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Sourcing Amendment

Sourcing Amendment. SST Governing Board December 11, 2007. New Section 310.1. Section 310.1 (A) Allows states with local jurisdiction taxes to elect to adopt alternative sourcing Applies to TPP and digital goods Does not affect ‘over-the-counter’ sales Section 310.1 (B)

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Sourcing Amendment

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  1. Sourcing Amendment SST Governing Board December 11, 2007

  2. New Section 310.1 • Section 310.1 (A) • Allows states with local jurisdiction taxes to elect to adopt alternative sourcing • Applies to TPP and digital goods • Does not affect ‘over-the-counter’ sales • Section 310.1 (B) • Limited exception to Section 310 sourcing. • All conditions must apply

  3. Section 310.1 (B) Conditions 1. Must be intra-state sale 2. Where products is received is pursuant to current provisions in Sec. 310 3. To apply origin sourcing, seller’s recordkeeping system must capture the location where the order is received

  4. Section 310.1 (C) • All states making this election must: 1. All interstate sales continue to be destination sourced 2. Only sales tax where order is received may be levied; no use tax due or refund available based on delivery location 3. State may not require recordkeeping system that determines where order is received

  5. Sec. 310.1 (C) [Cont.] 4. No additional purchaser liability to state if tax paid based on point of delivery or where order is received • Purchaser may rely on written representation of seller as to where order is received • If no written representation, purchaser may rely on business records

  6. Sec. 310.1 (C) [Cont.] 5. Location where order is received is physical location of seller operated by seller or seller’s employee • Is not where order may be subsequently accepted, completed or fulfilled • ‘Ship from’ location cannot be used 6. State shall have process for granting direct pay • DP may not be limited to manufacturers or where ultimate use is not known • State may establish reasonable threshold based on total purchases

  7. Sec. 310.1 (C) [Cont.] 7. If taxable services are sold with TPP or digital goods in single contract or transaction and billed on same statement, state must elect to either origin or destination source transaction to avoid sourcing parts of transaction to two different locations. 8. State shall inform GB of election to use Sec. 310.1 alternative sourcing.

  8. Sec. 310.1 (D) 1. If state is in substantial compliance with other provisions and makes election under 310.1, it shall become an Associate Member • Must follow process in Article VIII 2. States making election will automatically become full members when three states have made this election and been accepted as associate members, but in no event prior to Jan. 1, 2009 3. Subsequent to three-state trigger, any state making election is eligible for full membership

  9. New Sec. 604 - Compensation • States making election, when becoming full member, shall provide reasonable compensation for incremental expenses incurred in establishing or maintaining a uniform origin sourcing system

  10. Sec. 705 - Assoc. Members • Extends Associate Membership from December 31, 2007 to July 1, 2009

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