National Tax Association Communications And
Electronic Commerce Tax Project

Organizing Documents  (OD-13) REPORT OF THE SUBCOMMITTEE ON OTHER SIMPLIFICATIONS

Final Report
of the
NTA Communications and Electronic Commerce Tax Project
"Other Administrative Issues" Task Force
April 3, 1998

 

The issues assigned to the task force by the Steering Committee were:

  1. Uniform Vendor Discount
  2. Uniform bad debt deduction
  3. Uniform direct pay permit rules and registration requirements
  4. Uniform refund claim forms and procedures
  5. Uniform exemption provision and certificate
  6. Uniform presumptions of correctness of information
  7. Uniform procedures for assessments and appeals
  8. Uniform audit procedures and sampling methods
  9. Uniform de minimis threshold

The Task Force held two meetings by telephone and exchanged numerous e-mail communications. During the course of our work it was decided that it was premature to address many of the issues assigned to the group because the outcome of the other Task Forces was critical to the starting point of the issues we were assigned.

Many of the members were primarily concerned with the vendor discount, particularly as it related to third party financial intermediaries. We discovered late in the process that the Sourcing Task Force was dealing with the question of whether there would be a requirement placed on third party financial intermediaries to provide information to vendors/customers or tax agencies. It was agreed that those members who were interested in this issue should participate with that Task Force to the extent possible.

A decision tree was developed by the Task Force to deal with the possibilities of how to deal with the issue of "a Third Party Intermediary and Anonymous Transactions". This decision tree will be available at the Salt Lake City meeting and provided to the Sourcing Task Force. This document should prove useful to the process depending on the outcome of the Sourcing Task Force.

It was agreed by the members that the other issues on the assigned list of issues were important and that we did not have the right mix of members on the Task Force to address them at this time and that the work of the other Task Forces needed to be accomplished first.

At the next meeting of the Steering Committee in Salt Lake City, we request that the Task Force by reconstituted with members who are knowledgeable and interested in the procedural issues assigned to the Task Force. It is also a possibility that we could merge this Task Force with one of more of the other Task Forces depending on the progress and work load of those groups.

An expanded list of issues with the questions that need to be answered is attached to this report. This list should provide the basis for the continuing work of the Task Force.

Members of the Task Force are:

Val Oveson
Fred Ferguson
Kaye Caldwell
Lisa Schoenthaler
William Luna
Dan Bucks
Harley Duncan
Art Rosen
Steve Reiley

EXPANDED LIST OF QUESTIONS TO CONSIDER IN RELATION TO THE
"OTHER ADMINISTRATIVE ISSUES"

  1. Uniform Vendor Discount
  1. Should a vendor discount be provided to businesses collecting for the governments?
  2. If a vendor discount is provided, how much should it be?
  3. Should there be a difference rate of discount for primary vendors? For secondary vendors or intermediaries?
  1. Uniform bad debt deduction
  1. Should a company by required to remit money that was not collected from the customer, after good faith efforts have been made to collect the tax?
  2. Could a bad debt allowance or deduction be used to relieve the burden from the vendor from trying to collect small amounts of tax from customers after the transactions has been complete? If so, what should the allowance be?
  1. Uniform direct pay permit rules and registration requirements
  1. Is there a need to expand the use of direct pay permits in the electronic commerce arena?
  2. What portion of electronic commerce will be business to business?
  3. What problems will be encountered by the use of direct pay permits?
  4. What approvals should be required before direct pay permits are granted?
  1. Uniform refund claim forms and procedures
  1. What are the common elements of the claim procedures and forms?
  2. Which common elements are needed?
  1. Uniform exemption provision and certificate
  1. Will the current uniform exemption certificate be adequate for electronic commerce?
  2. Where are we at with an electronic exemption certificate?
  3. Is there a need to a exempt organization clearing house?
  4. How would the exempt organization clearing house work?
  1. Uniform presumptions of correctness of information
  1. In an electronic data interchange environment, is it possible to base presumptions of correctness of information on the use of state certified software or other criteria?
  2. What would be the criteria other than state certified software?
  1. Uniform procedures for assessments and appeals
  1. Are we willing to buy the idea that states will subordinate their legal systems to a common multi state court system?
  2. Are there ways to reduce the differences among the states without the subordination of state courts?
  3. Would common appeal periods and procedures be considered adequate without a multi state court system?
  1. Uniform audit procedures and sampling methods
  1. Is a single audit a good idea? If so, who should conduct the audit? The base state? A multi state audit organization?
  2. Should a standard for sampling and other audit procedures be established on a multi state basis? If so, what should those standards and procedures be?
  1. Uniform de minimis threshold
  1. Should there be a de minimis threshold of business activity below which the business does is not required to collect taxes for a state regardless of the level of contacts?
  2. If so, what should that level of activity be?

 

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