Tax News

CCH (cch.taxgroup.com) reports:

  The Issue Resolution Committee of the Streamlined Sales Tax (SST) Governing Board heard oral arguments on two pending matters during the committee's inaugural meeting, which was held by conference call on December 14. The matters relate to Nevada's compliance with the SST Agreement and the proper characterization of software license upgrades. Other petitions relating to the compliance of North Dakota, Rhode Island and Vermont were withdrawn by the Business Advisory Council (BAC) after those states resolved the matters in dispute. (TAXDAY, 2009/12/04, S.1)

  The committee is chaired by R. Bruce Johnson, Utah State Tax Commission. The other members are Tom Gillaspie, Nebraska Department of Revenue; Erica Mani, West Virginia Department of Revenue; and Robert Thompson, Oklahoma Tax Commission. Any person may petition the board to invoke the issue resolution process if certain enumerated matters are at issue, including matters related to a member state's compliance with the Agreement and interpretation issues. Petitions are heard by the Issue Resolution Committee, which makes recommendations to the board. After considering the recommendations, the board then makes a final determination.

  The BAC filed a petition arising from the board's failure to find Nevada out of compliance with the Agreement during the 2008 recertification process. (TAXDAY, 2009/09/01, S.1) On behalf of the BAC, Fred Nicely, Council On State Taxation, argued that Nevada's inability to process ACH credit payments, as required by §319(c) of the Agreement, puts the state out of compliance. While the state can process ACH debit payments, Nicely argued that is insufficient, adding that taxpayers prefer ACH credit transactions because they are more secure and easier to correct in the event of error than ACH debit payments. On behalf of Nevada, Dino DiCianno, Nevada Department of Taxation, admitted that the state does not have the ability currently to accept ACH credit payments. He said the Legislature failed to act on his request for funding to complete the necessary interface in 2009 and that now it is unlikely he can obtain the funding prior to 2011, when the Legislature next meets in regular session.

  Mark Nebergall, Software Finance and Tax Executives Council (SoFTEC), filed a petition seeking to have the board reconsider its adoption of an opinion holding that the purchase of software license upgrades should be treated the same as the original purchase of a software license (which may be considered the purchase of "tangible personal property" or "computer software"). (TAXDAY, 2009/05/19, S.1) Nebergall argued that this opinion was not a proper interpretation of any provision of the Agreement and that the board should, instead, hold that software license upgrades are intangible personal property. The opposing side was presented by Myles Vosberg, North Dakota Office of State Tax Commissioner, who chairs the Compliance Review and Interpretations Committee (CRIC). The CRIC issued the original opinion (TAXDAY, 2009/01/16, S.1) that later was adopted by the board over Nebergall's objection.

  Under the guidelines laid out by Johnson at the beginning of the call, the Issue Resolution Committee will issue its recommendations within 60 days. The Governing Board then will have 60 days after that to meet and act on those recommendations.

Conference call, Streamlined Sales Tax Issue Resolution Committee, December 14, 2009