Independent public policy watchdog updates progress of streamlined sales tax proposal
The streamlined sales tax project continues to make progress toward achieving equity between Utah retailers and out-of-state remote sellers.
Currently, remote sellers like Internet and mail order catalogue retailers are not required to collect taxes on sales if the business has no physical presence in the customer's state.
The Utah Taxpayers Association has been monitoring the progress of the project since the proposal's inception.
At the present time, 34 states are participating in the project, including Utah.
The goal focuses on simplifying the collection process in order to enable remote retailers to remit sales taxes for states participating in the project, pointed out the independent public policy watchdog organization.
The streamlined sales tax project has several components:
Uniform definitions - States will determine which items are taxable and exempt, but will be required to use common definitions.
Simplified rate structure - State and local tax bases must be identical.
In other words, items that are taxable at the state level will also be taxable at the local level, explained the association.
Under the guidelines of the project, tax rates cannot vary from product to product or service to service.
Uniform rules for point of taxation - Rates and tax jurisdiction in the proposal will be destination/delivery based.
Simplified exemption administration- The guidelines relieve the sellers of meeting the "good faith" requirements specified in existing laws, noted the taxpayers association.
In addition, the retailers will not be liable for uncollected taxes related to purchasers claiming incorrect exemptions.
Uniform audit procedures - Sellers participating in one of the certified streamlined sales tax system technology models will not be audited or will be subject to limited scope evaluations.
States may conduct joint audits of large multi-jurisdictional corporations.
Reduction of financial burden on sellers - States will assume responsibility for funding some of the technology models.
To comply with the streamlined sales tax proposal, Utah would have to make relatively few changes, indicated the independent association.
Currently, the Utah tax is based on point-of-sale, pointed out the association. However, the project requires that sales taxes be based on point-of-delivery. If the change were implemented, cities with large furniture and appliance warehouses that deliver products to customers outside the municipalities' boundaries would face declining sales tax revenues.
Requiring remote retailers to collect sales taxes like Main Street brick-and-mortar competitors is an issue of equity, concluded the association.