Transcript The Streamlined Sales Tax Project

The Streamlined Sales Tax Project
Overview and Impacts
Presentation by
Bettye Griggs, Principal Auditor
City of Birmingham Finance Dept
Agenda for Today’s Discussion
• The changing retail business environment
– Traditional “brick and mortar” sellers
– “Remote” sellers (i.e., Internet, catalog, etc.)
– The “Quill” Standard
• The importance of sales and use tax revenue
• The Streamlined Sales Tax Project
• The role of future governmental accountants
and auditors
The Changing Business Environment
• “Brick and Mortar” sales transaction vs
“Remote” sales transaction
• The “Quill” Standard
• Declining Tax Revenues –
– Challenging Economic Times
– Budget Deficits
– Tax Increases
Importance of Sales Tax Revenue
• In Alabama, sales tax revenue
is the primary source of funding
for education.
• In the City of Birmingham, sales and use
tax revenue accounts for nearly half of the
total general fund revenue.
• Significant decreases in sales and use tax
revenue can result in the loss of basic
services.
Streamlined Sales Tax Project
• What is the Streamlined Sales & Use Tax
Project (SSTP)?
• How did it begin? Who is involved?
• What are some key features of the system?
• What is the Streamlined Sales Tax
Implementing States Group (SSTIS) and
how does it differ from the SSTP?
What is the Streamlined Project?
• The Streamlined Sales and Use Tax Project (SSTP)
is an initiative by state governments to “simplify
and modernize sales and use tax administration for
all types of sellers and all types of commerce.”
• The Project’s effect will not be limited to mail
order, internet, or e-commerce businesses.
Traditional “brick and mortar” businesses will also
be affected by the work of the Project.
What Are the Project’s Goals?
• Reduced complexity of tax structure,
especially for multi-state vendors
• Reduced compliance burden for vendors
• Increased voluntary compliance
• Reduced administration problems
• Movement toward level playing field
• Voluntary compliance from “remote”
vendors
What are some key features of the
Streamlined System?
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Uniform Definitions
Simplified Exemption Administration
Rate Simplification
Base Simplification
Uniform Sourcing Rules
Uniform Audit Procedures
Voluntary Participation
How Did the Project Begin?
• The Project was organized in March, 2000.
In December, 2000, the Project approved
the “Uniform Sales and Use Tax
Administration Act” and the “Streamlined
Sales and Use Tax Agreement (the
Agreement)”, which were subsequently
amended in January, 2001 and again in
2002.
Who is Involved?
• Specific groups involved include:
– State Governments
– Business and Industry (Manufacturers,
Retailers, Telecoms)
– Public
– Trade Associations
– NGA, NCSL, NaCo, COST and others
– Since early 2001, Local Governments
Alabama’s Involvement
• Alabama became a “participating” state through an
executive order of the governor.
• Alabama officially represented by the “Revenue
Commissioner or his or her designee”, pursuant to
Streamlined Project organizational policies.
• Recognizing the potential impact of the SSTP upon
local governments, representatives from Alabama
local jurisdictions began attending meetings in early
2001.
Alabama’s “Simplification”
Legislation - Act 2002-418
• Alabama’s simplification legislation passed during
regular session of 2002 legislature.
• Act 2002-418 gave Alabama “Implementing” state
status.
• Act established a five-member delegation to attend
Project and Implementing States Meetings with a
view toward making a recommendation as to whether
Alabama should adopt the Streamlined Act and
Agreement.
Alabama’s “Simplification”
Legislation – Act 2002-418
• Alabama’s Streamlined Delegation includes
one representative appointed by the
following:
– Alabama Department of Revenue
– Alabama League of Municipalities
– Association of County Commissions of
Alabama
– Alabama Retail Association
– Alabama Society of Certified Public
Accountants
Areas of Concern for Local
Jurisdictions
• State Administration of “ALL” Local Sales
and Use Taxes
• State-Level Audits
• One Tax Base
• One Tax Rate Per Local Jurisdiction
• Enforcement, Compliance, and
Accountability
Cooperative Efforts of Local Tax
Officials
• Five (5) states currently allow local
jurisdictions the authority to selfadminister local sales and use taxes-Alabama, Alaska, Arizona, Colorado,
and Louisiana.
• Tax officials in these five states (known
as the “Alliance of Local Sales Tax
Collectors”) are committed to
protecting the interests of local selfadministered jurisdictions in their
respective states.
Efforts of “The Alliance”
• Working within the framework of the SSTP
and the SSTIS to draw the attention of the
Project to local concerns.
• Hosting the “Local Government Issues
Study Group” sessions
• Working together to obtain an amendment
to Section 301 (formerly Section 302) of the
SSTP Agreement
Section 301 of the Agreement
• 301 – STATE LEVEL ADMINISTRATION
“Each member state shall provide state level
administration of sales and use taxes. The state
level administration may be performed by a
member state’s Tax Commission, Department of
Revenue, or any other single entity designated by
state law. Sellers are only required to register with,
file returns with, and remit funds to the state level
authority. Each member state shall provide for
collection of any local taxes and distribution of
them to the appropriate taxing jurisdictions. . .”
Section 301 of the Agreement (cont’d)
• “Each member state shall conduct, or
authorize others to conduct on its behalf, all
audits of the sellers registered under this
Agreement for that state’s tax and the tax of
its local jurisdictions, and local jurisdictions
shall not conduct independent sales and use
tax audits of sellers registered under this
Agreement.”
Features of “New” Section 301
• Provides for a viable alternative to true
“state administration”.
• Allows “centralized” administration that
does not exclude local government
participation.
• Allows for a “technology” solution.
• Provides opportunity for cooperative effort
between states and local jurisdictions with
respect to audits.
Features of “New” Section 301
• Provides some degree of flexibility but is
still consistent with the purposes and goals
of the SSTP.
• Allows taxpayers to have a single point of
registration, reporting and remittance.
• Provides a single source of tax information.
Features of “New” Section 301
• Demonstrates that “Substantial
compliance” can be achieved without
removing the authority of self-administered
local governments to collect their own sales
and use taxes.
• Assures that a state taxing authority is not
precluded from performing all functions of
sales and use tax administration if that is
either its desire or current practice.
Features of “New” Section 301
• Provides a mechanism through which concerns of
local jurisdictions relating to the potential for loss of
revenue under state administration can be
addressed.
• Demonstrates that a quasi-centralized administrative
system can be successfully implemented while
allowing local jurisdictions to continue their current
enforcement activities.
• Forces state and locals to work together.
Why Should You Care?
• The Streamlined System will affect you.
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Purchaser
Seller or Business Owner
Governmental Accountant or Auditor
Administrator
Consultant
Advisor/Expert/Policy Maker
Why Should You Care?
• The Streamlined System will affect you.
• Some of you will become governmental
auditors or accountants.
• The “real world” work
experience is challenging
and diverse (very
different from classroom).
Have You Prepared Well?
• Analytical Skills
– Problem Solving
– Keeping Abreast of New Trends
• Communication Skills
– Oral Communication
– Written Communication
– Presentation Skills
• Interpersonal Skills
– Do you work and play well with others?
– Are you responsible, diligent, creative?
Consider a Career in Government
• Examples of positions available in a local
governmental setting:
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Accountant (Entry, Senior, Principal, Chief)
Auditor (Entry, Senior, Principal)
Payroll Manager
Budget Director
Cash Management and Investments Manager
Tax and License Administrator
Director of Finance
My Job Responsibilities
• Manager, Special Projects Team, Revenue
Division of the City of Birmingham Finance
Department
• Delegate to Streamlined Project and
Implementing States Group
• Member Mayor’s Economic Development
Incentives Team
• Tax Abatement Analyst
• Special Revenue Projects Coordinator
Questions???
Thank you for your attention
and participation!
Bettye Griggs, Principal Auditor
City of Birmingham
Finance Department
710 North 20th Street
Room TL-100
Birmingham, AL 35203
[email protected]
(205) 254-2833 Phone
(205) 254-2963 Fax