailer establishes an interface with CAS CAS performs calculation of tax due States compensate retailer for use of CAS Model 2 - Certified Automated Systems (CAS)

Streamlined Sales Tax Project Person/company who obtained certification of CAS from states is liable for failure of CAS Person/company who obtained certification of CAS is not liable for errors by states Retailer is liable for paying tax due and accuracy of returns Model 2 - Certified Automated Systems (CAS)

Streamlined Sales Tax Project CAS subject to periodic system checks Retailer subject to audit on tax remittance and return filing Retailer subject to audit on purchases (use tax) Model 2 - Certified Automated Systems (CAS)

Streamlined Sales Tax Project Certification of CSPs and CASs by Governing Board Contract between Governing Board of states and CSPs Certification of CASs for determining state and local sales and use tax rates, determining whether an item is taxable or exempt, any other requirement set by Governing Board

Streamlined Sales Tax Project Compensation Model 1 - Monetary allowance to CSP per contract Model 2 - All retailers will receive a base rate for a period not to exceed 24 months following commencement of participation by a retailer

Streamlined Sales Tax Project Compensation Retailers using Model 1 (CSPs) will not get vendor discounts otherwise provided in state law Retailers using Model 2 (CAS) will get vendor discounts otherwise provided in state law

Streamlined Sales Tax Project Time Line - Model 1 Certified Service Providers (CSPs) Proposals due on Initial approvals Certification process completed Tentative awards Negotiations completed Final contracts

Streamlined Sales Tax Project Time Line - Model 2 Certified Automated Systems (CASs) Some CSPs will provide CASs Other CASs will be certified after CSPs certified

Streamlined Sales Tax Project Pending Issues Certificates of compliance Governing Board on July 1, 2005 Interstate agreement on October 1, 2005 Voluntary collections begin October 1, 2005

Streamlined Sales Tax Project Pending Issues Telecommunication definitions Bundling rules Exemption processes Digital equivalent definitions

Streamlined Sales Tax Project Contacts