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ADVISORY COMMISSION ON ELECTRONIC COMMERCE
Invitation for Proposals Related to Electronic Commerce Taxes and Notice of Meeting
The purpose of this announcement is to invite interested parties to submit proposals to the Commission related to state and local taxation of Internet transactions and electronic commerce. Details pertaining to the next meeting of the Commission are also included.
The Advisory Commission on Electronic Commerce was established by Public Law 105-277 to conduct a thorough study of federal, state, local and international taxation and tariff treatment of transactions using the Internet and Internet access and other comparable intrastate, interstate or international sales activities. The Commission is to report its findings and recommendations to the Congress no later than April 21, 2000.
The Commission met in June in Williamsburg, Virginia, and in September in New York City. Notice is hereby given that the Commission will meet December 14-15, 1999, in San Francisco, California. The location and hours of the meeting and the agenda will be published when available on the Commission’s Web site listed below. The final Commission meeting is scheduled for March 20-21, 2000, in Dallas, Texas.
Criteria/Standards for the Tax Treatment of Electronic Commerce and other Remote Transactions
The Advisory Commission on Electronic Commerce was tasked with the responsibility of studying the tax treatment of electronic commerce transactions. The Commission held its second meeting in New York City on September 14-15, 1999. During this meeting, the Commission moved to establish a set of benchmarks concerning the taxation of electronic commerce, and to solicit proposals from the public that would seek to simplify state and local sales and use taxes, among other benchmarks. While a number of criteria were initially proposed during this New York meeting, the meeting concluded with the understanding that those criteria could be amended or supplemented and that additional criteria would be added immediately thereafter.
During the weeks following the conclusion of the meeting in New York, Commissioners proposed numerous changes, and the list of criteria was refined and expanded. Where possible, the Commission combined similar criteria and omitted duplicate suggestions to narrow the list.
This document reflects the priorities of the Commissioners with regard to the criteria that should be incorporated in the proposals to be selected and presented before the Commission at its December meeting in San Francisco. The decision of the Commission to use a specific list of criteria to evaluate plans to simplify state and local sales and use taxes should not be interpreted as a decision to adopt a plan to implement taxation of Internet-based transactions. While these criteria should not be considered a litmus test, each criterion will be important to certain Commissioners as they evaluate each proposal that is submitted.
The Report Drafting Subcommittee will evaluate all proposals and make recommendations to the full Commission on those proposals that should be accompanied by a formal presentation at the December 14 & 15, 1999 meeting in San Francisco.
What follows is the final list of criteria expressed in the form of questions. This form was used to encourage submitters not only to state their proposals, but also, briefly, to state how their proposals satisfy the underlying criteria. This list reflects the criteria as originally presented in New York, and encompasses all the revisions and additions that were subsequently added by individual Commissioners. All 18 criteria should be addressed in proposals submitted to the Commission for consideration. Any estimates or opinions must be substantiated. Should the Commission ultimately decide to recommend a streamlined system for the collection of sales and use taxes, such a system will be evaluated in the context of the following criteria.
Criteria for Evaluation of Alternative Proposals
- How does this proposal fundamentally simplify the existing system of sales tax collection (Some examples may be: common definitions, single rate per state, clarification of nexus standards, and so forth)?
- How does this proposal define, distinguish, and propose to tax information, digital goods, and services provided electronically over the Internet?
- How does this proposal protect against onerous and/or multiple audits?
- Does this proposal impose any taxes on Internet access or new taxes on Internet sales?
- Does this proposal leave the net tax burden on consumers unchanged? (Does it impose an obligation to pay taxes where such an obligation does not exist today? Does it reduce or increase state and local telecommunication taxes? Does it reduce or increase taxes, licensing fees, or other charges on services designed or used for access to or use of the Internet?)
- Does the proposal impose any tax, licensing or reporting requirement, collection obligation or other obligation or fee on parties other than those with a physical presence in a particular state or political subdivision?
- What features of the proposal will impact the revenue base of federal, state, and local governments?
Burden on Sellers
- Does this proposal remove the financial, logistical, and administrative compliance burdens of sales and use tax collections from sellers? Does the proposal include any special provisions with respect to small, medium-sized, or start-up businesses?
- Does the proposal treat purchasers of like products or services in as like a manner as possible through the implementation of a policy or system that does not discriminate on the basis of how people buy?
- 10.Does the proposal discriminate against out-of-state or remote vendors or among different categories of such vendors?
- How does this proposal affect U.S. global competitiveness and the ability of U.S. businesses to compete in a global marketplace?
- Can this proposal be scaled to the international level?
- How does this proposal conform to international tax systems, including those that are based on source rather than destination? Is this proposal harmonized with the tax systems of America’s trading partners?
- Is the proposal technologically feasible utilizing widely available software to enable tax collection? If so, what are the initial costs and the costs for required updates, and who is to bear those costs?
- Does the proposal protect the privacy of purchasers?
Sovereignty/Local Government Autonomy
- Does this proposal respect the sovereignty of states and Native Americans?
- How does this proposal treat local governments’ autonomy and their ability to raise a greater or lesser amount of revenues depending on the needs and desires of their citizens?
- Is the proposal constitutional?
Proposals must be no longer than eight single-spaced pages in length and must be submitted in 30 copies to the Commission’s offices listed below. In addition, electronic copies of submissions must be sent on a 3.5 inch computer disc or CD-ROM in Microsoft Word, Excel or Power Point format, addressed to the Commission’s staff offices at the location listed below. The deadline for receipt of all materials is November 15, 1999. Anyone submitting a proposal should be prepared to formally present the proposal at the Commission’s meeting in San Francisco upon the Commission’s request.
In addition to the above, interested persons are reminded of the general invitation to provide comments in writing to the Commission. Written comments should be provided in accordance with guidelines published in the Federal Register on August 13, 1999 (64 FR 44183).
Comments of a brief nature may be addressed to the Commission through its Web site at www.ecommercecommission.org.
Records shall be kept of all Commission proceedings and shall be available for public inspection given adequate notice at the Commission’s offices at 3401 North Fairfax Dr., Arlington, Virginia 22201-4498. In addition, records of meetings including agendas, transcripts and minutes are posted as soon as available on the Commission’s Web site.
A listing of the members of the Commission and details concerning their appointment were published in the Federal Register on June 9, 1999, at 64 FR 30958.