Print Friendly SENATE BILL NO. 1201 – Simplified sales & use tax admin
SENATE BILL NO. 1201
View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.
This sentence is marked with bold and underline to show added text.
This sentence is marked with strikethrough and italic, indicating
text to be removed.
S1201......................................................by STATE AFFAIRS
SALES AND USE TAX - Adds to existing law to authorize the Simplified Sales
and Use Tax Administration Act upon certain conditions.
03/15 Senate intro - 1st rdg - to printing
03/16 Rpt prt - to St Aff
03/24 Rpt out - rec d/p - to 2nd rdg
03/25 2nd rdg - to 3rd rdg
Rls susp - PASSED - 32-2-0, 1 vacancy
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
Stegner, Stennett, Werk, Williams
NAYS -- Schroeder, Sweet
Absent and excused -- (District 21 seat vacant)
Floor Sponsor - Bunderson
Title apvd - to House
03/28 House intro - 1st rdg - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE SENATE
SENATE BILL NO. 1201
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO SALES AND USE TAXES; AMENDING TITLE 63, IDAHO CODE, BY THE ADDI-
3 TION OF A NEW CHAPTER 46, TITLE 63, IDAHO CODE, TO PROVIDE A SHORT TITLE,
4 TO PROVIDE DEFINITIONS, TO PROVIDE A STATEMENT OF FINDINGS AND INTENT, TO
5 PROVIDE DUTIES OF THE STATE TAX COMMISSION, TO AUTHORIZE THE COMMISSION TO
6 ENTER THE STREAMLINED SALES TAX AGREEMENT, TO PROVIDE THAT THE AGREEMENT
7 DOES NOT PREEMPT STATE LAW, TO ESTABLISH THE MINIMUM TERMS AND CONDITIONS
8 FOR ENTERING THE AGREEMENT, TO PROVIDE THAT THE AGREEMENT IS AN ACCORD
9 AMONG COOPERATING SOVEREIGNS, TO PROVIDE FOR LIMITATIONS ON ACTIONS, TO
10 PROVIDE FOR CERTIFIED SERVICE PROVIDERS AND TO REQUIRE THE STATE TAX COM-
11 MISSION TO PREPARE PROPOSED LEGISLATION TO IMPLEMENT THE PROVISIONS OF THE
12 SIMPLIFIED SALES AND USE TAX AGREEMENT; PROVIDING AN EFFECTIVE DATE AND
13 PROVIDING A CONTINGENT EFFECTIVE DATE.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. That Title 63, Idaho Code, be, and the same is hereby amended
16 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
17 ter 46, Title 63, Idaho Code, and to read as follows:
18 CHAPTER 46
19 SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT
20 63-4601. SHORT TITLE. This chapter shall be known and cited as the
21 "Simplified Sales and Use Tax Administration Act."
22 63-4602. DEFINITIONS. The definitions in this section apply throughout
23 this chapter unless the context clearly requires otherwise.
24 (1) "Agreement" means the streamlined sales and use tax agreement as
26 (2) "Certified automated system" means software certified jointly by the
27 states that are signatories to the agreement to calculate the tax imposed by
28 each jurisdiction on a transaction, determine the amount of tax to remit to
29 the appropriate state, and maintain a record of the transaction.
30 (3) "Certified service provider" means an agent certified jointly by the
31 states that are signatories to the agreement to perform all of the seller's
32 sales tax functions.
33 (4) "Commission" means the Idaho state tax commission.
34 (5) "Person" means an individual, trust, estate, fiduciary, partnership,
35 limited liability company, limited liability partnership, corporation, or any
36 other legal entity.
37 (6) "Sales tax" means the tax levied by section 63-3619, Idaho Code.
38 (7) "Seller" means any person making sales, leases, or rentals of per-
39 sonal property or services.
40 (8) "State" means any state of the United States and the District of
1 (9) "Use tax" means the tax levied by section 63-3621, Idaho Code.
2 63-4603. STATEMENT OF FINDINGS AND INTENT. The legislature finds that a
3 simplified sales and use tax system will reduce and, over time, eliminate the
4 burden and cost for all vendors to collect this state's sales and use tax. The
5 legislature further finds that this state should participate in multistate
6 discussions to review or amend the terms of the agreement to simplify and mod-
7 ernize sales and use tax administration in order to substantially reduce the
8 burden of tax compliance for all sellers and for all types of commerce.
9 63-4604. DUTIES OF THE COMMISSION. (1) For the purposes of reviewing or
10 amending the agreement embodying the simplification requirements in section
11 63-4607, Idaho Code, the state shall enter into multistate discussions. For
12 purposes of these discussions, the commission shall represent the state. The
13 governor may appoint up to four (4) persons to consult with the commission at
14 these discussions. The persons advising the commission shall not be compen-
15 sated and are not entitled to payment of travel expenses by the state.
16 (2) The commission shall regularly consult with an advisory group com-
17 posed of two (2) members from the senate, appointed by the president pro tem-
18 pore of the senate and two (2) members of the house of representatives
19 appointed by the speaker of the house of representatives; representatives of
20 retailers, including those selling via mail, telephone and the internet; rep-
21 resentatives of large and small businesses; and representatives of counties
22 and cities. The commission shall use its best efforts to consult with the
23 advisory group before any multistate discussions in which it is anticipated
24 that amendments may be proposed to the agreement embodying the simplification
25 requirements in section 63-4607, Idaho Code.
26 63-4605. AUTHORIZATION FOR AGREEMENT. The commission shall enter into the
27 streamlined sales and use tax agreement and the streamlined sales tax project
28 with one (1) or more states to simplify and modernize sales and use tax admin-
29 istration in order to substantially reduce the burden of tax compliance for
30 all sellers and for all types of commerce. In furtherance of the agreement,
31 the state may act jointly with other states that are members of the agreement
32 to establish standards for certification of a certified service provider and
33 certified automated system and establish performance standards for multistate
34 sellers. The state is further authorized to take other actions reasonably
35 required to implement this chapter. Other actions authorized by this section
36 include, but are not limited to, the adoption of rules and the joint procure-
37 ment, with other member states, of goods and services in furtherance of the
38 cooperative agreement. The commission, or the commission's designee, may rep-
39 resent this state before the other states that are signatories to the agree-
41 63-4606. AGREEMENT NOT TO PREEMPT STATE LAW. No provision of the agree-
42 ment authorized by this chapter in whole or in part invalidates or amends any
43 provision of the law of this state. Adoption of the agreement by this state
44 does not amend or modify any law of this state. Implementation of any condi-
45 tion of the agreement in this state, whether adopted before, at, or after mem-
46 bership of this state in the agreement, must be by the action of the legisla-
47 ture or by administrative rules of the commission authorized by the legisla-
49 63-4607. TERMS AND CONDITIONS OF AGREEMENT. The commission shall not
50 enter into the streamlined sales and use tax agreement unless the agreement
1 requires each state to abide by the requirements in this section.
2 (1) The agreement must set restrictions to limit, over time, the number
3 of state rates.
4 (2) The agreement must establish uniform standards for:
5 (a) The sourcing of transactions to taxing jurisdictions;
6 (b) The administration of exempt sales; and
7 (c) Sales and use tax returns and remittances.
8 (3) The agreement must provide a central, electronic registration system
9 that allows a seller to register to collect and remit sales and use taxes for
10 all signatory states.
11 (4) The agreement must provide that registration with the central regis-
12 tration system and the collection of sales and use taxes in the signatory
13 states will not be used as a factor in determining whether the seller has
14 nexus with a state for any tax.
15 (5) The agreement must provide for reduction of the burdens of complying
16 with local sales and use taxes by:
17 (a) Restricting variances between the state and local tax bases;
18 (b) Requiring states to administer any sales and use taxes levied by
19 local jurisdictions within the state so that sellers collecting and remit-
20 ting these taxes will not have to register or file returns with, remit
21 funds to, or be subject to independent audits from local taxing jurisdic-
23 (c) Restricting the frequency of changes in the local sales and use tax
24 rates and setting effective dates for the application of local jurisdic-
25 tional boundary changes to local sales and use taxes; and
26 (d) Providing notice of changes in local sales and use tax rates and of
27 changes in the boundaries of local taxing jurisdictions.
28 (6) The agreement must outline any monetary allowances that are to be
29 provided by the states to sellers or certified service providers. The agree-
30 ment must allow for a joint public and private sector study of the compliance
31 cost on sellers and certified service providers to collect sales and use taxes
32 for state and local governments under various levels of complexity to be com-
33 pleted by July 1, 2008.
34 (7) The agreement must require each state to certify compliance with the
35 terms of the agreement before joining and to maintain compliance, under the
36 laws of the member state, with all provisions of the agreement while a member.
37 (8) The agreement must require each state to adopt a uniform policy for
38 certified service providers that protects the privacy of consumers and main-
39 tains the confidentiality of tax information.
40 (9) The agreement must provide for the appointment of an advisory council
41 of private sector representatives and an advisory council of nonmember state
42 representatives to consult with in the administration of the agreement.
43 63-4608. ACCORD AMONG COOPERATING SOVEREIGNS. The agreement authorized by
44 this chapter is an accord among individual cooperating sovereigns in further-
45 ance of their governmental functions. The agreement provides a mechanism among
46 the member states to establish and maintain a cooperative, simplified system
47 for the application and administration of sales and use taxes under the duly
48 adopted law of each member state.
49 63-4609. LIMITATIONS ON ACTIONS. (1) The agreement authorized by this
50 chapter binds and inures only to the benefit of this state and the other mem-
51 ber states. No person, other than a member state, is an intended beneficiary
52 of the agreement. Any benefit to a person other than a state is established
53 by the law of this state and the other member states and not by the terms of
1 the agreement.
2 (2) Consistent with subsection (1) of this section, no person has any
3 cause of action or defense under the agreement or by virtue of this state's
4 approval of the agreement. No person may challenge, in any action brought
5 under any provision of law, any action or inaction by any state, agency, other
6 instrumentality of this state, or any political subdivision of this state on
7 the ground that the action or inaction is inconsistent with the agreement.
8 (3) No law of this state, nor the application thereof, may be declared
9 invalid as to any person or circumstance on the ground that the provision or
10 application is inconsistent with the agreement.
11 63-4610. CERTIFIED SERVICE PROVIDER. (1) A certified service provider is
12 the agent of a seller, with whom the certified service provider has con-
13 tracted, for the collection and remittance of sales and use taxes. As the
14 seller's agent, the certified service provider is liable for sales and use tax
15 due each member state on all sales transactions it processes for the seller
16 except as set out in this section. A seller that contracts with a certified
17 service provider is not liable to the state for sales or use tax due on trans-
18 actions processed by the certified service provider unless the seller misrep-
19 resented the type of items it sells or committed fraud. In the absence of
20 probable cause to believe that the seller has committed fraud or made a mate-
21 rial misrepresentation, the seller is not subject to audit on the transactions
22 processed by the certified service provider. A seller is subject to audit for
23 transactions not processed by the certified service provider. The member
24 states acting jointly may perform a system check of the seller and review the
25 seller's procedures to determine if the certified service provider's system is
26 functioning properly and the extent to which the seller's transactions are
27 being processed by the certified service provider.
28 (2) A person that provides a certified automated system is responsible
29 for the proper functioning of that system and is liable to the state for
30 underpayments of tax attributable to errors in the functioning of the certi-
31 fied automated system. A seller that uses a certified automated system
32 remains responsible and is liable to the state for reporting and remitting
34 (3) A seller that has a proprietary system for determining the amount of
35 tax due on transactions and has signed an agreement establishing a performance
36 standard for that system is liable for the failure of the system to meet the
37 performance standard.
38 63-4611. NECESSARY REMEDIAL LEGISLATION. Upon becoming a member of the
39 streamlined sales and use tax agreement, the commission shall prepare legisla-
40 tion conforming state law as necessary and shall provide such legislation to
41 the governor and to the senate local government and taxation committee and the
42 house of representatives revenue and taxation committee.
43 SECTION 2. Sections 63-4501 through 63-4509, Idaho Code, shall be in full
44 force and effect on and after July 1, 2005; Sections 63-4510 and 63-4511,
45 Idaho Code, shall be in full force and effect when Idaho becomes a member of
46 the Streamlined Sales and Use Tax Agreement, but in no event prior to July 1,
STATEMENT OF PURPOSE
Idaho retailers are subject to unfair price competition from remote sellers (Internet
and catalog) who do not have a presence (nexus) in Idaho. Such remote sellers often
advertise the fact no state sales tax is charged on purchases made from them. The
rapid increase in Internet sales is exacerbating this problem. It is estimated within
the next few years, remote sellers not collecting sales tax on sales in Idaho, will
shift over $3 billion in sales out of Idaho and result in over $150 million in
uncollected state sales tax.
This problem also affects other sales taxing states and jurisdictions similarly (46
states and the District of Columbia assess sales tax). Most sales taxing states have
come together to simplify or streamline their sales tax structures so that the U.S.
Congress can pass legislation to require remote sellers to collect applicable sales
taxes for those states who are signatories to the agreement.
Idaho is one of five states that has not acted upon this important matter. To date,
the Idaho legislature has not authorized Idaho to participate in the development of
the Streamlined Sales Tax agreement and vote on the agreement terms. This legislation
allows Idaho to be a full voting participant in crafting and approving the Streamlined
Sales Tax Agreement. It does not allow Idaho to sign the agreement. Approval for Idaho
to sign the agreement will require separate legislation in a future legislative
This legislation deals with public policy issues and will not raise any tax revenue.
The fiscal impact consists of the cost of a Tax Commission representative(s)
attendance at meetings of the national committee.
Name: Pam Eaton, Idaho Retailers Association
Name: Senators Hal Bunderson, John Andreason
Phone: 332-1319, 332-1333
Name: Representatives Bill Deal, Maxine Bell
STATEMENT OF PURPOSE/FISCAL NOTE S 1201