Tax News

CCH (cch.taxgroup.com) reports:

  A Streamlined Sales Tax (SST) panel has agreed to issue an interpretation on whether the option for SST member states to use origin sourcing expires on January 1, 2010, or remains available after that date. The Compliance Review and Interpretations Committee (CRIC) accepted the request for an interpretation made by the states of Arizona, New Mexico, Ohio, Tennessee, Texas, Utah and Virginia. The Virginia Association of Counties also joined the request.

  The request grows out of a compromise approved by the SST Governing Board in December 2007. Originally, the SST Agreement required full member states to use destination sourcing. However, several states that used origin sourcing argued that making the transition to a destination system posed an insurmountable obstacle preventing them from becoming full members. This group included associate member states Ohio, Tennessee and Utah and nonmembers Texas and Virginia. After considerable resistance from some states and taxpayers, the board ultimately amended the Agreement to allow states to elect to use origin sourcing and still become full members under certain circumstances.

  Among the conditions was that the origin-sourcing option would be effective "on or after January 1, 2010, provided that at least five states which are not full member states on December 31, 2007" made the election to use origin sourcing and otherwise were in substantial compliance with the Agreement. Although Ohio, Tennessee and Utah may meet that standard now, there is no expectation that another two states will do so by January 1, 2010.

  The states requesting the interpretation have asked the CRIC to evaluate the 2007 amendments to the Agreement and decide whether the January 1, 2010 date is a "sunset" or a "trigger." If it is a "sunset," the option to elect to use origin sourcing would expire on January 1, 2010. If it is a "trigger," January 1, 2010, simply would be the earliest possible date that states making the election could become full member states. Under the "trigger" interpretation, states electing to use origin sourcing, which were otherwise in compliance, could become full members at whatever date in the future a fifth state successfully made that election.

  The states seeking the interpretation from the CRIC have asked that it rule the date is a "trigger," not a "sunset." The CRIC is expected to hold an expedited hearing on this issue in the near future, so that the matter can be evaluated by the full board at the upcoming annual meeting in Oklahoma City, September 29-30, 2009.

Meeting, Compliance Review and Interpretations Committee, July 30, 2009