Sales Tax Fairness And Simplification Act

1. Sales Tax Fairness And Simplification Act Past, Present, and Future By: Adam Nashban e-fairness Coalition Wednesday, November 5th, 2008

2. Outline • History-The Quill Decision • Federal Legislation • The States and State Legislation • Streamline Governing Board • e-fairness Coalition • How Can You Help?

3. What Started the Internet Retail Sales Tax Debate?

4. The Quill Decision Background • 1992 Decision of Quill Corp vs. North Dakota. • Quill Corporation sold $1 Million worth of office supplies into North Dakota, but had no physical presence in the state. • Quill Corp did have a computer software that allowed customers to check on supplies. • North Dakota saw this as operating business inside the state and tried to collect a use tax. • North Dakota Supreme court in favor of the State. U.S. Supreme Court Overruled.

5. Consequences of Quill vs. North Dakota States can not collect on Sales and Use Taxes without an instate retailer or supplier.

6. Which came first the chicken or the egg?

7. Federal Legislation Details • 10 States comprising at least 20 percent of the total population of all States imposing a sales tax, as determined by the 2000 Federal census, have petitioned for membership and have become Member States under the Agreement.

8. Federal LegislationContinued • Purpose of the federal legislation is provide legal permission for states to collect on Sales and Use tax remotely. • Includes both catalogue and internet sales. • Not a new tax or a tax on the internet but a tax on remote sales and use taxes.

9. Small Business Exemption • Originally it included any retailer having gross remote taxable sales under $5 million a year. • Current exemption: A uniform rule to establish a small seller exception to a requirement to collect authorized by this Act.

10. Streamline Sales Tax Governing Board • Mission: To assist states as they administer a simpler and more uniform sales and use tax system. • Fundamental Purpose: It is the purpose of this Agreement to simplify and modernize sales and use tax administration in the member states in order to substantially reduce the burden of tax compliance. The Agreement focuses on improving sales and use tax administration systems for all sellers and for all types of commerce.

11. How The Governing Board Helps Businesses Comply: • Businesses can use the Board as a resource to make sure the business is complying with the new laws. • The Governing Board will put businesses in touch with software companies to help track remote taxable sales. • Businesses are not responsible for adhering to all localities sales tax laws, that is what the software is for.

12. Streamlined Sales Tax States

13. Six types of States • Full Member States • Associate Member States-Flex to Full • Advisory States-Not Conforming • Non Sales Tax States • Project States-Not Advisory • Non-participating States

14. Which States are Participating?

16. A full member state is a state that is in compliance with the Streamlined Sales and Use Tax Agreement through its laws, rules, regulations, and policies. 19 States Currently: Arkansas, Iowa, Indiana, Kansas, Kentucky, Michigan, Minnesota, North Dakota, North Carolina, Nebraska, Nevada, New Jersey, Oklahoma, Rhode Island, South Dakota, Vermont, Washington, West Virginia, Wyoming. Member States Full Member

17. An associate member state is either (a) a state that is in compliance with the Streamlined Sales and Use Tax Agreement except that its laws, rules regulations and policies to bring the state into compliance are not in effect but are scheduled to take effect on or before July 1, 2009, or (b) a State that has achieved substantial compliance with the terms of the Streamlined Sales and Use Tax Agreement taken as a whole, but not necessarily each provision, and there is an expectation that the state will achieve compliance by July 1, 2009. 3 States: Ohio Tennessee Utah Member StatesAssociate Member State

18. Other States

19. Advisory States Nonconforming • Alabama, Arizona, California, Connecticut, Washington, DC, Florida, Georgia, Illinois, Louisiana, Massachusetts, Maryland, Maine, Michigan, Missouri, New Mexico, New York, South Carolina, Texas, Virginia, Wisconsin

20. Non Sales Tax States Alaska, Delaware, New Hampshire, Montana, Oregon

21. Project StatesNot Advisory Idaho, Pennsylvania

22. Non-participating Colorado

24. How Does The e-fairness Coalition Fit Into This?

25. e-fairness Coalition • Broad coalition of corporations, small businesses, and associations in support of the federal legislation. • Purpose: To organize and use the weight of these organizations to convince Members of Congress and Senators to pass the federal legislation.

26. How does the e-fairness Coalition use its influence?

27. e-fairness Coalition Actions • Press: Press conferences, press releases, op-eds, and letters to the editor. • Advertisements: Place ads in a few capitol hill directed newspapers to show support for legislation.

28. e-fairness Coalition Actions Continued • Grasstops Outreach: Have in state members of the coalition and other businesses reach out to their members of congress asking for support. • Fly-ins: Ask organizations and businesses to have their members come to DC to meet with their Member of Congress.

29. What Is Missing Without The Federal Legislation?

30. Effects On Businesses and State Governments • Estimated loss of $21.5 Billion to $33.6 Billion in collected Sales and Use Taxes in 2008 • Unlevel playing field between similar businesses. • Discrimination tax on main street.

31. How The Federal Legislation Will Make a Difference?

32. Businesses Small and Large • Level the playing field so all businesses collect sales tax on similar items sold.

33. State and Local Government • Lost sales tax revenue will be collected. • Benefiting local infrastructure, Education, Police, Fire and First Responders. • In turn lowering sales, property and state income taxes.

34. What Can small Businesses Do To Help?

35. How You Can Make a Difference • Send letters to your member of congress and Senator. • Send letters to the editor to your local newspaper. • Contribute money to the e-fairness Coalition to help our efforts.