I’m at the annual meeting of the National Conference of State Legislators (NCSL) this week, and online sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. issues were a big part of the agenda at today’s state taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. task force meeting. After the meeting, Scott Peterson of the Streamlined Sales Tax Board waved me over to show me my blog post on last week’s Senate hearing on his phone. In that post, I reported that after it was revealed that a sales tax provider had provided badly flawed information, Peterson (who was one of the witnesses) admitted that reliable sales tax lookup software did not yet exist but that a federal law requiring sales tax collection would create the market for it.
Peterson denies that he said this. I replied that I pulled it from my notes from the hearing, but he then walked away before I could discuss the issue further. I certainly don’t want to put anything inaccurate on our website, and luckily, the hearing was taped, so I rewatched it and below provide a transcript of the relevant portion. I must admit that there’s a sentence that creates a bit of ambiguity but I stand by what I wrote because no other meaning makes contextual sense.
At about 1:05 in the video, Senator Mark Begich (D-AK) asks about whether the bill’s proposed small business exemption threshold of $500,000 is the right amount and whether it should be adjusted over time, and if so, in what direction. Steve DelBianco answers first, arguing for a much higher threshold and stating that most sales tax money will be collected even with a threshold of $15 million. Begich analogizes that to an inventory tax reform in Alaska. At about 1:07, Peterson has his turn:
PETERSON: Thank you, Senator. The half million dollars that’s in the Marketplace Fairness Act was arrived at by looking at where it was cost-effective for states and retailers to file sales tax returns. But it was looking at the world that exists today. Six months after this bill passes, a year after this bill passes, sales tax administration software will be ubiquitous. It’ll be everywhere.
SENATOR BEGICH: Right.
PETERSON: The cost of collecting will go down radically. Now, the people I represent aren’t advocating a different rate. But the reason it doesn’t exist today is that there is no law that requires it to exist. Once that law happens, this will be everywhere and the cost of administration goes down radically.
(Bold added.)
In short, the way I understand it, Peterson says that sales tax lookup software will be “everywhere” after the bill passes and drive costs down, and after briefly referencing SSTP’s acquiescence in a small business exemption, says that “it” doesn’t exist today but “this” will soon be “everywhere” once the law passes and “requires it to exist” and will drive costs down. I read these two phrases to be talking about the same thing: “it” and “this” to mean the software. That makes sense contextually, as Peterson made the statement after it came to light that one of the sales tax lookup services was grossly in error.
I’m not sure what Peterson contends he meant, as he didn’t explain it to me in our encounter today. Perhaps he meant “it” to refer to the small business exemption level, although that means that the thing in paragraph 1 that he says will be everywhere and drive costs down is completely different from the thing in paragraph 2 that he says will be everywhere and drive costs down. But I’ve given you all the information: you can be the judge.
What’s clear is that Mr. Peterson does not stand by the statement I have attributed to him. I note only that he of course has an institutional reason for denying any assertion (even his own) that sales tax lookup software is not yet reliable, easy, accurate, inexpensive, and available, even after his side’s chosen witness on this point demonstrated that that is not the case.
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