GOOD AFTERNOON --
WALKING TODAY'S JOINT
INFORMATIONAL HEARING I JUST
WANNA MAKE SURE THIS IS THE
FIRST STEP IN WHAT WILL BE A
LONG PROCESS AND LIKE TO THINK
SENATOR MCGUIRE ON AND THE
MEMBERS OF BOTH COMMITTEES AND
THE PANELS FOR MAKING TODAY'S
JOINT.
INFORMATIONAL HEARING POSSIBLE.
THE SUPREME COURT'S RECENT
DECISION.
HAS CREATED AN OPPORTUNITY FOR
THE LEGISLATURE TO ADDRESS AN
ISSUE THAT HAS IMPACTED
MAINSTREET BUSINESS FOR YEARS.
SPECIFICALLY WAY FAR ALLOWS
CALLING FOR YOU TO MORE EASILY
COLLECT SALES TAX FROM ONLINE
RETAILERS.
THIS HEARING HOWEVER IS NOT
ABOUT A SPECIFIC PROPOSAL OR HOW
WE SHOULD MOVE FORWARD WITH
LEGISLATION THE GOAL TODAY'S
HEARING IS SLIP IT SIMPLY TO
EDUCATE OURSELVES.
ABOUT WELFARE DECISION --
WHAT EXISTING LAW IS IN THE NEW
IT AND WHAT IF ALREADY DO STATES
HAVE UNDER WAY FAIR AND HOW WILL
THE DEPARTMENT OF TAX AND FEE
ADMINISTRATION DEAL WITH THE
BROADER COLLECTION PRACTICES?
BUT WITH THAT I WILL TURN IT
OVER TO SENATOR MCGUIRE.
THANK YOU SO MUCH AYE MADAM
CHAIR -- ONE
SEAT THANK YOU ALL OF YOU FOR
TAKING TIME IN YOUR BUSY
SCHEDULE TO BE ABLE TO ATTEND
YOU KNOW SOMEONE APOLOGIZES I
DID THE CHAIR WOMAN. FOR BEING A
BIT TARDY TODAY AND I WANT TO
RECOGNIZE THAT YOUR WOMAN
CHAIRMAN BURKE --
FOR HER INITIATING THIS HEARING
YOU BRING US TOGETHER IN THE
JOINT FASHION WERE VERY VERY
GRATEFUL FOR THAT --
IN AS YOU HEARD FROM THE CHAIR
WOMAN THIS DECISION IS MOST
SIGNIFICANT TAX CASE DECIDED BY
THE UNITED STATES SUPREME COURT
IN MORE THAN THREE DECADES.
AND ITS ACCOMPLISH WHAT CONGRESS
HAD WE AT THAT REPEAL THE
ANTIQUATED PHYSICAL PRESENCE
REQUIREMENT TO COLLECT THE USE
TAX.
THIS DECISION ALSO CREATES MORE
OF ELEVEN LEVEL PRAYING BUT
PLAYING FIELD. EIGHTY WISE THE
PLAYING FIELD BETWEEN CALIFORNIA
SMALL BUSINESSES WHO MUST
COLLECTED TAX IN MANY AT A STATE
ONLINE JOB OR NOT.
SIMPLY DO NOT BUY THIS IS AN
IMPORTANT ISSUE BUT ALSO
COMPLICATED --
ONE WHICH WE HAVE MUCH TO LEARN
WHICH IS WHY WE ARE HERE TODAY
TO BE ABLE TO LEARN MORE.
AND DO BELIEVE THIS IS GOING TO
BE THE FIRST IN A FEW JOINT
HEARINGS AS WE MOVE FORWARD IN
AGAIN JUST WANT TO SAY THANK YOU
SO MUCH TO THE CHAIRMAN FOR
BRINGING US TOGETHER.
WITH THAT --
AND THIS WILL BE THE FIRST OF
HEARINGS AS WELL STAKEHOLDER
PROCESS SO. FOR EVERYONE'S
COMFORT AND EASE OF MIND I'M
WITH THAT LET'S START WITH SAID
CHRISTINE FROM THE LEGISLATIVE
ANALYST'S OFFICE.
THANK YOU FOR BEING HERE TODAY.
THANK YOU --
YES I'M SET KIRSTEN WITH THE
LEGISLATIVE ANALYST'S OFFICE AND
HAVE GET A HAND OUT TO ACCOMPANY
MY TESTIMONY AVAILABLE BOTH ON
PAPER AND ON OUR WEBSITE.
OF THIS PRESENTATION WILL BE A
HIGH LEVEL INTRODUCTION WITH THE
UNDERSTANDING THAT SUBSEQUENT
SPEAKERS WILL GO INTO GREATER
DEPTH IN THEIR AREAS OF
EXPERTISE.
SAW START ON PAGE ONE OF THE
HAND -- WITH
A VERY BRIEF OVERVIEW OF
CALIFORNIA SALES AND USE TAX.
THIS IS A TAX THAT MANY PEOPLE
KNOW SIMPLY AS SALES TAX BUT
IT'S ACTUALLY TAX WITH.
TWO COMPLEMENTARY PIECES THE
FIRST ON GOOD SOLD BY RETAILERS
IN CALIFORNIA.
AND THE SECOND PART IS A USE TAX
ON GOODS PURCHASED FROM OTHER
RETAILERS.
IN THE TWENTY SIXTEEN SEVENTEEN
FISCAL YEAR TAXPAYERS PAID A
TOTAL OF FIFTY THREE BILLION
DOLLARS IN SALES AND USE TAX AND
ALL OF THAT FIFTY THREE BILLION
TOTAL.
ABOUT TWENTY FIVE BILLION WENT
TO THE STATE'S GENERAL FUND --
WITH WHICH MAKES THE SALES AND
USE TAX THE SECOND BIGGEST
GENERAL FUND REVENUE SOURCE
AFTER THE PERSONAL INCOME TAX.
THE REMAINING SALES AND USE TAX
REVENUE GOES TO A VARIETY OF
FUNDS THAT SUPPORT LOCAL
GOVERNMENT PROGRAMS.
THE SALES AND USE TAX RATE
VARIES QUITE A BIT ACROSS CITIES
AND COUNTIES IN CALIFORNIA JUST
AS IT DOES IN MOST OTHER STATES.
DEPENDING ON THE JURISDICTION --
TAXABLE TRANSACTIONS ARE SUBJECT
TO ONE OF ABOUT TWO DOZEN
DISTINCT RATES.
THE LOWEST RATE IS SEVEN AND A
QUARTER PERCENT AND THE HIGHEST
RATE IS TEN AND A QUARTER
PERCENT WITH AN AVERAGE OF ABOUT
EIGHT AND A HALF PERCENT.
THE DEPARTMENT CURRENTLY
RESPONSIBLE FOR ADMINISTERING
THE SALES AND USE TAX IS THE
CALIFORNIA DEPARTMENT OF TAX AND
FEE ADMINISTRATION OR CD TFA.
CITY TFA IS A NEW DEPARTMENT
CREATED BY A LAW PASSED LAST
YEAR -- THIS
DEPARTMENT INHERITED MOST OF THE
TAX ADMINISTRATION
RESPONSIBILITIES FORMERLY
ASSIGNED TO THE STATE BOARD OF
EQUALIZATION.
SO NOW TURNING TO THE SECOND
PAGE OF THE HANDOUT.
ALL THE OF A LITTLE BIT DEEPER
INTO A POINT THAT I KIND OF
GLOSSED OVER RIGHT AT THE
BEGINNING --
WHEN CALIFORNIANS BUY GOODS FROM
STORES ARE OTHER RETAILERS
LOCATED HERE IN CALIFORNIA?
THOSE TRANSACTIONS ARE SUBJECT
TO SALES TAX BUT THERE ARE LOTS
OF INSTANCES IN WHICH PEOPLE
LIVING HERE IN CALIFORNIA.
MAKE VERY SIMILAR PURCHASES
STATE OR REMOTE SELLERS IN THOSE
TRANSACTIONS GENERALLY ARE
SUBJECT TO USE TAX SYSTEM
EXAMPLES OF USE TAX LIABILITY
INCLUDE FOR EXAMPLE.
OF WHAT THE MAIN FOCUS OF THIS
HEARING IS IT IS AS I UNDERSTAND
IT BUYING ITEMS ONLINE FROM
RETAILERS LOCATED OUTSIDE OF
CALIFORNIA.
THERE'S SOME OTHER EXAMPLES FOR
EXAMPLE --
WHEN CALIFORNIANS TRAVEL OUTSIDE
OF THE STATE BY TAXABLE GOODS
AND BRING THEM BACK IN THE
CALIFORNIA TO USE THAT ALSO IS --
IS AN EVENT THAT TRIGGERS USE
TAX LIABILITY AND THEN THERE'S A
THIRD EXAMPLE OF USE TAX THAT
DOESN'T COME TO MIND TOO OFTEN
BUT THAT'S NGUYEN INDIVIDUAL
SELL USED CARS TO ONE ANOTHER --
THERE'S NOT NECESSARILY
GEOGRAPHIC ISSUE THEY'RE BOTH
PARTIES COULD BE LOCATED RIGHT
HERE IN CALIFORNIA BUT PEOPLE
WHO SELL THINGS ONLY ON RARE
OCCASIONS OFTEN DON'T NEED TO
REGISTER AS SELLERS TO PAY SALES
TAX ON THE NOSE AND INSTANCES.
WHOEVER IS PURCHASING THAT USED
CAR WILL OF USE TAX.
SO GOING BACK TO THOSE FIRST TWO
EXAMPLES WHERE THERE'S A
PURCHASE FROM OUT OF STATE.
ARE THE DIFFICULTIES INVOLVED IN
GETTING CONSUMERS TO PAY THE TAX
THAT THEY OWE.
ON THEIR PURCHASES ARE PROBABLY
READILY APPARENT TO YOU SO A
COMMON STRATEGY THAT STATES USE
TO INCREASE USE TAX COMPLIANCE
IS TO FIND WAYS TO COLLECT THAT
TAX FROM THE BUSINESSES THAT ARE
SELLING THE TAXABLE GOODS RATHER
THAN.
FROM THE CONSUMERS THAT ARE
BUYING THEM.
SO THEN THE LEGAL QUESTION THAT
COMES UP THERE IS HOW CAN STATES
DO THAT WITHOUT BURDENING
INTERSTATE COMMERCE. TO A DEGREE
THAT VIOLATES THE IT'S
CONSTITUTION AND THAT'S BROADLY
SPEAKING WHAT THE WAY FOR
DECISION WAS ALL ABOUT.
BUT BEFORE WE GET INTO THAT
LET'S TAKE A QUICK LOOK BACK AT
WHAT WHAT HAPPENED PRIOR TO WAY
FAIR SO ON PAGE THREE OF THE
HANDOUT.
WE HIGHLIGHT TWO CENTRAL
CONCEPTS IN COMMERCE CLAUSE
JURISPRUDENCE WITH REGARD TO
STATE TAXES --
SUBSTANTIAL NEXUS AND PHYSICAL
PRESENCE SUBSTANTIAL NEXUS IS
ONE PART OF FOUR PART TEST USED.
TO DETERMINE OVER THE LAST
SEVERAL DECADES WHETHER A STATE
TAX UNDULY BURDENS INTERSTATE
COMMERCE AND FOR THIS AND FOR
THE TAX TO BE CONSTITUTIONAL.
THE TAXED ACTIVITY MUST HAVE.
A SO CALLED SUBSTANTIAL NEXUS
WITH THE TAXING STATE ALL
DEFERRED OTHERS SPEAKERS ON
THERE INVOLVING PRECISE LEGAL
MEANING OF THAT TERM --
THE SECOND KEY CONCEPTS. FOR
UNDERSTANDING WAY FAIR IS
PHYSICAL PRESENCE SO BACK IN
NINETEEN NINETY TWO IN THE
LANDMARK WILL DECISION FOR
EXAMPLE THE SUPREME COURT RULED.
THAT A STATE COULD NOT TAX
BUSINESSES THAT HAD NO PHYSICAL
PRESENCE WITHIN THAT STATE.
SO BACK IN TWENTY ELEVEN
OPERATING WITHIN THAT PHYSICAL
PRESENCE FRAMEWORK OF THE
CALIFORNIA LEGISLATURE PASSED A
LAW AB ONE FIFTY FIVE OF TWENTY
ELEVEN THAT EXPANDED THE SET OF
BUSINESSES THAT WERE REQUIRED TO
COLLECT.
USE TAX ON BEHALF OF THEIR
CUSTOMERS IN PARTICULAR AB ONE
FIFTY FIVE EXTENDED THIS
REQUIREMENT TO TWO TYPES OF
BUSINESSES.
OTHER FIRST TYPE WERE REMOTE
SELLERS THAT A SPEAKING PART OF
THE SAME --
CORPORATE OWNERSHIP STRUCTURE AS
IN STATE BUSINESSES AND THEN THE
SECOND --
TYPE WAS REMOTE SELLERS WHO WORK
WITH AFFILIATES THAT ARE LOCATED
WITHIN THE STATE PEOPLE WHO WERE
FOR POTENTIAL CUSTOMERS TO THOSE
REMOTE SELLERS.
SO THEN PAGE FOUR OF THE HANDOUT.
DISPLAYS.
THE REVENUE COLLECTED FROM
BUSINESSES REGISTERED UNDER AB
ONE ONE FIFTY FIVE AS A SHARE.
OF TOTAL SALES AND USE TAX
REVENUE.
AND SO THE GRAPH.
FAIRLY SIMPLE ONE BUT IT
ILLUSTRATES A COUPLE THINGS
WORTH NOTING OFF FIRST ALTHOUGH
AB ONE FIFTY FIVE REVENUE IS BY
NO MEANS TRIVIAL IT'S A
RELATIVELY SMALL SHARE AT THIS
TIME OF OVERALL SALES AND USE
TAX.
THROUGHOUT THE PERIOD DISPLAYED
IT'S LESS THAN ONE AND A HALF
PERCENT.
OF THE SECOND THING IS THAT AB
ONE FIFTY FIVE REVENUE.
HAS BEEN GROWING AT A FASTER
RATE THAN OTHER SALES AND USE
TAX REVENUE AND AS SUCH IT
REPRESENTS THOUGH A SMALL
CERTAINLY AN INCREASING SHARE OF
THE TOTAL OVER TIME.
AND TURNING TO THE FIFTH AND
FINAL PAGE OF THE HANDOUT.
WE HAVE A VERY BRIEF SUMMARY OF
THE WAY FOR DECISION THAT I
BELIEVE WILL BE DISCUSSED IN
GREATER DETAIL BY OTHERS
SPEAKERS.
ARE SUGGEST IS VERY BRIEF
BACKGROUND A COUPLE YEARS AGO
SOUTH DAKOTA PASSED A LAW.
REQUIRING REMOTE SELLERS TO PAY
TAXES IF THEY EXCEED EITHER OF
TWO ANNUAL THRESHOLDS A HUNDRED
THOUSAND DOLLARS OF GROSS
REVENUE FROM SALES INTO SOUTH
DAKOTA.
OR TWO HUNDRED OR MORE SEPARATE
SALES TRANSACTIONS INTO THE
STATE --
SOME REMOTE SELLERS REFUSED TO
COMPLY WITH THE NEW LAW SIR
SOUTH DAKOTA TOOK THEM TO COURT.
AND THE LOWER COURTS RULED IN
FAVOR OF THE REMOTE SELLERS DUE
TO THEIR LACK OF PHYSICAL
PRESENCE WITHIN SOUTH DAKOTA.
THEN THE US SUPREME COURT
DECISION --
GOT RID OF THE PHYSICAL PRESENCE
REQUIREMENT AND VACATED THE
LOWER COURT RULINGS.
AND THEN ABSENT THAT PHYSICAL
PRESENCE REQUIREMENT THE SUPREME
COURT RULED THAT THE SOUTH
DAKOTA LINE DOES MEET THE
SUBSTANTIAL NEXUS REQUIREMENT
AND DOES NOT UNDULY BURDEN
INTERSTATE COMMERCE.
IT'S MY UNDERSTANDING THAT.
WE'LL BE DISCUSSING THE LEGAL
SUBSTANCES DETAIL US THAT
CONCLUDES MY PRESENTATION AND AT
THIS TIME I'D BE HAPPY.
TO TAKE ANY QUESTIONS THAT YOU
HAVE FOR ME [inaudible]
ANYONE.
WE KNEW CENTER MARKET HAVE A FEW
QUESTIONS.
I THINK YES DON'T.
WE'RE GOING TO SAVE MOST OF OUR
SOME OF OUR QUESTIONS FOR THAT
FOR THE NEXT BIGGER WHEN WE TALK
ABOUT SOME OF THE LEGAL
BACKGROUND OF THE DECISION AND
SOME OF ITS IMPLICATIONS BUT
THANK YOU VERY MUCH FOR YOUR
PRESENTATION.
NEXT WE HAVE AND THAT NOW IN.
THANK YOU FOR BEING HERE.
I HAVE A LOT OF QUESTIONS FOR
YOU
.
WELCOME TO COMMITTING PLEASE
PROCEED.
I GOOD AFTERNOON HOW ARE THE
GERMAN BURKE CHEN MCGUIRE OF
MEMBERS OF THE COMMITTEES HERE
AND STAFF OF THANK YOU THE
OPPORTUNITY TALK ABOUT THIS
IMPORTANT CASE.
A IT IS A A MAJOR LANDMARK CASE
HERE AND YOU'VE GOT A LINE OF MY
REMARKS HERE.
BASICALLY THIS WAY FAIR CASE IS
LISTEN AFRICAN CASE IN THAT THE
COURT DID OVERTURN FIFTY ONE
YEARS OF PRIOR PRESIDENT WHICH
IS NOT A COMMON THING FOR THE
SUPREME COURT TO DO.
A BASICALLY SAYING THE PHYSICAL
PRESENCE RULE OF QUILL WHICH
DATED BACK TO NINETEEN NINETY
TWO IS UNSOUND AND IN CORRECT
THAT'S A A MAJOR HAD HIT TO THAT
THAT CASE.
OF THE PHYSICAL PRESENCE
STANDARD SHOULD NOT BE THE
STANDARD FOR THE SUBSTANTIAL
NEXUS FIRST PART OF THE FOUR
PART TEST OF COMPLETE AUTO
TRANSIT.
THEY WERE JUST LOOKING AT THIS
COMPLETE AUTO TRANSIT CASING
PHYSICAL PRESENCE BASICALLY WAS
JUST TOO LIMITING OF A STANDARD
AND I DO WANT TO POINT OUT OF
HIGH MENTION AGAIN AS I GO
THROUGH MY REMARKS THAT.
WHILE WE MIGHT THINK WAS IT
ADVANCES IN TECHNOLOGY THAT
BECAUSE THE COURT TO ADVANCE TO
THIS POINT IT REALLY WASN'T THEY
WERE SAYING EVEN BACK IN
NINETEEN EIGHTY TWO IN QUILL
WHEN THEY DECIDED PHYSICAL
PRESENCE THERE PROBABLY WERE
JUST BEING TOO NARROW AT THAT
POINT -- AS
WELL SO FAR AS WHAT COULD
POSSIBLY BE SUBSTANTIAL NEXUS.
SOUTH DAKOTA SALES TAX
COLLECTION REQUIREMENTS --
THAT THEY FOUND PROTECTS
INTERSTATE COMMERCE FISHING
NEXUS BASED ON BOTH ECONOMIC AND
VIRTUAL CONTACT.
THAT THE SELLERS HAVE WITH THE
STATE AND THEY DO HIGHLIGHT
THREE FEATURES OF THE SOUTH
DAKOTA LAW ACROSS THE SOUTH
DAKOTA LAW WAS PURPOSELY ENACTED
THE TRYING TO GET A CASE TO THE
SUPREME COURT.
THE CHALLENGE THE QUILL CASE
BECAUSE AN EARLIER DECISION
JUSTICE KENNEDY HAD HINTED THAT
IT WAS TIME TO OVERTURN QUILTS
THE SEVERAL STATES ARE VERY
EAGER TO GET THEIR CASE THERE.
AND SOUTH DAKOTA LAW HAD IT A
SYSTEM WHERE IT COULD GET THAT
MOVING FAIRLY QUICKLY.
OF THESE THREE FEATURES I WILL
COME BACK TO THIS WAS --
THERE WAS A SAFE HARBOR FOR
LIMITED BUSINESS ACTIVITY.
THERE WAS NO RETRO.
APPLICATION OF SOUTH DAKOTA IS
CHANGING ITS SALES TAX STANDARD
AND THERE WAS A SYSTEM IN SOUTH
DAKOTA TO REDUCE ADMINISTRATIVE
AND COMPLIANCE COSTS.
SO WE NEED TO BE AWARE THAT THE
SUPREME COURT DID NOT SAY WELL
HERE IS THE STANDARD IT JUST
SAID THAT THE SOUTH DAKOTA
STANDARD WAS WITHIN THOSE
GUIDELINES --
JUST ONE INTERESTING POINT --
IF INSTEAD OF LIKE A HUNDRED
THOUSAND DOLLAR THRESHOLD HAVE
BEEN A FIFTY THOUSAND OUR
THRESHOLD THAT HAVE MADE A
DIFFERENCE WE DON'T REALLY
DOUBTS ARE A LOT OF QUESTIONS --
WHICH AND WAS WHILE YOU'RE
HOLDING THIS HEARING AS TO WHAT
THIS CASE ARE REALLY MEANS.
I DO WANT TO STRESS BUT I HAVE A
UNFORTUNATE TYPO HIM THE FIRST
PAGE OF MY OUTLINED ALL REMOTE
SELLERS CAN BE SUBJECT TO A
STATE'S TAXES.
A WE'RE NOT GONNA BE ABLE TO GET
EVERY SELLER --
WHO DOESN'T HAVE A PHYSICAL
PRESENCE TO COLLECT TAX WE DON'T
KNOW EXACTLY WHAT THE STANDARD
IS -- BUT
SOLELY THEY'D MADE IT CLEAR THAT
SOME LIMITED BUSINESS ACTIVITY
WOULD EXCUSE SOMEBODY FROM
HAVING TO PAY --
TO COLLECT SALES TAX THAT IT'D
BE BANNED THE CASE ACTUALLY BACK
TO THE SOUTH DAKOTA SUPREME
COURT SO THEY COULD DâN RULE
BASED ON THE NEW STANDARD THAT
THE SUPREME COURTHAD HAD LAID
OUT SO WE WE ARE WAITING HERE
WHAT HAPPENS THERE.
THIS REALLY IS A VERY
SIGNIFICANT DECISION AS I NOTED
OVERTURNED FIFTY ONE YEARS OF
STATE TAX PRESIDENT OF THAT
INCLUDED THE UP TO THE QUILL
CASE FROM.
NINETEEN NINETY TWO AND THE
WHOLE CASE WAS A MAJOR CASE
BECAUSE IT HAD CLARIFIED AND
WENT A STEP BEYOND WHAT THE
BELLAS HAS CASE.
HAD ALLOWED A FEW DECADES
EARLIER.
IN THE BELLAS HAS CASE THEY
PRETTY MUCH SAID FOR BOTH DUE
PROCESS IAN COMMERCE CLAUSE
PURPOSES YOU HAVE TO HAVE A
PHYSICAL PRESENCE.
AND IN THAT BILLS HAS CASE THEY
WERE STRESSING THAT YOU KNOW
THERE WOULD BE SOME BURDEN ON
THE GO SMALL VENDORS THAT THEY
HAD TO COULD BE COLLECTING TAX
BECAUSE EVEN ENVELOPES HAS
DECADES AGO THEY NOTED.
THAT THERE ARE MULTIPLE
JURISDICTIONS IN THE U. S. B.
THE COUNT THE STATE'S IN THE
LOCAL GOVERNMENTS THAT CAN
ASSESS SALES TAX.
SO WHEN.
CIVIL DECADES GO ON AND THE
COURTS AS PERHAPS WRONG WE CAN
SEE FOR ALL THIS GROWTH AND
SALES THAT'S WHAT THE QUILL AND
TO GET TO THE COURT IN A QUILL
FOR EXAMPLE WAS.
THE SIXTH LARGEST OFFICE SUPPLY
SELLER IN NORTH DAKOTA BUT HAD
NO PHYSICAL PRESENCE THAT THEY
WOULD JUST MAIL CATALOGS THERE
AND THEY WOULD GET A LOT OF
BUSINESS OF THE STATE'S THEY
WERE CONCERNED.
AND IT WAS TIME TO LOOK AT
BALLOTS HAS AGAIN BUT WHEN THE
SUPREME COURT NINETEEN YOU TO
LOOK AT THE QUILL DECISION.
THEY SAID YET MAYBE THINGS HAVE
CHANGED AND WE SHOULD BE
ACTUALLY SEPARATING OUR ANALYSIS
OF THE DUE PROCESS CLAUSE AND
THE COMMERCE CLAUSE.
AND I THINK THAT THE PERSPECTIVE
OF WHAT THE COURT SAID WAS IF
YOU LOOK AT DUE PROCESS FOR
LOOKING AT THE INDIVIDUAL
TAXPAYER IS IT FAIR TO ASSESS.
OUR LAWS ON THAT TAX PAYER NAY
TH THOUGHT THAT IF YOU ARE
PURPOSELY AVAILING YOURSELF OF
THE MARKET IN THAT STATE THAT
WAS ENOUGH FOR DUE PROCESS.
BUT IN QUILTS A FORCE COMMERCE
CLAUSE IS THAT WE LOOK AT THE
WHOLE MARKET NOT JUST THE EFFECT
ON THAT ONE TAXPAYER AND
EFFECTIVE THE WHOLE MARKET IS
YOU KNOW THERE ARE OVER SIX
THOUSAND TAXING JURISDICTIONS AT
ALL HAVE DIFFERENT RULES AND
DEFINITIONS AND FILING
PROCEDURES AND THAT COULD.
IMPEDE INTERSTATE COMMERCE SO WE
THINK THE BETTER STANDARD WOULD
BE YOU HAVE A PHYSICAL PRESENCE
IN THE STATE.
AND THAT WAS THOUGHT OF AS BEING
A BRIGHT LINE TEST THOUGH THE
REALITY IS AS PEOPLE START
THINKING ABOUT IT AND LOOKING AT
A VARIETY OF FACT PATTERNS WHAT
EXACTLY IS A PHYSICAL PRESENCE
FOR EXAMPLE IF SOMEONE SENDS AN
EMPLOYEE INTO A STATE FOR TWO
DAYS TO HELP INSTALL.
SOME EQUIPMENT WOULD THAT BE
CONSIDERED A PHYSICAL PRESENCE
THERE WAS A FAIR AMOUNT LOCATION
AFTER COIL --
AS TO WHAT WOULD BE CONSIDERED A
PHYSICAL PRESENCE AND THE RULING
STILL NESTLE.
GOV ARE THE SAME THEY ARE THE
SAME FROM STATE TO STATE
UNFORTUNATELY WE CAN BRING THAT
DEFINITION IS OF PHYSICAL
PRESENCE AS WAS DESCRIBED
EARLIER LIKE IN THE AB ONE FIFTY
FIVE AND MANY AMAZON TYPE CLICK
THROUGH LAWS THAT MANY STATES --
HAD ENACTED --
FOR SO FAR AS THE OTHER QUILL
BEING YOU KNOW THIS MAJOR --
DECISION BACK IN NINETEEN NINETY
TWO THAT CASE DID SHAPE OF
BUSINESS DECISIONS WERE MANY
BUSINESSES CERTAINLY WERE TRYING
TO AVOID A PHYSICAL PRESENCE IN
THE STATE I THINK IS THE
COMMERCE GREW YOU COULD SEE.
PRICE COMPETITION WOULD BE WHY
THEY WANT TO AVOID THAT BECAUSE
YOU MIGHT THINK YOU KNOW AMAZONS
A BIG COMPANY WHAT'S THE BIG
DEAL COLLECTING SALES TAX IT WAS
A PRICE COMPETITION I THINK.
BUT THAT'S ALSO SOMETHING AWAY
FAIR MAJORITY WAS POINTING OUT
THAT THEY'RE WORSE LIKE.
LIKE A TAX SHELTER BEING CREATED
BY A BY THE QUILL DECISION.
SUPPORTERS OF WHAT WILL BE THE
EFFECT OF WHEY FAIR OF NOW
SAYING WILL THAT QUILL PHYSICAL
PRESENCE THAT'S NIGHT NOT THE
RIGHT STANDARD.
THIS IS GOING TO ALSO HAVE AN
EFFECT ON YOU COMMERCE IN MANY
AN UNKNOWN WAYS FOR EXAMPLE SOME
VENDORS MIGHT DECIDE THEY'RE NOT
GOING TO ENGAGE IN E. COMMERCE
OR AS MUCH YOU COMMERCE.
I DO NOTE YOUR NECKLACE ONLY BE
VENDORS LOCATED IN CALIFORNIA
SELLING OUTSIDE OF CALIFORNIA
MIGHT WANT TO RESTRICT THEIR
ACTIVITY BECAUSE THEY DON'T WANT
TO HAVE THE COLLECTION
OBLIGATIONS AND OTHER STATES SO.
WHAT THE EFFECT ON E. COMMERCE
WERE STILL WAIT TO SEE WHAT THE
EFFECT IS ON ON WAY FAIR AND
WHAT ALL THE STATES ARE GONNA DO
IN RESPONSE? TO THE WAY FAIR
CASE --
THEY'LL CERTAINLY BE AFFECTS ON
CONSUMERS I THINK THE WAY FAIR
CASE WILL HELP MORE PEOPLE
UNDERSTAND THAT YES THERE
ACTUALLY IS SALES TAX WHEN YOU
BUY SOMETHING THAT STANGEL
PERSONAL PROPERTY IN CALIFORNIA
EVEN IF YOU WERE NOT CHARGED IT
BY THE VENDOR --
I WOULD BE SURPRISED IF MAYBE
THE LOCAL GOVERNMENTS COULD TAKE
THE OPPORTUNITY TO PUSH HEY NO
GUESS WHAT THERE WAS A SALES TAX
MAYBE JUST WANNA BY LOCAL AS
OPPOSED --
TO BUYING FROM.
FROM OUTSIDE THE THE EFFECT OF
THE DIFFICULT DECISION HAD A
SIGNIFICANT IMPACT ON THE SHAPE
OF STATE TAX SYSTEMS THE STATE'S
REPLACE THAT LOST REVENUE
PERHAPS WITH OTHER REVENUE.
NOW -- YES
WE KNOW THAT PEOPLE OWE USE TAX
BUT AS THE IN THE SUPREME COURT
POINTED OUT ONLY ABOUT 4% OF USE
TAX DOES CUT GET COLLECTED --
I'D LIKE TO THINK MAYBE THE
PERCENTAGE IS HIGHER IN IN
CALIFORNIA WITH A FEW THINGS
THAT CALIFORNIA HAS DONE TO TRY
TO INCREASE STEP IS STILL PRETTY
LOW PERCENTAGE AND YOU CAN SEE
FROM.
A SOME OF THE DATA BEING
PROVIDED TODAY BY OTHER SPEAKERS
THAT.
OF THAT UNCOLLECTED USE TAX IT'S
NOT OLD BUSINESS TO CONSUMER
IT'S ALSO BUSINESS THE BUSINESS
HIS BUSINESS IS NOT TO SAY
COLLECTING USED TAX AS WELL.
THE THE EFFECT ON THE STATE AND
LOCAL TAXES OF THE WAY FOR
DECISION WILL FOR THE AFFECT
STATE AND LOCAL REVENUES AND
SOME BUSINESSES BEYOND SALES TAX.
THIS NEW DISA VALANCE OF A
PHYSICAL PRESENCE STANDARD
THAT'S NECESSARY FOR HAVING
COMMERCE CLAUSE NEXUS.
DOESN'T JUST APPLY TO SALES TAX
SEXUAL PLIES TO ALL TYPES OF
TAXES IS A SOMETHING ELSE TO BE
BE THINKING ABOUT ANY RELEVANCE
TO WHAT INCOME AND THE OTHER
TAXES HERE --
AND THEN I ALSO HAVE.
IN ANOTHER BESIDE THE OUTLINE I
HAD ARTICLES PUBLISHED TODAY
TALKING ABOUT SOME MORE
STAKEHOLDER --
CONCERNS THE GILMORE TO THE IN
THE WAY FAIR CASE WAS A FIVE
FOUR DECISIONS OF A OF A CLOSE
DECISION BEGIN OVERTURNING FIFTY
YEARS A PRESIDENT'S IS A BIG
DEAL.
THE COURT DID CONCLUDE THAT THE
PHYSICAL PRESENCE WILL OF QUILL
IS ON SOUND AND IN CORRECT.
AND AGAIN THE KEY FAXES AND TWO
THOUSAND SIXTEEN SOUTH DAKOTA
ALONG WITH THAT THE OTHER STATES
TRYING TO CHALLENGE GETTING A
CASE TO THE SUPREME COURT
BECAUSE THEY WERE.
TIRED OF WAITING FOR CONGRESS TO
TAKE ACTION AND I'VE DONE THIS A
BLAME CONGRESS FOR NOT TAKING
ACTION BECAUSE THEY WERE HEARING
ONE THING FROM STATES AND%
SEVERAL THINGS FROM FROM VENDORS.
BUT COULD NOT STOP THE CODE
ENACTED S. ONE OH SIX TO REQUIRE
CERTAIN REMOTE SELLERS TO
COLLECT SALES TAX THEY CALL THAT
EMERGENCY LEGISLATION DUE TO A
NEED FOR REVENUE.
SELLERS REQUIRED TO ACT AS IF
THEY TAX IF ON THE ANNUAL BASIS
THEY DELIVERED OVER A HUNDRED
THOUSAND OF GOODS OR SERVICES
INTO THE STATE.
OR HAD TWO HUNDRED OR MORE
TRANSACTIONS OF IN STATE
DELIVERIES AND THIS CHANGE
APPLIES PROSPECTIVELY WITH THAT
THE LADY PENDING A SHOWING OF
CONSTITUTIONALITY.
A SOUTH DAKOTA BROAD ACTION
AGAINST THREE SELLERS I I DO
WANT EMPHASIZE THAT THESE THREE
SELLERS WASTE WAYFAIR OVERSTOCK
DOT COM AND NEWEGG.
EACH HAVE ANNUAL REVENUE OF OVER
BILLION DOLLARS THESE WERE LARGE
VENDORS BUT THEY DID NOT HAVE A
PHYSICAL PRESENCE IN SOUTH
DAKOTA SO WE'RE NOT --
COLLECTING.
OF THE SOUTH DAKOTA LOST IN THE
STATE COURTS BECAUSE OF THE
QUILL DECISION AND EVENTUALLY
THIS THEY'D PETITION TO THE
SUPREME COURT THE SUPREME COURT
DECIDED TO TAKE THE CASE AND I
DO ALSO WANT TO NOTE THAT.
AS THIS --
DIFFERENCE BEEN COURT TODAY TAKE
THE CASE THERE WAS A LITTLE OVER
FIFTY AMICUS BRIEFS FILED WHICH
PROVIDE A LOT MORE BACKGROUND OF
PEOPLE OF FROM VARIOUS
STAKEHOLDER GROUPS WHETHER
THEY'RE LIKE EBAY AT SEA STATES
OF THE US GOVERNMENT.
OTHERS AND PROVIDE A GOOD NUMBER
BACKGROUND SO FAR AS CONCERNS
THEY HAVE WITH WHAT HAPPENED IF
A QUILL WAS TO BE CHANGED.
ON THE U. S. SUPREME COURT HELD
A PHYSICAL PRESENCE IS THE WRONG
STANDARD FOR COMMERCE CLAUSE AND
SALES TAX NEXUS PURPOSES THEY GO
THROUGH A REVIEW OF EVEN OLD
COMMERCE CLAUSE JURISDICTION
DATING BACK TO THE EARLY
EIGHTEEN HUNDREDS.
A BUT THEY DO STILL TALK ABOUT
THE COMPLETE COMPLETE AUTO
TRANSIT VERSUS BRADY --
IS STILL A VALID STANDARD THEY
JUST SAID HOW WE HAD INTERPRETED
THAT FIRST PART OF THAT FOUR
PART TEST AS YELLED THAT APPLIES --
TO AND WITH SUBSTANTIAL NEXUS
WITH THE STATE THAT JUST SHOULD
NOT BE A PHYSICAL PRESENCE OF
STANDARD THERE.
ARE THE PHYSICAL PRESENCE THEY
SAID WAS CONTRARY TO MODERN
COMMERCE CLAUSE APPLICATION AND
IS ARBITRARY FORMALISTIC MEASURE
IT DOES NOT PUT BUSINESSES ON AN
EVEN PLAYING FIELD AS IT DOES
NOT CONSIDER THE SIZE OF
BUSINESSES AND IMPOSES A
COMPETITIVE DISADVANTAGE FOR
BUSINESSES.
WITH A PHYSICAL PRESENCE
COMPARED TO NON PRESENT SELLERS
SO AGAIN THEY WEREN'T AS A
SIGNING WAS ADVANCES IN
TECHNOLOGY THAT CALLS AND TO GET
THIS NEW INTERPRETATION OF
WHAT'S COMMERCE CLAUSE
JURISDICTION AS IT WAS THEY JUST
THOUGHT EVEN BACK IN NINETEEN
EIGHTY TWO IT WASN'T LIKE A FAIR
STANDARD.
THAT THEY HAD PUT IN PLACE A TO
FORMALISTIC AND NOT NOT.
ARE THEY ALSO DO KNOW THOUGH
THAT TECHNOLOGY USED ANY
COMMERCE HAS GIVEN RISE THE NEW
TYPES OF CONNECTIONS BETWEEN A
RETAILER IN A STATE.
AND A VIRTUAL SHOW ROOM CAN SHOW
FOR MORE INVENTORY AND FOR MORE
DETAIL AND WITH GREATER
OPPORTUNITIES FOR CONSUMER AND
SELLER INTERACTION IT MIGHT BE
POSSIBLE FOR LOCAL STORES.
THEY'RE SAYING IS EVEN A RICHER
CONNECTION YOU COULD HAVE WITH
YOUR CUSTOMERS IN ECON RESCIND
VARMINT WITHOUT ANY PHYSICAL
PRESENCE AGAIN CHALLENGING WHAT
SHOULD BE APPROPRIATE
SUBSTANTIAL NEXUS.
DOES A RULE THAT IGNORE THE
SUBSTANTIAL VIRTUAL CONNECTIONS
THE STATE SHOULD NOT BE RETAINED.
THE DISSENTERS IN THE CASE SAID
WILL IT MUCH BETTER IF THE
CONGRESS WOULD RESULT THESE
ISSUES OF COURSE THINK SOME
RELUCTANCE TO OVERTURN ALL THIS
PRESIDENT.
BUT THE MAJORITY RESPONDED TO
THAT SAYING IT'S INCONSISTENT
WITH THE COURTS PROPER ROLE TO
ASK CONGRESS TO ADDRESS A FALSE
CONSTITUTIONAL PREMISE OF THIS
COURT'S OWN CREATION.
IT IS CURRENTLY THE COURT AND
NOT CONGRESS THAT IS LIMITING
THE LAWFUL PROVIDENCE OF THE
STATE'S.
SO AGAIN ALL THE COURT HELD WAS
YES PHYSICAL PRESENCE IS NOT THE
STANDARD --
FOR ANY KIND OF TAX NEXUS AND IT
SAID WELL WHAT IS A OKAY
STANDARD THAT'S NOT GONNA
VIOLATE THE COMMERCE CLAUSE THEY
SAID WELL SOUTH DAKOTA WHICH IS
THE LAW BEFORE US THEIR SB A ONE
OH SIX THAT'S ALL WE CAN
EVALUATE WHAT THE SOUTH DAKOTA.
THE CALENDAR YEAR WHETHER THE
THE PAST CALENDAR YEAR OR THE
CURRENT CALENDAR YEAR IF YOU HAD
MORE THAN A HUNDRED THOUSAND
DOLLARS OF SALES AND TO THE
STATE OR TWO HUNDRED OR MORE
TRANSACTIONS.
THAT WOULD BE ENOUGH TO SAY YOU
HAD SALES TAX COLLECTION
OBLIGATIONS THERE AND THEY ALSO
POINTED OUT THAT THE SOUTH
DAKOTA LAW WAS NOT RETROACTIVE.
AND THEY ALSO POINTED OUT THAT
SOUTH DAKOTA WAS A MEMBER OF THE
STREAMLINED SALES AND USE TAX --
AGREEMENT WHICH HAD SOME
SIMPLIFICATIONS AND IT SUCH AS
SOME STANDARD DEFINITIONS AT
LEAST AMONG THE MEMBER STATES
AND IT HAD SOME OF THE
PROTECTION FOR THE REMOTE
SELLERS SUCH AS THE STATES ARE
REQUIRED TO PROVIDE SOFTWARE TO
THE REMOTE SELLERS.
AND AT NO COST TO THE REMOTE
SELLERS AND IT DOES REMOTE
SELLERS USE THAT SOFTWARE THEY
ALSO GET AUDIT PROTECTION.
SO THEY DID STRESS THAT AGAIN
THAT'S YOUR THINK YOU KNOW HOW
COULD.
OTHER STATES GO AND SAY WHAT CAN
WE MATCH SOUTH DAKOTA LAW.
PROBABLY MATCHING THE FIRST PART
THE HUNDRED THOUSAND THE TUNER
TRANSACTIONS AND THE NOT
RETROACTIVE THAT'S PRETTY EASY
TO DO BUT WHAT ABOUT THE FACT
THAT CALIFORNIA AND MANY STATES
RETCHING NOT MEMBERS OF THE
STREAMLINED SALES AND USE TAX.
SO THAT'S GOING TO BE A
CHALLENGE AS TO WHAT CAN WE DO
TO SAY.
THE COURT IF THEY LOOKED AT ARES
WOULD SAY YES CAL THE THERE.
SO FAR AS YOUR STATE
CONSIDERATIONS IT REALLY IS AS
YOU KNOW WHAT EXACTLY DOES THIS
MEAN FOR OUR STATE [inaudible]
AND I DO LIST OF RIGHTY OF OF
CONSIDERATIONS HERE --
FOR THE STATE TO NEED TO TAKE A
LOOK AT HERE --
AS TO HOW IMPORTANT IS THAT WE
ARE OR NOT IN THE STREAMLINED
SALES AND USE TAX YOU MIGHT
THINK WELL MAYBE THAT WOULD BE
AN EASY THING TO DO THOUGH I
THINK WE PROBABLY WANT TO LOOK
VERY CAREFULLY AT THAT BECAUSE
ONE THING ABOUT THE GOVERNING
BOARD THE STREAMLINED.
SALES AND USE TAX AGREEMENT IT'S
ONE VOTE PER STATE.
ALMOND FOR EXAMPLE A SOUTH
DAKOTA HAS LESS THAN A MILLION
POPULATION WE'VE GOT FORTY
MILLION --
POPULATION HERE.
I'M ALSO HOW SHOULD ANY MEASURE
OF GROSS RECEIPTS SUPPLY DEMAND
AND WE SHOULDN'T THING VIEW ALL
THE SOUTH DAKOTA LAWS CAN BE
VERY STRAIGHT FORWARD.
OF HOW DO YOU HAVE ACTUALLY
MEASURE A HUNDRED THOUSAND OF
SALES IS THAT LOOKING AT ALL
TRANSACTIONS JUST TAXABLE ONES --
WHAT WOULD BE A SIMPLE WAY TO
DEAL WITH THAT --
IF YOU'RE LOOKING AT AVOIDING
FUTURE LITIGATION WHAT ABOUT
THIS THRESHOLD OF TWO HUNDRED OR
LESS TRANSACTIONS IN THE STATE.
THAT WASN'T THE CASE THAT WAS A
FOR THE COURT BUT THAT COULD BE
TWO HUNDRED TRANSACTIONS OF A
DOLLAR EACH --
I SAID I WOULD PROJECTED THAT'S
GOING TO LEAD TO FUTURE
LITIGATION THE STATES THAT ARE
ADOPTING OF THAT STANDARD.
ALSO WE WANT TO BE ADDRESSING.
WHEN DOES NEXUS START WHEN DOES
IT END WHAT IF SOMEONE SALES
DROP BELOW THAT THAT THRESHOLD
THERE ARE MANY THINGS TO
CONSIDER --
SO THE ANY CHANGE WERE DOING IN
CALIFORNIA CLEAR AS POSSIBLE
WHEN YOU DO AND DO NOT HAVE HAVE
NEXUS.
IS BY THE BEST WAY TO GO SO FAR
AS AVOIDING FUTURE LITIGATION
AND ENSURING THAT YOU'RE GOING
TO HAVE -- A
PROPER AND HOPEFULLY SIMPLE
COMPLIANCE.
AS TO WHAT AT ALSO WE NEED TO
LOOK AT WHAT'S THE EFFECT ON
LOCAL GOVERNMENT.
MINUTES LOCAL OVER THE FOR COULD
SAY HEY PHYSICAL PRESENCE YOU'VE
GOTTA COLLECT HERE THAT WAS
PRETTY STRAIGHT FORWARD WHAT
WILL BE THE MEASURE NOW.
AND COURSE AT THE LOCAL
GOVERNMENT LETTER LEVEL WE DO
HAVE VARYING SOURCING APPROACHES
IN THAT THE DISTRICT TAX GOES ON
A DESTINATION SOURCING AND THE
SALES TAX GOES ON THE ORIGIN
SOURCING WHICH CAN.
AS WE CHANGE A NEXUS STANDIFER
LOCAL GOVERNMENT HAVE SOME
IMPACT PERHAPS TO OF LOCAL
GOVERNMENT AND HOW THAT SHOULD
BE EXPLAINED.
AS THE WHAT'S THE APPROPRIATE
NEXUS STANDARD GIVEN NOT ONLY
THE WAY FAIR DECISION BUT
ENFORCEMENT CONSIDERATIONS AND
REALITIES.
AGAIN SOUTH DAKOTA HAD A
POPULATION OF EIGHT HUNDRED AND
SEVENTY THOUSAND WE HAVE FORTY
MILLION THAT MEANS IF WE WERE TO
ADOPT THE SOUTH DAKOTA THRESHOLD
AT THE HUNDRED THOUSAND SALES
INTERNET OR MORE TRANSACTIONS.
WE WOULD HAVE FAR MORE REMOTE
SELLERS AND SOUTH DAKOTA WILL
BECAUSE WE HAVE FAR MORE
CONSUMERS --
IN THIS STATE SO.
UPSET BE A NEED TO BE
CONSIDERING HOW TO ALSO FAIRNESS
CAN ALL VENDORS THE SUBJECT TO
COLLECTION DURING NEW STANDARD
BE TREATED SIMILARLY IN TERMS OF
ENFORCEMENT MEAN IF TO SAY WE'RE
GONNA HAVE A CERTAIN ENFORCEMENT
FOR THOSE WE CAN EASILY REACH IN
THE STATE.
AND THOSE OUTSIDE THE STATE WE
MIGHT NOT HAVE THE SAME
ENFORCEMENT COULD BE --
A CONCERN THERE.
ALSO COURSE UNDER REVENUE
TAXATION SIXTY TWO OR THREE SEE
IT DOES ALSO LOOK LIKE MAYBE THE
VENDOR SHOULD JUST START
COLLECTING BECAUSE IT SAYS YOU
ARE CONSIDERED A VENDOR --
IN THIS A RETAILER ENGAGED IN
BUSINESS IN THE STATE IF YOU
MEET THE SUBSTANTIAL NEXUS AS
THE FINE BY THE CONSTITUTION
WHICH IS A CREAM COURT JUST TO
FIND -- I
THINK THAT WOULD BE CHALLENGING
TO SOON VENDORS WOULD JUST START
OF START DOING THAT.
AS WELL AS STATES ARE DOING MANY
STATES SEEM TO BE GOING WITH THE
SOUTH DAKOTA STANDARD AND EVEN
MAKING EFFECTIVE PERHAPS YOU'D
LIKE TO OCTOBER FIRST NOVEMBER
FIRST.
I THINK ALSO HAS TO BE
CONSIDERATION OF HOW QUICKLY CAN
A VENDOR START COLLECTING HOW
QUICKLY CAN THE CD TFA HELP THAT
VENDOR GET COMPLIANT AND INTO
THE SYSTEM --
SO YOU KNOW THE SPACE THAT
SOMEBODY JUST CROSS THAT
THRESHOLD AND NOW HAD TO START
COLLECTING IS NOT REALLY A A LOT
OF TIME TO BE --
TO BE DEALING WITH.
A SO IT'S A MANY MANY --
CAN CONSIDERATIONS HERE MANY
STAKEHOLDERS AND INVOLVED HERE.
ALSO IS IN OF MY FINAL COMMENTS
HEARING ON GET.
TO KNOW YOUR TO GET THE
QUESTIONS BUT I THINK WE ALSO
SHOULD BE LIKE TO VIEW THINGS AS
AN OPPORTUNITY.
PRESS IS ALSO OPPORTUNITY THAN
LOOKING AT WHAT THIS WAY FAIR
MEAN FOR THE STATE AND DO WE
WANT TO BE SPECIFIC ON WHAT THE
NEXUS STANDARD WILL BE IN THE
STATE THAT WE THINK COULD BE IN
LINE WITH THE NEW.
CONGRESS CLASS INTERPRETATION
FROM THE WAY FAIR CASE BUT IT
SHOULD ALSO BE AN OPPORTUNITY TO
MAKE OTHER CHANGES TO THE SALES
TAX THAT MIGHT OF FURTHER
IMPROVE IT --
WE'D WE DO HAVE YOU KNOW A
FAIRLY HIGH RATE --
WE HAVE.
OF A. B. OTHER RULES NEED TO BE
CLARIFIED LCD LOOK AT THIS ANY
HOUSES CHANGE THINGS ABOUT DROP
SHIPMENT OR OCCASIONAL SALES ANY
OTHER CHANGES THAT NEED TO BE --
ADDRESS THEIR ANY OPPORTUNITIES
AND AS ALWAYS PROPOSALS PERHAPS
TO BROADEN THE BASE TO REMOVE A
CERTAIN EXEMPTIONS A TIME FOR
LOOKING AT THAT.
AND COURSE.
WITH ALL THAT COULD BE DONE
TOGETHER AS A LOGICAL WAY HE GOT
UP WE HAVE A OF AN EFFECTIVE
SALES AND USE TAX SYSTEM THAT'S
GONNA BE BENEFICIAL TO THE STATE
GOVERNMENT.
THE LOCAL GOVERNMENTS AND THE
CONSUMERS AS WELL AS THE
BUSINESSES AND AGAIN THE
BUSINESSES WE HAVE TO REALIZE
THAT THE BUSINESSES THAT ARE
GOING TO BE REMOTE HAVING
OBLIGATIONS IN THE STATE AS WELL
AS OUR OWN VENDORS AND THE STATE.
DEALING WITH THE STATE'S THAT
THEY HAVE REMOTE SALES AND
OUTSIDE OF A CALIFORNIA WHICH
ALSO MIGHT.
A CALL SOME CONSIDERATION OF
SHOULD CONGRESS.
TO PUT SOME STANDARD IN PLACE OF
SO THERE COULD BE SOME
CONSISTENCY FOR ALL VENDORS
THROUGHOUT THE THROUGHOUT THE U.
S. [inaudible]
ON WITHOUT BE GLAD TO TAKE ANY
ANY QUESTIONS AND DO MY BEST --
TO ADDRESS THOSE.
FIRST THANK YOU FOR YOUR
PRESENTATION IT'S EXTREMELY
COMPLICATED AND I THINK YOUR
PRESENTATION GIVES US MUCH MORE
DETAIL AND SHOWS US ALL HOW
ACTUALLY TRULY MORE COMPLICATED
EVEN THAT MAYBE WE REALIZED IT
IS -- I I DO
WANT TO ASK A QUESTION I REALIZE
THAT AT SOME POINT THE THE
NOTION OF A PHYSICAL PRESENT
BECAME ANTIQUATED HOWEVER THE
THE ISSUE THE REASON THE
PHYSICAL PRESENCE --
KIND OF STANDARD CAME ABOUT WAS
BECAUSE OF THE COMPLEXITY OF
KIND OF OF THE COLD THE
COLLECTION OBLIGATION WHICH
CLEARLY STILL EXISTS AS IF NOT
WORSE NOW THAN WHEN THAT
STANDARD WAS PUT INTO PLACE.
AND MY QUESTION FOR YOU IS AS
LONG AS WE'RE CALIFORNIA'S NOT
OF STATUS --
SITUATION AND WE ARE AN ADVISORY
STATE WHICH I'M NOT SURE I
TOTALLY UNDERSTAND WHAT THAT
MEANS THE WORD RISING ON THE
STREAMLINED BUT WERE NOT PART OF
IT.
WHAT OTHER POSSIBLE SOLUTIONS
ARE THERE IF WE'RE NOT GOING TO
PARTICIPATE IN SOMETHING LIKE
THIS?
WILL.
I GUESS ALSO NO MORE AS WE HEAR
WHATEVER THE SOUTH DAKOTA
SUPREME COURT SAYS --
BUT IF YOU'RE LOOKING AT THE
FEATURES OF THE STREAMLINED
SALES AND USE TAX ME ONE WAS
EMPHASIZED BY THE COURT WAS THE
SOFTWARE BEING PROVIDED TO THE
REMOTE VENDORS WITH THE AUDIT
PROTECTION THAT'S THAT'S A
REALLY GOOD DEAL [inaudible]
CALIFORNIA COULD.
SIGN ON TO THESE SAME VENDORS AS
SEVEN OF SULFUR PROVIDERS THAT
THE STREAMLINED SALES AND USE
TAX OFFERS.
CALIFORNIA PERHAPS COULD SAY
WELL WE'RE GONNA TAKE THAT
FEATURE AND WE'LL DO IT ON OUR
OWN AS OTHER OF COURSE OTHER
VENDORS AGAIN ALSO OFFER THAT --
SOURCE OF COURSE IT WOULD TAKE
FUNDING FOR THAT TO OCCUR SO IT
COULD BE --
PROBABLY PRESENTED TO THESE OF
VENDORS ALSO THE STREAMLINED
SALES AND USE TAX DOES HAVE A OF
A ONE STOP SHOP SO FAR AS
REGISTERING WHEN YOU REGISTER TO
STREAMLINED SALES AND USE TAX.
YOU ARE THEN REGISTERED ALL THE
MEMBER STATES LETTING IN THOSE
STATES --
YOU IF YOU DON'T WANT TO DO THAT
YOU ACTUALLY CAN STILL REGISTER
STATE BY STATE THIS LOT EASIER
JUST TO DO THE ONE MASS.
SIGNING ON THEIR SHORTLY AFTER
THE SUPREME COURT DECISION THE
GOVERNING BOARD OF STREAMLINED
SALES AND USE TAX DID HOLD A
MEETING WHERE THEY WERE ASKING
SOME OF THESE QUESTIONS SHOULD
WE LET NON MEMBER STATES
COMMENTS AT SOMETHING TO TAKE A
LOOK AT ARE THEY GOING TO
REALIZE THAT MAYBE.
NOT EVERYBODY WANTS TO BE IN THE
STREAMLINED SALES AND USE TAX
WHICH HAS BROUGHT SOME
SUPPLICATION BUT NOT.
AS SIMPLE AS WE MIGHT THINK IF
YOU WERE GO TO THEIR WEBSITE
EVERY STATE HAS TO HAVE A TAX
ABILITY MATRIX.
WHERE MOTHERS COMMON DEFINITIONS
THE STATE CAN STILL DECIDE WE
WANT TO TAX OR NOT TAXIS
COMPANIES TAX ABILITY MATTRESSES
ARE FAIRLY COMPLICATED MEAN THE
SALES TAX AND THEN YOU CODE ALL
YOUR PRODUCTS? TO TIED TO THAT
AMOUNTS TO TECHNOLOGY EXISTED DO
THAT BUT IT'S MORE THAN JUST THE
SOFTWARE YOU DO NEED HUMAN
BEINGS TO HELP.
OPERATE THAT SORT THERE ARE
COSTS INVOLVED IN ALL THAT --
SO YES THERE ARE SOME
SUPPLICATIONS THERE BY THINK WE
COULD LOOK AT WHAT MIGHT WE
STILL BE ABLE TO DO WITHOUT
PERHAPS HAVING TO JOIN THE
STREAMLINED SALES AND USE TAX
BUT PROBABLY MONITORING WHAT
THEY ARE GOING TO BE.
A DOING WILL THEY BE PUSHING
THAT YES OTHER SCANNED.
NON MEMBER STATES CAN CAN SIGN
ON TO THAT IS PUTTING TWENTY
THREE TWENTY FOUR STATES BELONG
TO STREAMLINED SALES AND USE TAX
AND SO I READ YOUR ARTICLE THAT
SAYS CALIFORNIA WOULD NEVER JOIN.
SAYS THIS IS STREAMLINED SALES
AND USE TAX SO CAN I ASK WHY
WHAT ARE YOUR CHARITY I JUST
HEAR OPINION OBVIOUSLY I THINK
IS THE ONE VOTE PER STATE.
AND I I DON'T THINK IT'S
HAPPENED RECENTLY BUT STILL
YEARS AGO THERE WERE OFTEN
CHANGES TO THE AGREEMENT.
AND CYCLE HOW MANY OF YOU KNOW
CHANGES DO YOU WANT TO THE SIZE
OF OUR STATE WILL WE SEE LARGE
STAGE JOINING IN --
SOME TODAY MIGHT WONDER WELL HOW
IMPORTANT IS TO STREAMLINED
SALES AND USE TAX AGREEMENT NOW
THAT WE DON'T HAVE THAT PHYSICAL
PRESENCE STANDARD WE COULD JUST
SAY HEY IT'S OVER A HUNDRED
THOUSAND AND TWO OTHER
TRANSACTIONS [inaudible]
BUT YET IT MEMBER CAN SIGN ON TO
VIEW MORE THOSE DEFINITIONS
PERHAPS I THINK IT'S STILL BE
WORTH LOOKING AT BUT THE ONE
VOTE PER STATE IS THAT.
SOUNDS TROUBLING BECAUSE I WAS
WHICH IS SUCH A LARGE STATE.
AND WE'RE FORTY TIMES THE SIZE
OF SOUTH DAKOTA.
IS THERE WOULD.
YES NO.
FEEL BUT I THINK ALSO WHAT WHAT
THE PERCENTAGE OF SALES TAX
COLLECTED UNITED STATES CONSERVE
CALIFORNIA RIGHT.
THE MUCH HIGHER THAN OUR
POPULATION FOR RIGHT RIGHT ALSO
IT WAS IT WAS EVEN NOTED THAT
SOMEBODY'S LARGE VENDORS ALREADY
ARE COLLECTING IN CALIFORNIA THE
GAO REPORT THAT CAME OUT LATE
TWO THOUSAND SEVENTEEN ALSO
INDICATED.
THAT -- NOT
I ALWAYS SAY IT NEVER BECAUSE
THEY WANT ONE VOTE FOR STATE
DOESN'T SOUND LIKE SOMETHING
CALIFORNIA OR NEW YORKER --
TEXAS IS GOING TO SIGN ON TO BUT
IT'S WORTH MONITORING AS
EVERYTHING ELSE IS BEING LOOKED
AT AND THEN I DID HAVE ONE LAST
QUESTION THEM PASSING ON IT ARE
NOT REALLY A QUESTION BUT JUST A
COMMENT THAT I WANT TO MAKE SURE
EVERYONE ON THE COMMITTEE IS.
AWARE OF AND UNDERSTANDS THAT
THIS ACTIVE THAT US AS A BODY
WHETHER.
A IS REGULATORY OR US
LEGISLATIVE WE WILL LOOK AT
WHETHER OR NOT THIS OUT TO GO TO
STANDARD IS THE APPROPRIATE
STANDARD A HUNDRED THOUSAND
DOLLARS OR AND TO HAND TRADE
TRACKS ACTIONS.
WE MAY NOT FIND THAT THAT IS THE
STANDARD THAT WE WILL AS A STATE
WANT TO ABIDE BY BUT I JUST WANT
TO PUT THAT OUT THERE THAT IS
SOMETHING THAT WE WILL WE'LL
HAVE TO AS COMMITTEE MEMBERS.
KEEP AN EYE ON SO TENER.
THE SWITCHMAN CHAIR IN AT FASTER
THANK YOU SO MUCH FOR BEING HERE
TODAY RG STATE TO BE ABLE TO
IMPLEMENT SINCE --
THE COURT'S DECISION IS WHICH
STATE.
AS FAR AS POPULATION WEISS.
IMPLEMENT --
IS MOVING ON THE USE TAX IN
BEING ABLE TO COLLECT WHICH
WHICH IS THE LARGEST STATE
QUIBBLING TO CALIFORNIA IF YOU
WILL -- HAD
MOVED WITH IMPLEMENTING.
SO FAR AS ADOPTING AWAY FOR
STANDARD --
NO TAKE IT WE'RE JUST SAYING
TEXAS IS CLOSE.
YES YOU MAY MAYBE.
MAYBE TEXAS OTHER STATES ARE
STILL WAITING TO SAY ANYTHING
SPECIFIC --
AND ALSO PROBABLY LIKE US
FIGURING OUT IS IT
ADMINISTRATIVE OR LEGISLATIVE
APPROACH THERE BUT DELIVERY OF
THEM IN OUR LARGE STATES THAT
ARE SIGNING ON TO WHAT LOOKS
LIKE.
YOU KNOW A LOW STANDARD BECAUSE
IT IN IN OUR STATE BEING SOLD
LARGE SO FAR AS NUMBER OF
CONSUMERS.
THAT WOULD MEAN WILL HAVE A FAR
MORE REMOTE VENDORS THAN MOST
STATES WOULD HAVE BECAUSE IT
WOULD BE EASY TO SAY VALIUM JUST
LOOKING FOR EXAMPLE YOU WANT
LIKE A CROWD FUNDING WEBSITE.
AND PEOPLE ARE TRYING TO RAISE
MONEY AND ALL WILL GIVE YOU --
YOU GIVE US TEN DOLLARS OR
TWENTY DOLLARS AND WILL SELL YOU
A CALENDAR WHEN WE RAISE A
CERTAIN AMOUNT OF MONEY WE STILL
SMALL BUSINESSES BUT COULD
EASILY HAVE TWO HUNDRED OR MORE
TRANSACTIONS IN CALIFORNIA MAYBE
NOT -- IN
SOUTH DAKOTA SO I THINK WE ALSO
THE LOOK AT WHAT'S THE
APPROPRIATE BALANCE AND FORCED
SAY LESS STILL KEEP ON TRYING TO
COLLECT THE USE TAX.
VERSUS TRIED EIGHT MANAGED IS
VERY LARGE NUMBER OF REMOTE A
REMOTE VENDORS.
BUT AT THE DOUBLE CHECK WHAT
SEEMS TO BE THE LARGEST STATE
THAT.
WENT WITH THE WAY FAIR STANDARD
SO FAR HAS SCREEN I'LL CHECKS AS
WELL AND IF HE KNOWS IS AN WALK
US THROUGH.
DURING TIMES OF A DOWNTURN.
IN HOW THAT WORKS IN REGARDS TO
COLLECTION.
UNDERSTAND YOU HAVE THE HUNDRED
THOUSAND FOR EXAMPLE WHICH IS TO
DAKOTA. HUNDRED THOUSAND TWO
HUNDRED TRANSACTIONS A YEAR.
SO AT A HUNDRED THOUSAND
THRESHOLD WHAT HAPPENS WHEN THEY
DIP BELOW TO THE WAY TO THE NEXT
TAX YEAR HOW HOW DOES THAT WORK --
IN WALKING THROUGH THAT.
THAT'S A GOOD QUESTION AND NOT
ALL STATES ARE SPECIFIC ON THAT
AS TO WHEN IF EVER NEXUS ENDS --
SOME STATES WILL SAY WELL ONCE
SAID AND YOU STILL HAVE TO
COLLECT FOR ANOTHER YEAR
THINKING THAT SOME OF THAT.
NEXUS ACTIVITY STILL LINGERS ON
FOR THE NEXT YEAR --
WE CULTURALLY NEXUS BUT
SOMETHING THAT SHOULD BE.
I THINK LAID OUT SPECIFICALLY SO
THAT VENDORS AREN'T ON CERTAIN
THEY KNOW WHAT WHAT THEY NEED TO
BE DOING SOME I JUST CONTINUE TO
COLLECT THINKING A SALES WOULD
GO UP AND THEY GOT THE SYSTEM IN
PLACE BUT IN SOME STATES IT
MIGHT BE CLEAR.
YOU DROP BELOW WHAT YOU CAN STOP
COLLECTING OTHER STATES --
MIGHT NOT SAY ANYTHING AT ALL
THIS IS A TOWN SURPRISE HAD MANY
STATES OF NOT ONLY ADDRESS
SPECIFICALLY THE TRAILING NEXUS
QUESTION.
WHEN DOES IT END YEAH IT IN
THAT'S WHERE I THINK AND THAT'S
WHERE I FIRST WENT TO IS THAT --
ESPECIALLY FROM HAVING A BAD
YEAR RIGHT --
AND WHAT THAT WOULD MEAN FOR ME
LONG TERM.
OKAY.
CAN YOU WALK US THROUGH LESSONS
IN THE ROAD ANY GIVEN EXAMPLE --
I THINK IT WAS PROBABLY GOOD FOR
US THAT CALIFORNIA WAS THAT
THIRD STATE TO BE ABLE TO
IMPLEMENT.
ALL CANNABIS RELATED TAXES WE
SAW WHAT HAPPENED --
IN COLORADO WE SAW WHAT HAPPENED
IN WASHINGTON IN TRY NOT TO
REPEAT.
IF YOU WERE TO SAY MISTAKES THAT
WERE MADE BY SOME STATES WHAT
WOULD YOU REPEAT AND WHAT ADVICE
WOULD YOU GIVE US AS WE MOVE
DOWN THIS ROAD.
WELL I WOULD SUGGEST BEING
SPECIFIC AS TO WHAT A NEW NEXUS
STANDARD IS.
AND BE THINKING OF IT FROM THE
PERSPECTIVE OF AVOIDING FUTURE
LITIGATION.
MEAN.
PERSONALLY I VIEW THIS TWO
HUNDRED TRANSACTIONS AS JUST TO
LOW I MEAN IF THAT WAS THE CASE.
I THINK THE IF THAT WAS BEEN
WHAT IT WAS BEFORE THE SUPREME
COURT.
I THINK THEY WOULD HAVE SAID NO
THAT DOESN'T SEEM TO BE THE
RIGHT STANDARD.
UNLESS THE WHAT ANY DOLLAR
THRESHOLD IS AGAIN WEIGHING.
HOW MANY REMOTE VENDORS WOULD
THAT BE TO HAVE?
TO ENFORCE THE OF BE UNDER YOUR
ENFORCEMENT WEIGHING VERSUS MADE
WISHES ALL STAR COLLECTING USED
TAX AND YOU STILL HAVE TO CLICK
USE TAX MINNESOTA BE OBVIOUSLY
VENDORS THAT FALL BELOW THAT
THRESHOLD.
BUT WE'RE TALKING ABOUT THESE
REMOTE VENDORS THAT UNDER LIKE
SOUTH DAKOTA STANDARD.
HUNDRED THOUSAND THAT SOMEBODY'S
VENDORS ARE OUTSIDE THE UNITED
STATES RATIONS AND THAT WOULD BE
I THINK A GOOD NUMBER OF REMOTE
VENDORS FOR THE STATE OF
CALIFORNIA THINK BEING AS
SPECIFIC AS POSSIBLE.
MAKING IT EASY FOR ANY VENDOR TO
KNOW DO I HAVE SALES TAX
COLLECTION OBLIGATIONS IN THE
STATE BUT IN THE OF LONGER
ARTICLE THAT.
I WROTE THAT'S OUT THERE SUGGEST
ONE NOT EVEN CREATE SOME HAVE AN
ONLINE TOOL YOU'RE ASKED YOU
KNOW TEN QUESTIONS OR SOMETHING
AND WHEN WHATEVER ANSWER YOU GET.
AND YOU PUT THE YOUR ANSWERS AND
YELL AND GOOD FAITH.
THAT'S YOUR STANDARD ARE YOU SUB
THE SALES TAX COLLECTION OR NOT --
MAKE SURE THAT THE CD TFA HAS
THE RESOURCES TO GIVE THE
PROGRAM FROM NATION TO THESE NEW
NEW VENDORS MAKE IT CLEAR AS
POSSIBLE WHEN AT THE COLLECT.
AND YEAH I THINK WE WOULD NEED
TO BE OFFERING A SOFTWARE TO THE
REMOTE THIS REMOTE SELLERS. TO
MAKE IT SO MORE TO THE
STREAMLINED SALES AND USE TAX
AND THAT THE THEORETICALLY
SHOULD HELP IN THE COMPLIANCE.
BECAUSE HAS TO BE APPROVED BY
THE STATE THAT THIS IS THE
SOFTWARE ARE REALLY WORKS AND
THE COST IS GOING TO BE LOWER
THAN WHAT THE ADDED COLLECTION.
OF WOULD BE I THINK MAKING IT AS
CLEAR AS POSSIBLE AS REALISTIC
WHATEVER WE THINK CAN REDUCE
FUTURE LITIGATION BY BEING TOO
LOW A STANDARD --
I THINK WOULD BE THE WELL SIR
FOR THE FOR THE STATE AND THEN
NOT FORGETTING ABOUT PLACE WITH
THEM AS TO HOW DOES THIS AFFECT.
THEIR DISTRICT TAXES THERE IS
CHAIR OF THE SALES TAX THEIR
POOLING ARRANGEMENT AS TO HOW
YOU THE MONEY GOES IN THE COUNTY
POOL GETS ALLOCATED BACK OUT
IT'S A COMPLICATED --
PROCESS BUT HOW DOES THIS CHANGE
THEIR STANDARD AND WHAT WILL
MAKE IT EASY FOR THEM TO MAKE
SURE THEY'RE GETTING THEIR
ADDITIONAL REVENUE IN A COST
EFFECTIVE MANNER.
YEAH THEY'RE GOING TO BE THE
TABLE AND I THINK THE OTHER
PIECES THAT WE ALREADY HAVE
BASED OFF OF PROPOSITION --
ENCUMBERED SOURCES OF REVENUE SO
AS THAT THOSE FUNDS COME IN.
THEY'RE GONNA HAVE TO BE A TO GO
INTO EACH OF THOSE INDIVIDUAL
POT SO I CAN ONLY IMAGINE
CALIFORNIA'S GIVE ME THAT MORE
COMPLICATED IN SOME OF THE
STATE'S.
IS WELL MY LAST QUESTION IS AN
ISSUE OF ENFORCEMENT.
SO WHAT HAVE YOU HEARD --
IN OTHER STATES THAT HAVE
ADOPTED STANDARD ABOUT
ENFORCEMENT HAS BEEN TRICKY --
AND TO WALK US THROUGH THAT AT
THE IT IF YOU DON'T MIND I THINK
IT'S PROBABLY TOO EARLY TO TELL
BECAUSE SOME OF THE STATES THAT
HAVE ADOPTED THE SOUTH DAKOTA
STANDARD DID MAKE IT EFFECTIVE
STARTING OCTOBER FIRST --
I THINK THAT WOULD BE
INTERESTING TO SEE HOW DO THEY
REACH OUT TO EVEN IDENTIFY WHO
THESE NEW REMOTE SELLERS ARE
THAT MEET THAT THRESHOLD THAT
DON'T HAVE A PHYSICAL PRESENCE
IN THE STATE.
BECAUSE AS A VARIETY OF WAYS
NEED TO MEET THEM IN SOME STATES
A BIT MORE COMPLICATED BECAUSE
SOME STATES TAX --
INTANGIBLE ITEMS WHERE SO IT'S
NOT LIKE --
I CAN CHECK THE UPS TRUCKS
COMING AND YOU KNOW INTO THE
STATE SO THEY'VE GOT A VARIETY
OF COUNSELING THAT STILL REMAINS
TO BE SEEN.
PLUS I WOULD SAY.
TELLING VENDORS ALL THE SUDDEN
OCTOBER FIRST YOU'RE GONNA BE
REGISTERED AND START COLLECTING
HERE I THINK THAT'S TOO SHORT OF
A TIME FRAME TO BE.
BE EFFECTIVE.
I AGREE WITH YOU AND I THINK THE
ONE IN THE YOU SAID AND IS GOING
TO MAKE ONE LAST COMMENT IS --
IN REGARDS TO WHAT SOME THE
RAMIFICATIONS WOULD BE I KNOW
THERE MAY BE SOME CONCERN SAID --
WE'LL SEE FOLK SHYING AWAY FROM
YOU COMMERCE I JUST CANNOT
IMAGINE THAT I THINK THEY HAVE
IT THERE --
AND WE'RE GONNA CONTINUE TO SEE --
WHICH IS A CONCERN I JUST
SPECIALLY BEING FROM A SMALLER
COMMUNITY --
AND I DO THINK IT CREATES A BIT
OF AN EQUAL PLAYING FIELD --
WITH BRICK AND MORTAR AND MAMA
POPS.
IN HAVING TO STEP UP TIME AND
TIME AGAIN.
YES NO NO NO I AGREE --
I THINK SOME VENDORS MIGHT
DECIDE IF THEY SHOULD THEY HAVE
THE LOW DOLLAR TRANSACTIONS
THEY'RE GONNA BE MONITORING THAT
BECAUSE YOU KNOW IF YOU HAVE.
SALES OF JUST OVER TWO DOLLARS A
STATE NOT TO START COLLECTING
SALES TAX ON YOU YET THAT THAT
THAT MIGHT BE ENOUGH ON THAT ONE
BUT YET THEY'RE OVER THAT ARE
THOUSAND THAT MIGHT BE THERE
GOOD SIZE BUSINESS AND COULD
COULD HANDLE THAT.
ARE THE REMAINS REMAINS TO BE
SEEN AND I THINK USUALLY THE OF
THE VENDORS THE BRICK AND MORTAR --
OPPORTUNITY DENT THEN REMIND
FOLKS THAT YES YOU KNOW THE
SALES TAX IS MUCH BROADER AND
HOPEFULLY THEY'LL BE HEARING OF
IT MORE OFTEN.
AND THE PEOPLE REMEMBERING TO
SHOP IN YOUR LOCAL JURISDICTION
[inaudible]
THANK YOU [inaudible]
SENATOR MARK --
THANK PROFESSOR ALAN --
NOW THAT YOU'RE WRITTEN THE
ARTICLES YOU'RE THE SUBJECT
MATTER EXPERT SO.
APPRECIATE --
YOUR YOUR WORK --
THIS STREAMLINED SALES AND USE
TAX AGREEMENT I WANT TO FOLLOW
UP ON SOME OF THE QUESTIONS
ASKED BY THE CHAIR --
BASED ON OUR DIALOGUE IT HAS A
BOARD.
IT HAS ONE VOTE PER STATE OR
MEMBERS POTENTIALLY --
IT HAS SEVEN SOFTWARE VENDORS
THAT RECOMMENDS --
YOU CAN REGISTER ONE STOP SHOP
AND AND THEY PROMOTE ON THEIR
WEBSITE THAT THEY ARE A
SIMPLIFICATION.
MEASURE I TRY.
TO GET MY ARMS AROUND THIS IT
WAS FORMED IN MARCH OF TWO
THOUSAND SO IT'S BEEN AROUND
EIGHTEEN YEARS YOU'RE READY --
IT HAS TWENTY FOUR STATES IS
MEMBERS BUT IT ONLY REPRESENTS
31% OF THE UNITED STATES
POPULATION.
AND SO THE QUESTIONS I HAD --
I'M NOT SO CONCERNED ABOUT THE
ONE VOTE PER STATE I MEAN I WAS
PART OF A FIFTY EIGHT MEMBER
COUNTY ORGANIZATION AND YOU KNOW
AS LONG AS WE GAVE LOS ANGELES
COUNTY AT LEAST ONE SEAT ON THE
BOARD OR SOMETHING LIKE THAT
THAT.
YOU KNOW WE KIND OF TOOK CARE OF
THE SMALL VERSUS LARGE --
SIDE MAYBE THAT COULD BE
ADJUSTED BUT I'M I'M WONDERING
WHETHER OR NOT IF WE JOINED AS A
STATE.
THAT WE WOULD HAVE TO MAKE MAJOR
MODIFICATIONS TO CONFORM.
IN THEN THAT WOULD BE THE SECOND
QUESTION IS WHY EIGHTEEN YEARS
AND WE HAVEN'T.
WELL YEARS AGO I THINK WE WERE --
THERE WAS LEGISLATION THAT WE
WERE OBSERVING THAT THE THE
MATTER AND THAT THIS IS MANY
YEARS AGO WHICH YOU WOULD HAVE
TO MAKE CHANGES TO YOUR REVENUE
TAXATION CO TO CONFORM TO WHAT
THE MODEL AGREEMENT IS AND I
HAVEN'T DONE A SURVEY AS TO HOW
MANY CHANGES THOSE ARE.
MAYBE THE CD TFA HAS A BETTER
IDEA AS TO THE NUMBER OF THOSE
OR STAFF HERE HAVE CHECKED HOW
MANY CHANGES ARE GOING.
SO MODIFYING WOULD BE ONE OPTION
ANOTHER WOULD BE MAYBE TO START
OUR OWN ORGANIZATION. FOR LARGER
STATES WHERE WE COULD BE A
LITTLE MORE INDEPENDENT LIKE A
TWO TIER.
IS THAT SOMETHING THAT WE SHOULD
CONSIDER YEAH I I'VE I'VE RAISES
ARGUMENT FOR YEARS THAT YOU KNOW
ALL THE SMALL STATES CAN GATHER
TOGETHER BECAUSE IT WILL IT WORK
WILL WAS SAYING THIS WHEN COURT
WAS SAYING AND QUILL.
ALL LOOK OUT THERE'S OVER SIX
THOUSAND TAXING JURISDICTIONS
ALL WITH DIFFERENT RULES WHILE
WE'RE BIG TAXING JURISDICTION
WHY CAN'T WE BE ONE SET OF THE
RULES IN NEW YORK WE ONE SET OF
RULES EVERYBODY ELSE JOIN
TOGETHER SO --
I THOUGHT MAYBE THAT WOULD BE AT
CHALLENGE AT SOME POINT THAT.
YOU KNOW WE HAVE SO MANY.
VENDORS THAT WOULD BE DONE WITH
CALIFORNIA GET DOWN TO FEWER
NUMBER SYSTEMS BUT NEVER OFFICE
HE CAME.
TO CAN ANY KIND OF LITIGATION
BUT YEAH THAT WE WERE THINK
EXPLORING BECAUSE MAYBE WE SAY
WE WE'VE ADOPTED MAYBE SOME
SIMILARITIES.
AND SOME WITH SOME WE DO HAVE OF
SO FAR AS YOU KNOW THE TAX BEING
COLLECTED AT THE STATE LEVEL
THAN GOING BACK DOWN TO THE
LOCAL GOVERNMENTS AS OPPOSED TO
HAVING TO COLLECT.
YOU KNOW.
FILE SEPARATE RETURNS FOR THE
LOCAL GOVERNMENTS SO WE DO HAVE
SOME OF THINGS IN PLACE BUT I
THINK THAT BIG WORTH LOOKING AT
BECAUSE OUR MONEY PEOPLE WERE A
BIG STATE.
SO THEN WHAT WOULD THE BENEFIT
OF OF BEING INVOLVED WITH THE
THE STREAMLINED SALES AND TAX.
USE TAX AGREEMENT GROUP WOULD BE
THAT THEY WORRY IDENTIFIED.
ALL THIS ALL THE VENDORS YOU'RE
USING THE TERM VENDORS.
AND SO THAT WOULD SAVE MAYBE.
THIS STATE A LITTLE BIT OF TIME.
AND IN TRYING TO FIND WHO THEY
NEED TO WRITE LETTERS.
TO AYE YEAH THAT'S THAT'S A GOOD
POINT OF THEIR A REMOTE VENDOR
IN SOME OTHER STATE THEY'RE
PROBABLY REMOTE VENDOR HERE AS
WELL SO OR THAT WOULD HELP
IDENTIFY ALL OF THEM --
USING LIKE YOU KNOW THEY'RE ONE
STOP SHOP WOULD WOULD MAKE SEEM
TO MAKE SENSE OF SOME FEATURES
THAT DO.
SEEM TO MAKE SENSE BY GEXA WOULD
COME DOWN TO COMPARING THE
STREAMLINED SALES AND USE TAX
SIDE BY SIDE WITH.
OR REVENUE TAXATION AGREEMENT
WHERE DO WE NEED TO MAKE CHANGES
AND HOW.
HOW EASY OR SIMPLE WITH THOSE BE
I MEAN IT WHEN I AGREE MOST PUT
TOGETHER YEARS AGO WHEN THEY
WERE DISPUTES OVER DO YOU AROUND
UP FOR YOU DO AROUND DOWN TO
SOME STATES ROUNDED UP AND SOME
AROUND THE DOWN IT WAS A BIG
DISPUTE?
BEFORE THEY COULD FOUND THE END
OF WHILE THEY RESOLVED AT THIS
POINT BUT YES BUT THERE WAS THIS
CUT THOSE KIND --
TO THOSE OF THE RESULT BUT WOULD
THEY BE AND CAUGHT HOW MUCH
CONFLICT WITH A. B. IN OUR STATE
COMPARED TO STREAMLINED SALES
AND USE TAX AGREEMENT.
SO GRAB SOMEBODY ORHE HAS THAT.
SIDE BY SIDE COMPARISON WITH
THAT WOULD BE THE LAST QUESTION
THAT IS THE HISTORY.
WHAT OVER THE LAST EIGHTEEN
YEARS WE HAVE WE DONE YOU
MENTIONED IT WAS A BILL? FOUR
YEARS AGO BUT NO NOT MET SO FOR
YOUR SAKE AUTOS GOT SOMETHING IN
THEIR FILES THAT.
WOULD SHOW THAT A LONG TIME AGO
THAT WE WERE SUPPOSED TO DO A
STUDY OF FOR THAT WE WOULD SIGN
ON HE'S OVER TEN YEARS AGO I
THINK.
SO I DON'T REMEMBER OFF HAND
[inaudible]
YOUR THANK YOU FOR YOUR THE
PROBLEM WITH THAT WITH THAT ON
THE YEAH.
BUT YOU'RE ASKING YOUR QUESTION
DOES RESEARCHING.
ANY OTHER QUESTIONS I HAVE
ANOTHER QUESTION --
AS A MEMBER YOU.
THINK YOU ARE YOU AT ONE POINT
IN YOUR TESTIMONY YOU MENTIONED
THAT PERHAPS NON MEMBER STATES
COULD JOIN.
ON THE STREAMLINED SALES
AGREEMENT --
I JUST WANTED.
TO ASK MORE ABOUT THAT LIKE.
WHAT DO YOU ENVISION OR HOW IS
THAT POSSIBLE FOR CALIFORNIA
ONLY HEARD WAS A IT WAS A WEEK
OR TWO AFTER EATING AND ON THEIR
AGENDA WAS?
WHAT ABOUT NON STATES USING LIKE
THE SOFTWARE PROVIDERS YOU KNOW
SOMEHOW YOU'RE USING --
THAT SYSTEM WHICH YOU KNOW I
THINK ABOUT IT THE REMOTE
VENDORS WOULD LIKE THAT BECAUSE
IF THEY CAN HAVE ONE SOFTWARE
PROVIDER HELPING WITH ALL THE
STATES THAT WOULD BE THEIR WAY
TO GO AS WELL BECAUSE ACTION
MIGHT SEE.
THAT HAD TO BE A STATE OF THE OF
THE VENDORS THAT THAT THE REMOTE
VENDORS MIGHT BE THE ONE SAYING
I WANT TO USE THE SOFTWARE NOT
JUST AND HE'S TWENTY FOUR STATES
BUT I WANT TO USE IT. FOR OTHER
STATES.
AND THE THAN THE SOFTWARE
VENDORS HAS HOWEVER BEEN WOULD
COME BACK TO CITY CALIFORNIA SAY
WILL FORK UP GIVE US SOME MONEY
TO HELP MAKE THAT THAT HAPPEN.
BECAUSE I THINK YOU KNOW HUNDRED
THOUSAND IS NOT THAT BIG OF A
BUSINESS.
IN SOME REAL FOR SOME ONLINE
RETAILERS.
AND FOR THEM TO HAVE.
TO USE THE AT THE SOFTWARE FOR
THE STREAMLINED AND THEN
SOMETHING ELSE FOR THE BIGGER
STATES.
MIGHT BE A BURDEN FOR THEM.
RIGHT SO IT IS POSSIBLE THAT
CALIFORNIA CAN GO IN.
ON USING THAT SAME SOFTWARE.
YET I THINK BE WORTH LOOKING AT
MANY SIR YOUR COMMERCIAL.
VENDORS ABOUT JUST WONDERING IF
THEY'VE ACTUALLY BY CHANCE
APPROACH THE CD TFA TO SEE IF
THEY WANT.
TO BY THE THE SOFTWARE.
BECAUSE OF THE THE VENDORS OF
THIS OFFER PROVIDER HAVE AN
INTEREST IN DOING THIS BECAUSE
THEY'RE PEOPLE USING IT.
WOULD.
LIKE TO HAVE IT DONE IN EVERY
STATE THAT EVEN EASIER FOR THOSE
ALL THOSE VENDORS.
HAVE ONE MORE QUESTION WHAT HAVE
OTHER STATES DONE. TO DO
OUTREACH TO THESE ONLINE
RETAILERS REMOTE SELLERS. TO
INFORM THEM.
THAT THERE ARE LIABLE FOR THIS
TAX.
A THAT THAT'S A GOOD QUESTION
I'VE I'VE BEEN.
TRACKING WHAT WHAT THE STATES
HAVE BEEN DOING THE BEST BEST I
CAN'T OTHERS OF THE CONSTANT.
CHANGE AT THAT TIME THAT TIME
THE STATE MIGHT SAY ONE THING
TION OF THAT [inaudible]
THE YEAH THE PUSH TO GET UP YOU
WONDER WHO IS READING THAT MEANS
SOME VENDOR DECIDING I'VE EVER
COLLECTED IN MARYLAND BUT I'LL
START LOOKING AT THE MARYLAND
[inaudible]
THE DEPARTMENT OF REVENUE
WEBSITE BUT THE FIRST.
ANNOUNCEMENT BY THE DEPARTMENT
OF OF MARYLAND REVENUE MARYLAND
WAS OUT GO READ THE CASE AND
FIGURED OUT.
LIKE I NOT SHOWN THE VENDORS
WERE GOING TO DO THAT IF SINCE
CLARIFIED THAT WILL MORE DETAIL
THAT'S GONNA BE A BIG A BIG DEAL
TO HAVE SHE PUSH.
THAT OUT AND IT WOULD BE.
I GUESS EASIER.
FOR YES HAS A THAT IT DIDN'T NOT
ONLY EASIER FOR THE STREAMLINED
SALES AND USE TAX ONES BECAUSE
REMOTE VENDORS --
THERE TO ONLY VOLUNTARILY GO
INTO THE STREAMLINED SALES AND
USE TAX.
IF YOU'RE REMOTE VENDOR AND YOU
SIGN ON I'M GONNA GO REGISTER
AND ALL THOSE STATES YET NOW
YOU'RE SAYING I'M GONNA REGINALD
THE STATE'S EVEN THOUGH I DON'T
HAVE A PHYSICAL PRESENCE THERE --
BUT NOT EVEN ON ALL REMOTE
VENDORS HAVE SIGNED ON TO THE
STREAMLINED SALES AND USE TAX
STATE SO YEAH THEY'VE GOT DO BIG
EFFORT TO PUSH OUT.
SO IT'S GONNA FALL PRIMARILY ON
YOU THERE.
ARE TAX ADVISORS TO SAY HEY WE
NEED TO BE LOOKING AT THIS
YOU'VE GOT SOME EXPOSURE BECAUSE
YOU KNOW FOR EXAMPLES YOU KNOW
NORTH DAKOTA HAS CHANGED --
LAW TO SAY YOU GOT MORE THAN TWO
OR TRANSACTIONS YOU TO START
COLLECTING --
SALES TAX THERE.
THE PUBLIC ATTACK TAX DEPARTMENT
YEAH THAT'S THAT'S WHAT I'M
ENVISIONED YOU KNOW THEY'RE THE
COULD BE SMALL AND HAVE OVER TWO
HUNDRED TRANSACTIONS IN THE
STATE AND NOT REALIZE THAT.
THEY SHOULD BE COLLECTING THESE
TAX RIGHT.
OKAY THINKING.
ANYONE ELSE I HAVE ONE LAST
QUESTION AND I'M NOT SURE IF
IT'S FOR YOUR THE LA --
BUT AS WE KIND OF LOOK AT WHAT
WE'RE GOING TO DO IN THE STATE
OF CALIFORNIA I'M WONDERING DO
WE HAVE ANY IDEA HOW MANY.
BUSINESSES WILL FALL WOULD FALL
UNDER THE HUNDRED THOUSAND
TRANSACTIONS AND HOW MANY IF WE
LIFTED IT TO FIVE HUNDRED
THOUSAND HOW MANY WE WOULD TAKE
OUT AND WHAT THE REDUCTION IN --
KIND OF REVENUE TO THE STATE
WHAT IT WOULD LOOK LIKE RIGHT
BECAUSE WE WOULD TAKE OUT AREN'T
A LOT OF OUR ENFORCEMENT
RESPONSIBILITY FOR A LOT OF THE
SMALLER COMPANIES AND AND OVER
FIVE HUNDRED THOUSAND IF.
I FEEL LIKE IT BE EASIER TO FIND
THEM IN THE FIRST PLACE IT WOULD
REDUCE OUR FOR ENFORCEMENT
EFFORTS I'M JUST CURIOUS IF
ANYONE IF WE HAVE THOSE KIND OF
NUMBERS AVAILABLE TO US.
YOU KNOW THE THE OVER IT WAS
OVER FIVE HUNDRED THOUSAND I
WOULD GUESS WOULD HAVE THOSE
NUMBERS BECAUSE THEY'D BE.
LIKELY PAYING INCOME TAX AND THE
STATE -- BUT
OVER A HUNDRED THOUSAND ONE IS
LIKE BE PAYING INCOME TAX THE
STATE SO WE COULD TRACK OF THAT
WAY BUT I KNOW THIS OTHER TOOLS
AVAILABLE FOR IDENTIFYING THOSE
THOSE VENDORS.
CAM WISE IT'S I THINK JUST UP TO
YOUR BIG.
PUBLIC ANNOUNCEMENTS THAT THESE
VENDORS NEED TO BE TRYING TO
TRACK THIS.
TRACK THIS DOWN AT THE OF FILING
OBLIGATIONS HERE AND I THINK ALL
THE WILL FALL ON THEIR TAX
ADVISORS.
ALL RIGHT GREAT THANK YOU AND
THANK YOU SO MUCH THANK YOU VERY
MUCH INTEREST MONEY TODAY.
NEXT WE HAVE NICOLAS MADURO'S.
GOOD TO SEE YOU AGAIN
[inaudible]
CAROLINA.
THANK YOU FOR BEING HERE TODAY
THANK YOU FOR HAVING ME.
HI MY NAME'S NICK MOTORISTS AND
THE DIRECTOR OF THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION ALSO KNOWN AS THE
C. D. T. F. A WHICH FOR EASE OF
SPEAKING I WILL.
CALL IT THAT TODAY --
THANK YOU SO MUCH FOR HAVING ME
HERE TODAY THANK YOU TO TO THE
COMMITTEE STAFF WHO'S JUST A
PLEASURE TO WORK WITH AND IT'S
BEEN INCREDIBLY HELPFUL ON THIS
AND MANY OTHER SUBJECTS --
I REALLY APPRECIATE THEIR
COOPERATION PARTNERSHIP.
I'M HAVE SOME REMARKS AND THEN
OF COURSE I WELCOME ANY
QUESTIONS YOU MAY HAVE TODAY --
I ALSO HAVE SOME MEMBERS OF THE
FANTASTIC CD TFA TEAM HERE WITH
ME TODAY IN CASE YOU HAVE ANY.
QUESTIONS THAT REACH BEYOND MY
DEPTH.
IN THE VERY COMPLEX IT'S A VERY
COMPLEX ISSUE OF USE TAX.
SO -- JUST
BY WAY OF BACKGROUND CD TFA
ADMINISTERS MORE THAN --
THIRTY SEVEN STATE TAX AND FEE
PROGRAMS INCLUDING THE STATE
SALES AND USE TAX TOBACCO FUEL
CANNABIS TAXES AND MANY OTHERS.
LAST FISCAL YEAR WE COLLECTED
ALMOST SIXTY EIGHT BILLION
DOLLARS IN REVENUE --
NOW.
THE VAST BULK OF THAT IS THE
SALES AND USE TAX AND JUST --
TO CLARIFY ABOUT 55% OF THE
SALES AND USE TAX TO BE COLLECTS
COLLECT GOES OUT TO ON THE
LOCALS -- TO
CITIES COUNTIES TRANSPORTATION
AUTHORITIES OTHERS ABOUT 45% OF
THAT --
COMES TO YOU FOR GENERAL FUND
REVENUE --
HERE IN THE STATE.
THE DEPARTMENT WAS JUST CREATED
IN JULY OF LAST YEAR I JOINED A
COUPLE OF WEEKS LATER BEEN A
BUSY.
BUSY YEAR.
WE'VE IMPLEMENTED THE CANNABIS
TAXES YOU KNOW SENATOR --
WE'VE --
CONDUCTED ABOUT SEVEN HUNDRED
EDUCATION EVENTS AROUND THE
STATE WE'VE BEEN STREAMLINING
OUR PROCESS SEES --
TO BETTER HELP SMALL TAXPAYERS.
WE'VE BEEN WORKING ON A LOT OF
AUDITS THAT IT IS AND CORRECTIVE
ACTION PLANS.
MOVE ALSO IMPLEMENTED A BIG NEW
COMPUTER SYSTEM THAT'S BEEN A
REAL CHALLENGE.
BUT THROUGH ALL OF THAT ONE OF
OUR BIG --
EFFORTS OF FOLK OF FOCAL POINT
OF OUR EFFORT HAS BEEN THE
COMMERCE --
FROM THE EARLIEST DAYS
DEPARTMENT WE'VE RECOGNIZED THAT
WE'VE GOT TO DO MORE WITH --
ONLINE SALES APPROACHING 10% OF
ALL RETAIL SALES --
THIS IS A HUGE.
AREA OF IMPORTANCE FOR US AND
FOR THE STATE NOT ONLY IS IT A
BIG SOURCE OF OUR TAX GAP BUT IT
IS ALSO GROSSLY UNFAIR. TO BRICK
AND MORTAR RETAILERS AND TO MAIN
STREET BUSINESSES AROUND THE
STATE --
THAT ARE AUTOMATICALLY UNDER CUT --
BY AT LEAST SEVEN AND A QUARTER
PERCENT ON SALES DAY IN AND DAY
OUT THROUGHOUT THE STATE.
OUR REVENUE ESTIMATE IS THAT --
THE STATE IS LOSING SOMEWHERE
BETWEEN ONE AND TWO BILLION
DOLLARS --
ANNUALLY THAT'S THE COMBINED
STATE PORTION AND AND LOCAL
PORTION --
DUE TO THE E. COMMERCE TAX GAP --
IS TO GIVE YOU A BRIEF UPDATE ON
WHAT WE'VE DONE AND WHAT WERE
PREPARING TO DO TO ADDRESS THAT --
SO I'D LIKE TO START WITH GIVING
A BRIEF OVERVIEW OF SALES AND
USE TAX WHICH ALREADY HEARD SOME
BUT I'LL GIVE YOU.
A JUST A SLIGHTLY DIFFERENT TAKE.
TO ALL TALK ABOUT OUR EXISTING
EFFORTS AND WHAT WE'VE BEEN
DOING --
WITH REGARD TO HE COMMERCE FOR
THOSE MERCHANTS THE TO HAVE
PHYSICAL NEXUS IN THE STATE.
THREE ALL PROVIDE AN EXPLANATION
THE WAY FAIR DECISIONS INTERPLAY
WITH THE STATE'S LONG ARM
STATUTE AS WE SEE IT AT THE
DEPARTMENT --
THEN ALL --
LIKE TO GIVE YOU A BRIEF
TIMELINE AN UPDATE ON WHAT ARE
IMPLEMENTATION PLAN IS UNLESS OF
COURSE I'M HAPPY TO ANSWER ANY
QUESTIONS.
SO FIRST --
TO THE SALES AND USE.
TAX BACKGROUND WHICH ALREADY
HEARD SOME OF TODAY.
AS YOU KNOW WE'VE GOT A SEVEN IN
QUARTER PERCENT STATEWIDE RATE --
WITH CERTAIN PERCENTAGES
ALLOCATED TO THE STATE TO CITIES
THE COUNTY'S TRANSPORTATION
AUTHORITIES AND OTHERS --
ON TOP OF THAT RATE WE HAVE --
DISTRICT TAXES IMPOSED BY
JURISDICTIONS AROUND THE STATE.
OF THESE ARE --
FOR EXAMPLE SACRAMENTO
SACRAMENTO COUNTY HAS A POINT 5%.
DISTRICT TAX THE CITY OF
SACRAMENTO ALSO HAS A POINT 5%
DISTRICT TAX.
SO IF YOU WERE TO PURCHASE
TAXABLE TANGIBLE PERSONAL
PROPERTY WITHIN THE CITY OF
SACRAMENTO.
WE PAY THE SEVEN AND A QUARTER
PLUS THAT EXTRA 1% SEE PAY EIGHT
AND A QUARTER PERCENT --
FOR SALES TAX TO APPLY.
THE LAW REQUIRES BOTH IN STATE
PARTICIPATION OR NEGOTIATION BY
THE RETAILER AND THE TITLE
PASSES IN THE STATE.
IF THOSE TWO CRITERIA ARE NOT
MET THEN THEN WE'RE APPLYING USE
TAX NOT USED TAXES THE PLIGHT AT
THE SAME RATE AS THE SALES TAX.
THE ONLY REAL DIFFERENCE THAT I
THINK IS --
RELEVANT HERE TODAY IS IS.
WITH REGARD THE ALLOCATION OF
THAT. 1% --
BRADLEY BURNS TAX.
WHICH IN A USE TAX SCENARIO --
GOES INTO A COUNTY WIDE POOL
WHICH IS THEN ALLOCATED --
ACCORDING --
TO THE SALES TAX --
ALLOCATION RATES WITHIN THAT.
WITHIN THAT COUNTY --
TODAY I'M TALKING ABOUT USE TAX
BECAUSE POST WAY FAIR.
WE'RE TALKING ABOUT ONLINE
RETAILERS WITHOUT ANY PHYSICAL
PRESENCE IN THE STATE SO BY
DEFINITION.
THESE ARE RETAILERS WITHOUT IN
STATE PARTICIPATION IN SALE.
IN THERE'S ONE FOR THE POINT I
THINK IS REALLY IMPORTANT TO
POINT OUT TODAY.
ALL OF THE TAX IN IT AND THIS IS
I THINK CAN'T BE STRESSED ENOUGH
ALL THE TAX WE'RE TALKING ABOUT.
IS ALREADY DO.
THE ONLY QUESTION IS WHETHER OR
NOT CONSUMERS IN CALIFORNIA.
ARE REQUIRED TO DECLARE AND KEEP
TRACK OF AND REMIT THAT TAX THE
STATE THEMSELVES.
OR AS HAPPENS IN WITH ALL OTHER
TRANSACTIONS THAT YOU USED TO
WHETHER THE RETAILER.
WILL -- HAS
THAT OBLIGATION TO KEEP TRACK OF
COLLECT AND REMIT THE TAX --
SO THAT'S WHY I CAN'T EMPHASIZE
THAT ENOUGH THINK IT'S RULING
PARTY KEEP THAT MIND MISTER
DIRECTOR I IT.
SHE DIED.
UNDERSTAND WHAT YOU'RE SAYING IN
REGARDS --
I'D IT'S ALREADY DO.
THOSE TWO ITEMS YOU JUST
MENTIONED ARE REALLY BIG.
RIGHT DO THEY EVEN KNOW THAT
THEY'RE GONNA HAVE TO BE ABLE TO
REMAIN AT IN RIGHT NOW NOT
TECHNICALLY THE THE RETAILER THE
CONSUMER KNOW THEIR THE
RETAILERS TO IT THESE DECISIONS
HAVE TO BE MADE --
IN IN IMPLEMENTED I IS MORE OF A
CHALLENGE THAN JUST SAYING THAT
IT'S THEIR DO IT IS ALTHOUGH I
DO THINK IN AND WE'LL GET TO
THIS AND I I APPRECIATE THE
COMMENT.
I DO THINK.
IN A IN SOME OF THE CONVERSATION
THAT I'VE HEARD IN IN SITTING IN
THE AUDIENCE FOR THIS.
WE ARE.
OVER PLAYING I THINK TO SOME
EXTENT.
THE SMALL BUSINESS ANGLE HERE
AND I CAME HERE FROM THE SMALL
BUSINESS ADMINISTRATION I'M.
VERY FOCUSED ON THE IMPACT OF
ALL THIS ON SMALL BUSINESS.
BUT IT.
OUR RESEARCH TELLS US THEIR
PROXIMALLY 80% OF ONLINE SALES.
COME FROM 2% OF RETAILERS.
WE HAVE SOME VERY LARGE
RETAILERS.
WHO ARE AMONG THE MOST
TECHNOLOGICALLY ADVANCED
COMPANIES ON EARTH?
WHO ARE NOT --
COLLECTING AND REMITTING USE TAX
[inaudible]
SO.
IF WE CAN BRING THOSE VERY
TECHNOLOGICALLY ADVANCED
COMPANIES INTO COMPLIANCE WE
WILL GO A VERY LONG WAY TO
CLOSING THE TAX CAP.
NOW CERTAINLY THERE ARE SMALLER
RETAILERS ALSO --
WHO MAY BE IMPACTED BY THIS BUT?
I I THINK IF WE FOCUS SOLELY ON
SMALL RETAILERS WHO MIGHT HAVE
TWO HUNDRED TRANSACTIONS WE MAY
BE MISSING THE FOREST FOR THE
TREES --
ANYWAY IF I COULD BRING IN --
TALK A BIT ABOUT WHAT WE'VE
ALREADY BEEN DOING SO EVEN PRIOR
TO WAY FAIR.
RETAILERS WHO HAVE --
PHYSICAL PRESENCE IN THE STATE.
WERE REQUIRED --
TO COLLECT AND REMIT USE TAXES
[inaudible]
IT.
HAS BEEN APPARENT THAT MANY
RETAILERS.
WITH PHYSICAL PRESENCE --
HAVE NOT BEEN LIVING UP TO THAT
OBLIGATION.
MANY OF THESE RETAILERS HAVE
PHYSICAL PRESENCE THROUGH
WAREHOUSING OF GOODS IN THE
STATE OF CALIFORNIA.
SO AT CD TFA WE'VE OVER THE PAST
YEAR [inaudible]
EXCUSE ME.
WE HAVE --
GONE ABOUT --
DOING OUR OWN RESEARCH TO TRY TO
IDENTIFY THOSE RETAILERS.
WE CONTACTED MORE THAN TWENTY
FIVE HUNDRED OF THEM --
IN THE PAST YEAR.
WE'VE OF PERMITTED --
SOME HUNDREDS OF THEM AND I
THINK IN THAT EFFORT.
WE'VE COLLECTED ABOUT SIXTY NINE
MILLION DOLLARS IN.
ADDITIONAL REVENUE DEVOTED TO
THOSE EFFORTS TO THAT'S THESE
ARE THE RETAILERS THAT DO YOU
HAVE ANY --
PHYSICAL PRESENCE WITHIN THE
STATE -- WE
WILL CONTINUE REGARDLESS OF WHAT
WE DO --
WITH WAY FAIR OUT OF STATE
RETAILERS WITHOUT A PHYSICAL
PRESENCE WE WILL CONTINUE THAT
EFFORT -- I
EXPECT THAT WE WILL BE
CONTACTING MANY MORE RETAILERS --
IF WE DO HAVE A PHYSICAL
PRESENCE IN THE STATE.
AND REQUIRE THEM TO GET
PERMITTED AND COMPLY --
RETAILERS I ANYBODY LISTENING I
WOULD ENCOURAGE YOU.
TO COME FORWARD BEFORE WE
CONTACT YOU BECAUSE THERE ARE
BENEFITS. TWO COMING FORWARD AND
VOLUNTARILY DISCLOSING IF WE
FIND YOU BEFORE YOU FIND US --
YOUR OPTIONS ARE MORE LIMITED SO --
SO I DON'T INTERRUPT YOU BUT
MAYBE THEY USUALLY HAVE THE
ANSWER TO THE QUESTION I ASKED
BEFORE WHICH IS.
WHAT WITH THE DIFFERENT WHAT IS
THE DO YOU HAVE AN ESTIMATE OF
HOW MANY COMPANIES THAT?
ARE HOW MANY BUSINESSES BECAUSE
LIKE YOU SAID YOU'RE ONLY
TALKING ABOUT REALLY 2% OF THE
COMPANIES WOULD FALL UNDER OR
ABOVE UNDER THAT ABOVE THAT FIVE
HUNDRED THOUSAND OR UNDER THE
FIVE HUNDRED THOUSAND OUR
THRESHOLD.
I DON'T.
I DON'T KNOW THAT WE HAVE THAT I
HAVE AN ESTIMATE OF THE NUMBER
OF COMPANIES OF A DIFFERENCE IN
REVENUE I DO WE DO HAVE AN
ESTIMATE BETWEEN A HUNDRED AND A
HUNDRED AND FIVE HUNDRED
THOUSAND AND I THINK THE
DIFFERENCE IN REVENUES OF ABOUT
5%.FOR THAT SO IT'S IT'S A NAY --
YOU KNOW THAT TO GO TO A LARGER
INCOME IT BECAUSE THE VAST BULK
OF THE SALES WERE TALKING ABOUT
ARE REALLY FROM SOME GIANT.
COMPANIES.
OKAY -- SO
AS YOU'VE HEARD FROM PROFESSOR
ALAN AND ELLIE OF WAYFAIR CAME
ALONG -- IN
LATE JUNE OF THIS YEAR --
WITH SPRING COURT DECISION.
AND EVEN BEFORE THE DECISION
CAME OUT WE WERE LOOKING AT
POSSIBLE.
HOW WOULD INTERACT WITH --
THE STATE'S LONG ARM PROVISION.
HELLO.
IN A REVENUE TAXATION CODE
SECTION SIXTY TWO OH THREE
SUBDIVISION SEE.
WHICH EXPRESSLY PROVIDES THAT
THE TERM RETAILING CATION
BUSINESS IN THE STATE MEANS ANY
RETAILER THAT HAS SUBSTANTIAL
NEXUS WITH THE STATE. FOR
PURPOSES OF THE COMMERCE CLAUSE
U. S. CONSTITUTION --
AND ANY RETAILER PAWN HIM
FEDERAL LAW PERMITS THE STATE TO
IMPOSE THE USE TAX COLLECTION
DUTIES SO BASICALLY.
OUR JURISDICTION EXTENDS AS FAR
AS CONGRESS AND THE CONSTITUTION
PERMITS --
AND AS YOU'VE ALSO HEARD THOUGH
THE CORDON WAY FAIR DIDN'T
PROVIDE DEFINITIVE GUIDANCE AS
TO WHAT EXACTLY THAT MEANS AND
SO.
WE HAVE SPENT A LOT OF TIME
DOING A LOT OF LEGAL RESEARCH --
AND IT IS YOU KNOW HAS BEEN VERY
COMPLICATED I THINK THAT'S WHY
I'VE SEEN.
NOT ONLY CALIFORNIA TEXAS
FLORIDA NEW YORK AND SOME OTHER
BIG STATES --
HOLD BACK --
IN ANY EVENT --
WE ALSO DO THEY'LL REALIZE THAT
WE ARE AND NEED TO MOVE FORWARD
THE CALIFORNIA LEGISLATURE HAS --
PAST THIS LONG ARM STATUTES FOR
EXACTLY THIS EVENTUALITY --
BUT THERE ARE SOME QUESTIONS
NEED TO ANSWER AND AMONG THEM
ARE WHAT ARE THE APPROPRIATE
THRESHOLDS AS YOU'VE HEARD --
WHAT ARE THE IMPACTS ON IT IN
STATE SELLERS WHICH IS --
ONE OF THE QUIRKY THINGS OF OUR
CODE THAT HASN'T COME UP IN
TODAY'S HEARING BUT WHATEVER WE
DO WILL IMPACT --
IN STATE SELLERS AS WELL.
OF WHAT'S THE MOST EFFICIENT OUT
OF STATE COLLECTION PROCESS --
WHEN WILL THE OBLIGATION BEGAN --
HOW LONG WILL BUSINESSES HAVE TO
COME INTO COMPLIANCE --
HOW WILL LOCAL DISTRICT TAXES BE
IMPACTED --
THE COSTS OF IMPLEMENTATION AND
THE RISK OF LITIGATION ARE JUST
SOME OF THE QUESTIONS.
THAT WE ARE.
CONTEMPLATING GIVING THE GIVEN
THESE AND OTHER QUESTIONS AND
BEFORE WE FINALIZE ANY
IMPLEMENTATION.
WE ARE EAGER TO HEAR FROM ALL
STAY SAYS.
BUSINESSES INCLUDING THOSE WITH
PHYSICAL PRESENCE IN THOSE
WITHOUT --
RETAILERS LARGE AND SMALL CITIES
COUNTIES.
OTHERS NON PROFITS --
WE ARE SCHEDULING OR HAVE
SCHEDULED.
A STAKEHOLDER MEETING FOR NEXT
WEDNESDAY AT TEN AM AT THE
DEPARTMENTWE WELCOME
PARTICIPATION BY ANYONE
INTERESTED --
WELL WE DON'T AND WHAT WE DON'T
KNOW WHAT THE FULL CONTOUR IS OF
IMPLEMENTATION LOOK LIKE ONE
THING I DO WANT TO STRESS TO
ANYBODY LISTENING --
WE CERTAINLY WILL NOT BE
IMPOSING ANY RETROACTIVE
LIABILITY WE'RE ONLY LOOKING AT
PERSPECTIVE --
SOLUTIONS TO THIS SO.
THAT IS SOMETHING THAT COMES UP.
OFTEN SO I WANNA MAKE SURE
PEOPLE UNDERSTAND THAT --
WE DO EXPECT THAT WE WILL --
ISSUE A NOTICE SOMETIME --
BEFORE THE END OF THE YEAR. TO
BUSINESSES INFORMING THEM OF
THERE NEED TO COMPLY WITH.
A SIXTY TWO OH THREE WITH WITH
CALIFORNIA'S TAX LAWS.
AND WE EXPECTED SOMETIME IN THE
FIRST.
HALF BURKE FIRST PART OF TWENTY
NINETEEN THAT --
THAT.
THAT NOTICE WOULD A REQUIRE
COMPLIANCE --
A FEW OTHER THINGS THAT I THINK
IT'S WORTH MENTIONING --
AS WE LOOK AT REVENUE AND AND
WHOSE IMPACTED --
AS I MENTIONED YOU COMMERCE
SALES VERY CONCENTRATED --
SECOND -- IN
THERE WITH THIS WAS MENTIONED
EARLIER.
YOU'RE LOOKING AT A VERY
DIFFERENT SLICE THE MARKET
BETWEEN BUSINESS TO BUSINESS --
TRANSACTIONS AND BUSINESS TO
CONSUMERTRANSACTIONS I THINK WE
OFTEN THINK OF THE BUSINESS TO
CONSUMER TRANSACTIONS BECAUSE
MOST OF US HERE ARE.
THAT'S HOW WE INTERFACE WITH
ONLINE RETAIL.
BUT ACTUALLY THE BULK OF ONLINE
RETAILERS BUSINESS TO BUSINESS --
A HUGE PERCENTAGE THAT THOUGH IS
OUR SALES FOR RESALE SO THEY'RE
NOT SUBJECT TO TAX.
A AND ALSO I THINK COMPLIANCE
APPEARS TO BE HIGHER IN THE B.
TO B. SEGMENT --
PERHAPS BECAUSE WE ALSO --
IN FORCE USED TAX LAWS WHEN WE
DO OUR BUSINESSES IN THE STATE --
SO WE'RE CHECKING USE TAX
LIABILITY --
FOR THOSE TAXPAYERS THAT ARE
ALREADY PERMITTED BY CD TFA --
IN THE BUSINESS TO CONSUMER
WHAT'S A SMALLER SEGMENT OF THE
MARKET THE COMPLIANCE RATES.
ARE.
MUCH WORSE [inaudible]
SO -- AND
LASTLY IN THIS CAME UP --
BEFORE AS WELL.
THE IT COMPLYING --
ENFORCEMENT ACTIVITIES OUTSIDE
OF THE STATE WILL BE MORE
COMPLICATED WE'RE WE RECOGNIZE
THAT -- CDFA
DOES HAVE FOUR OFFICES.
DEVOTED EXCLUSIVELY TO OUT OF
STATE RETAILERS.
WE HAVE ONE IN SACRAMENTO WHICH
IS CALLED NOW TO STATE OFFICE
WHICH IS CONFUSING.
THAT DEALS WITH THE WESTERN
UNITED STATES BUT THEN WE HAVE
OFFICES IN HOUSTON CHICAGO.
NEW YORK AS WELL THAT FOCUS
SOLELY ON ENFORCEMENT.
OF FOR OUT OF STATE RETAILERS SO.
THIS IS SOMETHING WE'RE USED TO
WE HAVE A MILLION TAXPAYERS
ALREADY.
IN OUR SYSTEM.
I THINK WE CAN HANDLE WHATEVER
ADDITIONAL WORK IT IS BUT BUT IT
IS MORE COMPLICATED AND CAN BE
MORE TIME CONSUMING.
I WITHOUT A SERVICE HOURS SO
WITH THAT THOSE ARE FEW THE
ISSUES I HOPE THIS IS HELPFUL
AND I LOOK FOR TO ANY QUESTIONS
YOU MAY [inaudible]
SENATE MCGUIRE.
I THINK SO MUCH.
VENTURA STRUCTURE THANK YOU AS
ALWAYS --
FOR THE COMPREHENSIVE IN A IN.
WITH A GOOD PRESENTATION JUST A
FEW QUESTIONS FOR YOU EVER WORKS
THANK YOU SO WORKLOAD IS A CRAZY
BUSY FOR YOU IN THE DEPARTMENT
RIGHT NOW --
AND JUST TECHNOLOGY UPGRADE AND
THEN YOU'RE STILL DEALING WITH
THE THE GOOD TIMES WITH CANNABIS
IN TRYING TO BE ABLE TO
IMPLEMENT.
YES IT IS NOT BEEN THE SMOOTHEST
IT'S A SUCH A CHALLENGE --
TO BE TO BRING FOLKS IN
COMPLIANCE.
SO THEN YOU ADD THIS TO ANOTHER
LAYER UNDERSTANDING THAT YOU'RE
SAYING THAT --
80% OF SALES ARE COMING FROM 2%
RETAILERS.
AN SAME TIME THEY'LL.
ANYTIME ANYTIME ARE WE DO
TECHNOLOGY HERE IN CALIFORNIA IT
COULD BE CHALLENGE THAT I WAS
GIVEN ASSURANCES IT IS COULD BE
REALLY SMOOTH ROLLING OUT.
WE ALL KNOW IT'S ALWAYS THE MORE
COMPLICATED YEAH SO.
YEAH THERE YOU GO SO WALK US
THROUGH THAT BECAUSE IT IS JUST
ON THE WAY LIFE SO WHAT'S.
YOUR THOUGHT.
ON BEING ABLE TO BRING
COMPLAINTS IN IN.
HOW DO YOU BRING THAT REMAIN TO
THE 20% INTO THE FULL
[inaudible]
WELL. TO VIEW MY CERTAIN SURE
HAPPENS SO IF.
THE REGISTRATION PIECES
RELATIVELY EASY --
YOU KNOW WE DO HAVE AN ONLINE
REGISTRATION IT'S NOT INCREDIBLY
COMPLICATED I'VE.
GONE THROUGH IT MYSELF NOT AS A
BUSINESS OWNER BUT AS A HAS A
TWO MEMBER THEIR CD TFA USE
WANTS TO TEST OUT THE NEW
COMPUTER SYSTEM NOT THAT PARTS.
NOT DIFFICULT --
THE AUDIT PROCESS TYPICALLY.
A AGAIN UNLESS WE SEE REAL
IRREGULARITIES OR REAL RED FLAGS
RAISED.
THE AUDIT PROCESS TYPICALLY
DOESN'T BEGIN TO LET'S SAY THREE
YEARS INTO A REGISTRATION CYCLE --
FOR ANYBODY LISTENING I DON'T
WANT TO THANK YOU CAN --
NOT COMPLY FOR THREE YEARS
THAT'S NOT HOW IT WORKS --
SINCE WE DO GO BACK EIGHT YEARS
OFTEN AND OUR AUDITS --
SO I THINK.
YOU KNOW WHAT THE BEGINNING PART
WOULD BE A MATTER OF GETTING
REGISTRATION AND GETTING PEOPLE
INTO THE SYSTEM --
WE DO A LOT OF OUR REGION
EDUCATION I THINK THAT'S SORT OF
HOW WE WOULD --
FOCUS.
OUR EFFORTS SIDE TO TRY.
TO BRING VOLUNTARY COMPLIANCE
WHICH IS REALLY THE CHEAPEST
MONEY WE CAN BRING INTO THE
SYSTEM BECAUSE COLLECTIONS
EFFORTS ARE MORE EXPENSIVE AUDIT
IS EVEN MORE EXPENSIVE SO.
OUR FOCUS IS REALLY ON HELPING
PEOPLE WHO WANT TO COMPLY --
VOLUNTARILY [inaudible]
I THINK. FOR THE LARGE FOLKS --
I DON'T THINK THAT WILL BE VERY
DIFFICULT I THINK IN THE PAST
YOU'VE SEEN SOME PEOPLE PROTEST
THAT.
THERE IS IT WOULD BE IMPOSSIBLE
WOULD BE VERY DIFFICULT HOW
COULD WE POSSIBLY DO IT AND THEN
SOMEHOW WITH THE FLIP OF A
SWITCH --
THEY ARE THEN ABLE TO COLLECT
AND REMIT VERY ACCURATELY --
FOR SOME MID TO SMALLER SIZE
RETAILERS AGAIN.
WHATEVER NUMBER WE'RE TALKING
ABOUT THOSE ARE JUST THE SALES
IN CALIFORNIA SO.
PRESUMABLY Và YOU HAVE HALF A
MILLION DOLLARS IN SALES IN
CALIFORNIA YOUR MAY BE A YOU
KNOW. FIVE MILLION DOLLAR --
IN SALES RETAILERS SO AGAIN.
IN OF THAT'S A PRETTY GOOD SIZE
YEAH I WISH MY MOM AND POP HAD A
FIVE MILLION DOLLAR A YEAR.
BUSINESS I WOULD.
MAYBE I'D STILL BE SITTING HERE
BUT MAYBE I'D BE ON THE BEACH
SOMEWHERE AND ANYWAY THAT'S
NEITHER HERE NOR THERE --
BUT SO I THINK THAT'S YOU KNOW I
I KEEP THAT IN MIND THE OTHER
THING IS THAT THERE ARE THESE
AND IT'S IT CAME UP BEFORE WITH
REGARD TO STREAMLINED.
THESE ARE NOT STREAMLINED I I
DON'T BELIEVE THESE ARE
STREAMLINED PROPRIETARY SOFTWARE
ARRANGEMENTS THERE ARE A HOST OF
COMMERCIALLY AVAILABLE SOFTWARE
SOLUTIONS.
THAT BUSINESSES CAN.
I SUBSCRIBE. TO TO HELP THEM --
THAT WILL TELL THEM EXACTLY WHAT
THEIR TAX OBLIGATIONS ARE --
DEPENDING ON WHERE THE SALE IS
[inaudible]
SOPHISTICATED --
AND THEIR NUMBER OF THOSE
COMMERCIALLY AVAILABLE SO I
THINK PEOPLE WOULD DO THAT JUST
AS IN STATE BUSINESSES --
RELY ON PAID SOFTWARE AND OTHER
THINGS IN ORDER TO COMPLY TO
WITH THE TRANSITION SO MOVING --
ON IN AND AGAIN THIS IS NOT AT
ALL TRYING TO BE CRITICAL
BECAUSE SUBJECT I REALLY DO
THINK THAT YOU DO A FANTASTIC
JOB AND I'M REALLY HAPPY --
THERE SANCTI INSINCERE --
BUT THE THE TRANSITION WITH MORE
EQUALIZATION RIGHT --
THAT'S THIRD ANSWERING CALLS ON
THAT ONE IS YES THERE HAVE BEEN
I BRING ALL THIS UP IS THAT JUST
IF YOU CAN GIVE US.
BALLPARK ON THE TIME HOW MUCH
TIME DO YOU NEED IN REGARDS --
TO BRING IN YOUR OFFICE.
INTO COMPLIANCE WITH --
ENFORCEMENT NUMBER --
TWO I IT WOULD EXPECT THAT
YOU'RE GOING TO BE NEEDING SOME
TYPE OF BUDGET AUGMENTATION.
I'M TO BE ABLE TO BRING IN WHAT
IS THIS LOOK LIKE AS FAR AS YOUR
STRUCTURE WHAT WHAT WHAT SITES
HAVE YOU HAD --
AS IF YOU DON'T MIND THIS WALK
US THROUGH THAT WELL --
I THINK IN TERMS OF TIMING I'M.
I'M LESS FOCUSED ON OUR TIMING
BECAUSE I THINK WE ARE READY.
TO WE'RE READY TO GO IN TERMS
THE REGISTRATION PIECE I'M.
I'M VERY INTERESTED IN HEARING
FROM STAKEHOLDERS AND HOW MUCH
TIME THEY NEED TO COMPLY --
IT N. IN TERMS OF RESOURCES --
YOU KNOW I THINK.
YOU KNOW OUR SYSTEM.
AGAIN WE HAVE A MILLION
TAXPAYERS SO EVEN IF WE'RE
TALKING ABOUT SOME NUMBER OF
THOUSANDS.
OF EXTRA TAXPAYERS COMING INTO
THE SYSTEM AND WHEN YOU LOOK AT
A MILLION WE IT'S IT'S A PRETTY
SMALL INCREMENTAL IN YOUR
BALLPARK.
WHAT AS FAR AS FOLKS WHO WOULD
BE COMING INTO THE SYSTEM IN
ADDITION TO WHAT YOU HAVE NOW
JUST BALLPARK?
ARE WE TALKING TEN THOUSAND WE
TALKING FIFTY THOUSAND I A WE
DON'T KNOW EXACTLY BUT I THINK.
GIVEN HISTORIC COMPLIANCE RATES
AND WHAT WE SEE WITH SOME OTHER
NEW TAXES.
WE'RE NOT GOING TO GET A RUSH OF
EVERY --
SMALL RETAIL YOU KNOW EVERY
SMALL RETAILER I WOULD SAY IT'S
IN THE PROBABLY.
I DON'T I I'D HATE A THOUSAND
EIGHT TO ESTIMATE BUT I DON'T
THINK WE'RE TALKING MORE THAN
FIFTY THOUSAND I THINK WE'RE
TALKING FEWER THAN THAT --
IN TERMS OF RESOURCES ON WHAT WE
WILL.
OF COURSE WE COULD USE EXTRA
RESOURCES WHAT WE DO AND WHAT WE
DO CURRENTLY IS WE PRIORITIZE
OUR ENFORCEMENT ACTIVITIES I
HOPE I'M NOT.
GIVING AWAY SECRETS WE
PRIORITIZE OUR ENFORCEMENT
ACTIVITIES BASED ON THE
POTENTIAL --
FISCAL IMPACT FOR THE STATE.
AND SO WE WOULD --
MOVE OUR YOU KNOW WE WOULD LOWER
OUR AUDIT THRESHOLD FOR SOME
OTHER.
A BRICK AND MORTAR BUSINESSES --
IF WE THOUGHT WE COULD GET MORE
MONEY PRIORITIZING SOME OF THESE
LARGER --
OUT OF STATE RETAILERS WEEK WE
COULD OF COURSE SO.
SO WE WOULDN'T BE DOING.
THESE ON TOP OF EVERYTHING ELSE
WE'RE CURRENTLY DOING WE WOULD.
SWITCH OUT SOME OF WHAT WE
CURRENTLY DO --
FOR SOME OF THESE HIGHER VALUE
IN FORCE ACTIVITIES UNLESS OF
COURSE WE DID RECEIVE ADDITIONAL.
A RESOURCES BUT YOU KNOW THE THE
KEY IN TAX ADMINISTRATION IS
DETERRENCE I MEAN WE'RE NOT OUT
THERE.
PEOPLE NEED TO KNOW THAT THERE'S
A GOOD CHANCE OF THEM.
BEING --
FOUND OUT IF THEY IF THEY TAXES
AND AND SO WE NEED TO HAVE
ENOUGH.
BODIES OUT THERE --
POUNDING THE PAVEMENT AND DOING
AUDITS AND COLLECTION ACTIVITIES
TO MAKE SURE PEOPLE KNOW THAT.
IN VENTURE MY LAST QUESTION
DISAPPOINTED I PROMISE IS --
LESSONS LEARNED FROM OTHER
STATES CAN YOU WALK US THROUGH
THAT [inaudible]
WELL --
OTHER STATES ARE JUST GETTING
GOING --
MOST STATES THAT HAVE PRECEDED
HAD LEGISLATION --
A LOT OF STATES OF ACTED.
IN THE PAST YEAR TWO YOU KNOW
SOME POST WAY FARE --
SOME PRE [inaudible]
I IT.
THE THE A LOT WENT LIVE OCTOBER
FIRST IS PROFESSOR NALAN
MENTIONED [inaudible]
BUT I HAVEN'T HEARD AYE AMONG
OFTEN TALK WITH THE OTHER TAX
ADMINISTRATORS IVAN HEARD A TON
OF REGRETS FROM THOSE THEY'VE
GONE FORWARD DOOR --
WHO WERE CONCERNS ABOUT?
HOW THEY'LL DO PEOPLE ARE
PLOWING FORWARD AND?
IT SEEMS TO BE.
GOING OKAY THUS FAR [inaudible]
SURE.
I DO HAVE A QUICK QUESTION
BEFORE WE MOVE ON SO I WANNA
MAKE SURE I UNDERSTOOD.
YOU'RE DOING A NOTICE PROCESS SO
I WANT TO UNDERSTAND THE
DIFFERENCE BETWEEN THE NOSE
PROCESS AND THE REGULATORY
PROCESS IN WHICH STAKEHOLDERS
WILL HAVE THEIR OPPORTUNITY
[inaudible]
TO WELL [inaudible]
SO.
OUR LEGAL ANALYSIS IS THAT THE
STATUTE THE LONG ARM STATUTE IS.
ALREADY APPLIES THAT IS THE LAW.
OF THE STATE OF CALIFORNIA AND
SO -- V..
I I THINK WE'LL WE MAY FOLLOW I
THINK WE'LL WE ARE PLAN IS TO
FOLLOW UP WITH WITH REGULATIONS
BOTH TO HELP US INTERNALLY.
A AND TO UP POTENTIALLY FILL IN
SOME GAPS BUT I THINK THAT THERE
ARE -- YOU
KNOW THE LAW IS OUT THERE AND
IT'S ON THE BOOKS AND I THINK
WE'LL.
WE BELIEVE THAT WE COULD PROCEED
WITH NOTICE --
TO REQUIRE PEOPLE TO COMPLY.
SO THAT WHEN THEY COMPLY THEY
WILL BE COMPLYING WITH THE SOUTH
DAKOTA STANDARD OR WHAT WHAT ARE
THEY COMPLYING WELL THAT'S NOT
ONE OF THE THINGS THAT THAT.
WE'LL BE DISCUSSING AT OUR
STAKEHOLDER MEETING THERE ARE
AFTER THE NOTICE NO THAT WOULD
BE IN THE NOTICE WE WOULD TELL
PEOPLE IT WHICH WHICH SALES
LEVEL THEY NEED TO COMPLY OF
COURSE.
THAT WOULD BE A RETROSPECTIVE
YOU KNOW YOU THE FOR FOR
PROSPECTIVE COMPLIANCE BUT YOU
LOOK AT AT THINGS I NEED YOU TO
WALK ME THROUGH IT.
SO THERE'S A NOTE SO YOU'RE
GONNA GIVEN NOTICE AND IT IS
GOING TO SAY.
TO IS GOING TO SAY THAT WE ARE
MAINTAINING THE SOUTH DAKOTA
STANDARD AND WE WILL HAVE A
STAKEHOLDER PROCESS EVENTUALLY
SO.
THAT I'M JUST TRYING TO
UNDERSTAND WHAT'S COMING FROM
THE STAKEHOLDER PROCESS IS
COMING FIRST WE'RE YOU KNOW
WE'RE MEETING NEXT WEDNESDAY.
I THINK THE NOTICE WILL SAY.
YOU KNOW IF YOUR SALES IN
CALIFORNIA IN THE PRECEDING --
YOU KNOW IN THE PRECEDING TWELVE
MONTH PERIOD ARE ABOVE ACTS IN
IT -- WE IS
IF IT'S ONE HUNDRED THOUSAND TWO
HUNDRED TRANSACTIONS OR
SOMETHING DIFFERENT DEPENDING ON
WHAT -- THE
BEST LEGAL ADVICE WE CAN.
CAN MUSTER THEN WE EXPECT YOU TO
COMPLY WITH CALIFORNIA USED TAX
OBLIGATIONS [inaudible]
PROSPECTIVELY [inaudible]
GOT IT [inaudible]
WITH.
JUST HAD A NO NAME THINKING
MANAGER OF ARENA SO WHAT ARE
THEY SUPPOSED TO COMPLY WITH AND
WHAT IS THE STANDARD WHICH AT
THE THRESHOLD CAN HIT SO WHAT
WHAT WHAT THREAT THAT'S WHAT I'M.
YOU KNOW I I I'M GOING INTO NEXT
WEDNESDAY WITH A COMPLETELY OPEN
MIND SO I DON'T WANT TO PRE
JUDGE.
I THINK --
AS PROFESSOR ALAN MENTIONED IT'S
RELATIVELY COMPLICATED BECAUSE
CALIFORNIA DOESN'T HAVE ALL OF
THOSE --
SAME IT DOES HAVE EXACT SAME
STRUCTURE AS SOUTH DAKOTA.
I THINK --
OUR LEGAL TEAMS I THINK IT'S
FAIR TO SAY OUR LEGAL TEAMS --
GOING INTO THE STAKEHOLDER
MEETING BELIEVES THAT --
THAT WE WOULD BE ON SOLID GROUND
WITH A ONE HUNDRED THOUSAND TWO
HUNDRED TRANSACTIONS BUT WHETHER
THAT ALTERNATELY IS THE STANDARD.
IS SOMETHING THAT WE HAS NOT YET
BEEN DETERMINED AND WE ARE OPEN
TO CONSIDERING.
AND THAT'S THAT THE PEACE IN ANY
DON'T EVERYONE PUT WORDS INTO
THE CHAIRMAN'S AMOUNT SO --
SO WHAT HAPPENS IF THERE IS
LEGISLATION IT'S ADVANCE IT
CREATES A DIFFERENT STANDARD AND
THAT WOULD OF COURSE OUR OUR
INTENT IS ONLY --
TWO IMPLEMENT THE LAW THAT YOU
ALL OF PASSED THE LEGISLATURE
DID PASS THIS LONG ARM STATUTE
AND NOW WE ARE DOING OUR LEVEL
BEST TO IMPLEMENT.
THAT LAW SO THAT THAT WOULD BE
JUST WALKING THROUGH THIS AND
AND THANK YOU FOR PLAYING TWENTY
QUESTIONS WITH US.
AND THAT'S WHY I'M HERE HEY SO
YOU WOULD GO WITH WHATEVER STATE
WITH THAT THE STANDARD IS IT'S
ON THE BOOKS NOW.
LET'S JUST SAY THE LEGISLATURE
WOULD CHANGE THAT STANDARD.
AND THAT WOULD BE SIGNED INTO
LAW EVEN WITH AN URGENCY
SOMETIME LATER IN.
TWO THOUSAND NINETEEN YOU WOULD
COLLECT A PART OF THE YEAR.
AT LET'S JUST SAY THE HUNDRED
THOUSAND STANDARD.
AND IF THE LEGISLATURE SAID WE
WANTED TO GET A COLLECTED A TWO
OR THOUSANDS ARE STANDARD THAT
WOULD THEN BE PRO RATED FOR THE
REMAINDER OF THE YEAR I'M JUST
TRYING.
TO DETERMINE IF YOU'RE GONNA BE
SENDING OUT A LETTER.
HEAVY DUTY.
AFTER YOUR STAKEHOLDER MEAN
YOU'RE GONNA DETERMINE THRESHOLD.
AND THEN THAT SPECIAL CHANGES BY
THE LEGISLATURE --
JUST TRYING TO FIGURE OUT HOW
THIS WORKS AND HOW WE CAN BE
CLEAR WITH THE MARKET PLACE AND
I JUST WANNA ADD TO THAT
QUESTION CENTURY ANSWERING MOST
OF IT.
AND I JUST HAVE A LITTLE OUT ON
IS IS THE URGENCY TO PUT THE
NOTICE OUT THE AMOUNT OF MONEY
THAT WE WOULD BE COLLECTING WHAT
IS THE URGENCY BEFORE. TO BUT
THE NOTICE OUT ARE OR THE I
THINK ON OUR URGENCY IS SIMPLY
THE THAT THERE IS A STATUTE ON
THE BOOKS IN CALIFORNIA.
AND MY JOB.
AS I SEE IT IS TO EMPLOYMENT.
THE LAWS OF THE STATE OF
CALIFORNIA AND BUT THAT'S THAT'S
THE EXTENT OF OF MY URGENCY.
IN ALL SAY IN THIS IS MORE OF AN
EDITORIAL THAN A QUESTION WOULD
BE IS THAT.
ABSOLUTELY YOU'RE RIGHT ANY TO
BE A TO CARRY THROUGH DISCREET
AN AWKWARD DYNAMIC --
I THINK THERE'S TWO ROUTES
THAT'S COULD BE IMPLEMENTED THIS
COULD BE IMPLEMENTED IN A BUDGET
BILL -- IT
THROUGH THE MINISTRATION OR THIS
COULD BE IMPLEMENTED THROUGH
LEGISLATION UNDERSTAND AS WE
HEARD FROM PROFESSOR MANY STATES
ARE CHOOSING LEGISLATIVE ROUTE.
SO IF YOU CHOOSE TO BE TO GO
WITH THE STANDARD HERE BY THE
END OF THE YEAR INTEL RETAILERS
ARE THEY'RE GONNA HAVE TO COMPLY
TO X. STANDARD.
IN THE LEGISLATURE DECIDES BE
ABLE TO ADVANCE LEGISLATION AND
A DIFFERENT STANDARD IT CREATES.
SOME LOGISTICAL CHALLENGES IN
SINGLE CONFUSION SO I'LL ALL I
WOULD SAY IS I THINK NUMBER ONE
I THINK WE NEED TO BE TO
DETERMINE.
AND CAN NEVER TELL THE
ADMINISTRATION WHAT TO DO SO I
TOTALLY GET IT WHAT THE ROUTE IS
GONNA BE TAKEN --
AND WHAT THAT STANDARD IS TO NO
ONE SO THERE IS NOT A WHOLE LOT
OF CONFUSION OUT --
IN THE MARKET PLACE THAT'S THOSE
CONCERNS ARE CERTAINLY ON OUR
MINDS AS WELL WHICH IS ONE OF
THE REASONS WHY.
YOU KNOW NOT TO WE DID NOT WANT
TO BE PRESUMPTUOUS BUT WE IN
FACT.
LOOKING AT THE LEGISLATIVE
LOOKING AT THE CORE DECISION --
OUR TEAM --
PUT DOWN SOME THOUGHTS ON WHAT
WE THOUGHT LEGISLATION MIGHT.
IN FACT LOOK LIKE AND YOU KNOW
IN IN.
WHY I THINK OUR OUR THOUGHTS
WERE IF WE WERE LEGISLATING A
NEW SYSTEM?
THAT WE WOULD.
HAVE A HIGHER THRESHOLD
SATISFIED HAVE AND THEN NOT HAVE
A A NUMBER OF TRANSACTIONS THAT
WE WOULD HAVE.
I THINK A MARKET PLACE PROVISION
WHICH I THINK WOULD.
WOULD MAKE TAX ADMINISTRATION
MUCH EASIER --
IN FACT THAT IS ONE OF THE
THINGS THAT I THINK YOU KNOW WE
PURPOSEFULLY.
WAITED A BIT ODD TO SEE WHETHER
THAT MIGHT.
OCCUR.
LET ME HELP YOU SO WE SPOKE AT
THE END OF LAST YEAR AND THERE
WAS A DESIRE I THINK AMONG SOME
TO TRY DID HANDLE THIS AS
QUICKLY AS POSSIBLE HOWEVER.
THERE WERE THE OVER ARCHING
DESIRE WAS NOT THERE TO GET IT
DONE THROUGH A BUDGET TRAILER
BILL OR SOMETHING LIKE THAT --
HOWEVER THAT IS WHY I ASK THE
QUESTION IS THE I'M TRYING TO
FIGURE OUT WHERE THE PUSH IS NOW
IF IT'S FROM CD TFA IF IT IS
FROM THE MINISTRY WHERE THE PUSH
IS NOW TO GET A NOTICE OUT SO
QUICKLY.
AS WE'VE WAITED IT'S NOT LIKE
THIS DECISION JUST CAME IN I
MEAN THE DECISION WAS.
HAS BEEN MADE FOR I BELIEVE IT
IS.
HEY I HAS TO TO RAISE BECAUSE IT
WAS NOT ONE OF OUR FINEST HOURS
BUT IN FACT YOU KNOW --
RIGHT AFTER THE DECISION RIGHT
IS ISSUED WITH THEIR WAS A A
CHEST PAGE PUT UP ON OUR WEBSITE
WHICH WOULD HAVE HAD.
A NOTICE THAT HAD A VERY SPAN
ARE --
PERIOD -- SO
THIS IS BEEN FROM THE GET GO I'M
WE TAKE OUR RESPONSIBILITY TO
ENFORCE THE LAW SERIOUSLY AND
THAT'S THIS IS BEEN SINCE JUNE
SO THEY HAVE THEIR OWN LANGUAGE
CAME OUT IN JUNE --
ON THE WEBSITE.
AND THEN WAS PULLED BACK OFF THE
WEBSITE AND SO WE HAVE SO THIS
CONVERSATION HAS BEEN GOING ON
FOR A BIT HOWEVER THAT'S WHAT
I'M TRYING TO FIGURE OUT THE
REST BECAUSE THEY DO.
SHARE YOUR CONCERNS AND WE SHARE
THEM WITH NICHOLAS IS THAT --
IF WHAT'S SOMETHING GOES INTO
PLACE AND THEN WE DON'T FEEL
IT'S THE APPROPRIATE THRESHOLD
WHICH I THINK.
I THINK A HUNDRED THOUSAND IS
VERY LOW I THINK ASSEMBLY WOMAN
RIVA SAID THAT AS WELL FOR A
STATE LIKE CALIFORNIA WITH THE
AMOUNT OF CONSUMERS WE HAVE AND
I THINK WITHOUT SMALL MARGIN
THAT YOU.
LOSE IN REVENUE BETWEEN A
HUNDRED AND FIVE HUNDRED
THOUSAND I THINK THAT WE SEE A
LOT OF THE BENEFITS ON YOUR SIDE
AND ON OURS.
BUT THAT'S I REALLY TRYING TO
UNDERSTAND I I AM CLASS.
WELL WITH TAX LAW WE HAVE EVERY
YEAR.
I I WISH THAT THE LEGISLATURE
WERE THIS RETICENT TO CHANGE TAX
LAW NORMALLY BECAUSE WE HAVE
EVERY YEAR MANY MANY BILLS THAT.
THAT.
FIND THEIR WAY TO A TO US WERE --
WE CHANGE TAX ALL I I PERSONALLY
NOT INCREDIBLY TROUBLED THOUGH I
I UNDERSTAND YOUR CONCERNS ABOUT
THE PROSPECT OF IF IF THE
LEGISLATURE WERE TO CHANGE THE
THE THRESHOLDS.
AT SOME POINT WE WOULD.
CHANGE THE THRESHOLDS.
ASSEMBLY MEMBER VOEPEL YOU HAVE.
YES AND I'D LIKE TO THANK YOU
MISTER DIRECTOR FOR MEETING WITH
ME EARLIER AND WE WENT OVER --
SO MY CONCERNS --
I JUST WANT TO REITERATE FOR THE
GROUP HERE THAT --
SO FAR OUR COLLECTIVE TAXES ON
MARIJUANA HAS NOT BEEN STERLING --
IT'S MUCH EASIER TO GO TO YOUR
LOCAL CORNER DEALER AND GET IT
435% OFF.
OF THE STATE PRICE.
THEN IT IS TO GO TO THE
DIFFERENT DISPENSARIES THAT ARE
DOING IT LEGALLY AND THAT LEGAL
GROWERS THAT HAVE TO PAY ALL THE
ACTOR FEES AND TAXES AND PERMITS.
SO ONE OF MY CONCERNS.
HERE.
IS THE DARK WEB.
IT'S BECOMING MORE AND MORE OF A
MASSIVE ECONOMIC ENGINE.
ON THE DARK WEB THEY'RE NOT JUST
GET YOUR SOUL SECURITY NUMBER ON
IT THEY'RE DOING A LOT OF
COMMERCE --
NOT THAT I WOULDN'T KNOW WHAT'S
THIS I HEAR IT.
I HAVE FRIENDS THAT HE WOULD
PACKARD.
SO WHAT. ONE OF MY CONCERNS IS
IS AS WE COME OUT OF THE GATE.
UP IT'S LIKE YOU WERE A
FISHERMAN WITH A NET.
OKAY YOU'RE GOING TO CATCH THE
PEOPLE GET THEIR TAXES WE WANT
TO CATCH THE FISH [inaudible]
GOT IT.
I WOULD SUGGEST THAT WE ALL LOOK
AT MAKING THE NET.
IS BIG AND WIDE AS POSSIBLE WITH
THE FIRST CASS.
LITTLE LITTLE FISH OUT GO AFTER
THE BIG FISH.
THEN WE CAN CHANGE THE NET DOWN
THE ROAD QUE.
IN TILL IT'S FINALLY WE WE WE WE
HIT THAT --
BALANCE WHERE IT'S FAIR. TO THE
MOST PEOPLE BECAUSE SMALL
BUSINESSES.
I DON'T GET IT HALF THE TIME.
AND THE AVERAGE CONSUMER IF I'M
NOT BEING CHARGED A SALES TAX ON
TAKEN ON MAYBE YOU KNOW.
ONCE NOT DO SO [inaudible]
QUITE A OFTEN IT'S AN EDUCATION
THING WHICH I HAVE GREAT
CONFIDENCE YOUR GOING TO BE
DOING THAT.
BUT JUST KEEP A WIDE NET THANK
YOU MADAM CHAIR.
THANK YOU CAN I JUST YES WORSE.
FIRST I I AGREE IN AND ALL OF
OUR ACTIVITIES GENERALLY INVOLVE
YOU KNOW WE LIKE.
GOOD FISHERMAN WE ARE GOING
AFTER THE BIGGER FISH FIRST
THAT'S HOW WE EXPAND OUR
RESOURCES --
IN IT AS TO THE DARK WEB BEEN
AND ALL THAT THERE ARE MANY.
RETAILERS WHO HAVE COME INTO
COMPLIANCE --
WITH ONLINE SALES.
AND CONTINUE TO BE.
VERY SUCCESSFUL SO.
I DON'T VIEW AGAIN THIS TAXES
VIEW THIS AS ANY EFFORT.
TO PUT FOLKS OUT OF BUSINESS OR
DRIVE PEOPLE AND I DON'T THINK
PAYING THE USE TAX IS GOING TO
DRIVE PEOPLE IN THE BLACK MARKET
I THINK IT'S IT'S SIMPLY.
UNFAIR AND IT'S THE LAW.
THURMOND ARE.
THANK YOU MADAM CHAIR THANK YOU
MISTER DIRECTOR AND THANK YOU
FOR MEETING WITH ME THIS.
MORNING I I STILL HAVE A FEW.
QUESTIONS A SHORT --
AFTER OUR OUR ROBUST DISCUSSION
EVEN THOUGH YOU'RE IN YOUR OR
DEPARTMENT IS IN ITS INFANCY UP.
ARE YOU PERMITTED TO ISSUE
REGULATIONS YES.
SO CAN YOU START.
WITH YOUR THRESHOLDS THROUGH
REGULATIONS AND THEN WAIT FOR
THE LEGISLATION.
WE COULD I DON'T KNOW THAT OUT.
OUR LEGAL DEPARTMENT HAS ADVISED
THAT THAT'S NOT [inaudible]
NESSA'S NECESSARY GIVEN THE
STATUTE BUT THAT IS WHY.
A POSSIBLE AVENUE FOR PRECEDING.
IT COULD TAKE.
A YEAR.
REGULATIONS COULD TAKE UP TO A
YEAR -- AS
WHAT I UNDERSTAND IN.
IT'S NOT A FAST PROCESS MCKAY
THEN OF THE SECOND QUESTION IS --
GOOD TO COMMENT ON THE
STREAMLINED SALES AND USE TAX
AGREEMENT.
HAVE YOU HAD A CHANCE TO LOOK AT
IT AND SEE IF YOUR THUMBS UP OR
THUMBS DOWN WELL I THINK THE AS
I UNDERSTAND IT I THINK THE
LEGISLATURE MAY HAVE DONE A AN
ANALYSIS IN. TWO THOUSAND NINE
EIGHTEEN OR SO --
THAT FOUND IT WOULD REQUIRE
HUNDREDS OF CHANGES TO
CALIFORNIA TAX LAW --
IT WOULD DISALLOW THINGS LIKE OF
THE PARTIAL EXEMPTIONS THAT --
CALIFORNIA HAS TO PROMOTE
CERTAIN ACTIVITIES THAT THE
STATE DETERMINES ARE BENEFICIAL --
SO IT'S IT'S BY.
PROBLEMATIC FOR A NUMBER OF
REASONS WHY I BELIEVE.
THERE ARE ASPECTS YOU KNOW IF
THERE WERE CENTRALIZE
REGISTRATION THAT'S ONE THING I
KNOW SOME OF THE STATE'S OF
TALKED WITH STREAMLINED ABOUT
JUST USING IT AS A PORTAL SO
SOMEBODY COULD.
REGISTER WITH MORE SIMPLY WITH
ALL THE STATE'S NOT SOMETHING
THAT WE'RE LOOKING AT ALTHOUGH
WE WOULD HAVE.
TO GIVEN THAT OUR REGISTRATION
PROCESS IS SLIGHTLY DIFFERENT
AND REQUIRES SLIGHTLY DIFFERENT
FORMATION WE WOULD.
HAVE TO GO BACK TO THOSE SELLERS
BUT WE COULD AT LEAST IDENTIFY
THEM THROUGH THAT PROCESS SO
THAT'S THAT SEEMS TO BE THE MOST
FRUITFUL PATH OF THE MOMENT
RATHER THAN --
MASSIVELY OVERHAULING OUR OWN
TAX LAWS TO CONFORM.
WITH --
STREAMLINED.
DO YOU HAVE A WHITE PAPER.
ON THIS PARTICULAR WE CAN
CERTAINLY PUT ONE TOGETHER I
DON'T HAVE ONE FOR YOU AT THE
MOMENT BUT I WOULD BE MORE THAN
HAPPY TO HAVE OUR OUR TEAM MIND
A IT SOUNDS LIKE THAT'S AN AREA
OF INTEREST IN A WELCOME THE
CHANCE FOR US.
TO PUT TOGETHER SOME MORE
INFORMATION ON STREAMLINED IN.
HOW IT?
INTERFERE IN A PLACE WITH
CALIFORNIA SALES AND USE TAX LAW
AND PROVIDE THAT TO THE
COMMITTEE.
OR EVEN ON COMMITTEES --
WEBSITE AS A MODULE JUST WHY
WERE IN A WHY WE'RE NOT --
IF YOU'RE LOOKING FOR A LITTLE
UNIFORMITY THIS IS.
THIS IS A A PLACE TO FIND IT
WERE WERE ONE SHY OF FALL AFTER
THE STATE'S BEING INVOLVED --
I'M JUST WONDERING --
WITH REGARDS TO THE USE TAX --
THERE'S A LINE ON THE FORM FIVE
FORTY WERE.
IF YOU HAVEN'T PAID WHEN YOU
HAVE ONE OF THESE AT ESTATE
TRANSACTIONS --
THAT YOU'RE YOU PAY FOR ON YOUR
FORM FIVE FORTY AT HOW'S THAT
WORKING OUT [inaudible]
IT -- I
DON'T HAVE THE LATEST NUMBERS
BUT IT'S NOT A LARGE SOURCE OF
REVENUE FOR THE STATE OF
CALIFORNIA.
SO THEN HOW DO WE DEAL WITH THAT.
AND AND WHAT ARE WE DOING FOR
SAY THE UNDERGROUND ECONOMY
WORRY NIBBLED AT IT BUT I JUST
YEAH JUST A COUPLE MINUTES JUST.
TO WELL THE UNDERGROUND ECONOMY
AND WITH REGARD TO USE TAX --
WITH RICK I'M WITH REGARD TO
THIS I MEAN HOW WE DEAL WITH
THAT IN MY MIND IS.
AS WE DO WITH I MEAN IMAGINE IF.
FOR BRICK AND MORTAR RETAILERS
WE DIDN'T HAVE THE RETAILER
COLLECT THE SALES TAX AND WE HAD
THE THE REPORTING OBLIGATION ON
THE CONSUMER.
SIMILARLY ON THE TAX FORMS NOT
MANY PEOPLE WOULD SAY I WENT OUT
AND YOU KNOW.
BOUGHT A NEW TV IT AT X. BIG BOX
STORE.
AS YOU KNOW THREE MONTHS AGO AND
HERE'S MY TAX PEOPLE WOULDN'T
PAY IT SO IN MY MIND.
WHAT MAKES THE MOST SENSE IS TWO
ESPECIALLY NOW THIS IS BRING
CORD IS SPOKEN SAID THIS IS WHAT
WE CAN DO --
IS TO HAVE --
ONLINE SELLERS REMOTE SELLERS DO
THE EXACT SAME THING THAT WE ASK --
BUSINESSES TO DO AND THAT'S ONE
OF THE OTHER POINTS HERE YOU
KNOW THERE'S A LOT OF CONCERN
WHICH I GET ABOUT.
YOU KNOW SMALLER SELLERS AND HOW
COULD THEY POSSIBLY COMPLY
[inaudible]
EVERY DAY.
IN EACH OF YOUR CONSTITUENCIES.
THOUSANDS OF BUSINESSES.
SMALL MEDIUM AND LARGE ARE
FINDING WAYS TO COMPLY.
BUSINESSES THROUGHOUT THE STATE
DO THIS DAY IN AND DAY OUT.
IT'S SOMETHING WE REQUIRE OF
THEM I DON'T KNOW. TO ME THAT
IT'S FAIR NOT TO REQUIRE THAT OF%
OTHER PEOPLE --
WHO IN MANY CASES ARE WAY LARGER?
AND MUCH MORE SOPHISTICATED THAN
THE SAME BUSINESSES THAT WE'RE
YOU KNOW UNFORTUNATELY TAX LAWS
AGAINST AND AND THEY'RE NOT
AGAINST WOULD ENFORCING TAX LAWS
WITH --
THROUGHOUT THE STATE.
ANYWAY THAT'S GET OFF MY SOAPBOX
THERE.
THANK YOU MANAGER ASSEMBLY
MEMBER REVERSE.
SWITCH BUT TO BE CLEAR --
THE THRESHOLD YOU MENTION YOUR
NEXT WEEK YOU WILL --
PUBLISHED NEXT WEEK WE'RE JUST
HAVING A MEETING TO STATE
QUARTERBACK YEAH OKAY BUT ARE
YOU OF SUGGESTING A THRESHOLD
NEXT WEEK NO WE'RE DISCUSSING IT
I'M.
AS I MENTIONED ARE LAWYERS --
HAVE LOOKED AT THE ISSUE LEAVE.
THAT.
THEY WOULD BE COMFORTABLE --
AND IT'S NOT A QUESTION OF
COMFORT BECAUSE IF YOU READ THE
WAY THE STATUTES WRITTEN.
AND THIS IS WHERE THE THE
COMPLICATION COMES AND IT
DOESN'T SAY --
NEAR THE STICK STATES LONG ARM
STATUTES [inaudible]
DOESN'T SAY.
CDT FAA ARE.
THE WE EXISTED THEN DECIDE
WHETHER GOOD THRESHOLD IS IT
SAYS -- IN
FORCES TO THE FULL EXTENT
ALLOWED BY THE COMMERCE CLAUSE.
AND SO AGAIN I'M NOT TRYING TO
SUBSTITUTE --
MY JUDGMENT DEPARTMENTS NOT
TRYING TO SUBSTITUTE OUR
JUDGMENT WE'RE TRYING TO LOOK AT
OKAY WHAT DOES THAT.
WHAT DOES THAT MEAN WHETHER
WHETHER THE LEGISLATURE TELL US
TO DO AND SIXTY TO SIXTY TWO OR?
THREE AND ARE LAWYERS --
INITIAL --
REVIEW IS THAT THAT FULL EXAM
THE COMMERCE CLAUSE --
THAT THEY'RE COMFORTABLE THAT
THAT MEANS ONE AND WE'RE TWO
HUNDRED TRANSACTIONS GIVEN WITH
SPRING COURT SAID [inaudible]
I FULLY EXPECT THAT THERE WILL
BE.
OTHER PEOPLE WHO HAVE.
LEGAL ADVICE THAT THAT IS
PERHAPS NOT THE RIGHT
INTERPRETATION LATIN I WANNA
HEAR WHAT EVERYBODY HAS TO SAY.
ANY OTHER QUESTIONS OR COMMENTS
FROM THE COMMITTEE [inaudible]
NO.
THANK YOU VERY MUCH THANK YOU.
SENATOR REQUIRE TO HAVE CLOSING
STATEMENTS.
I THINK IT'S MUCH BETTER HERE
AGAIN I WANNA.
SORRY WE HAVE TO PUBLIC ON FIRST
I TELL YOU JUMP THE GUN.
WE'LL TAKE WE'LL HOPE WE WILL
HAVE COMPLETELY COLOGNE AND AND
IT ONLY.
NOT LAUGHING AT THE PUBLIC
COMMENT LAUGHING AT MYSELF.
GOOD AFTERNOON MY NAME IS ROBERT
TERRACE OF THE CALIFORNIA
TAXPAYERS ASSOCIATION.
CELTIC SUPPORTS IMPLEMENTATION
OF SOUTH CURSES WAYFARER BUT WE
BELIEVE THAT A THOUGHTFUL
APPROACH NEEDS TO TAKE PLACE --
WE ALL HEARD TODAY OF THE
NUMEROUS COMPLEXITIES AND
NUANCES OF SALES TAX LAWS AND
IT'S IMPORTANT --
TO GET THIS RIGHT AS WE MOVE
FORWARD.
IT IS CRITICAL THAT CALIFORNIA'S
DEFINITION OF RETAILER IS
LEGALLY VIABLE AND DOES NOT
DISCRIMINATE AGAINST INTERSTATE
COMMERCE.
THE US SUPREME COURT GAVE STATES
PRINCIPLES --
AND A ROAD MAP TO LOOK AT WHEN
IMPLEMENTING THEIR DECISION.
AND IT'S IN EVERYONE'S VESTED
INTEREST THAT WE STICK WITH
THESE PRINCIPLES IN
IMPLEMENTATION --
LONG TERM STATUE ESTABLISHES
ECONOMIC NEXUS BUT OUR LONGARM
STATUE IS MUCH DIFFERENT THAN
SOUTH DAKOTA'S LAWS WE NEED --
TO TO INCLUDE SOUTH DAKOTA'S --
PRINCIPLES IN THE US A SUPREME
COURTS --
PRINCIPLES AS WELL AND MOVING
FORWARD THANK YOU.
HEY MAN CHAIRWOMAN MISTER CHAIR
KEITH ON HER BEHALF SO FULL
COUNTIES COALITION THE TWENTY
FOUR COUNTIES THAT RELY ON SALES
TAX TO HELP BUILD AND MAINTAIN
OUR INFRASTRUCTURE IN CALIFORNIA.
WE LOOK FORWARD TO WORKING WITH
YOU ALL --
AND IF THROUGHOUT THIS COMING
YEAR IN THE NEW ADMINISTRATION
TO MAKE DETERMINATIONS THAT YOU
SEE FIT TO IMPLEMENT --
AS BEST AS POSSIBLE THIS PROGRAM
GET IT RIGHT I THINK THAT WE
FOUND OUT TODAY THAT THERE'S A
LOT TO DISCUSS WILL BE HAVING
OUR ANNUAL CONFERENCE A COUPLE
WEEKS WITH DIRECT MURDEROUS
COMING DOWN THE PARTICIPATING --
IT'S SOMETHING WE'VE BEEN
FOLLOWING CLOSELY AS THE
COUNTIES WE LOOK FORWARD TO
CONTINUING THAT DIALOGUE WITH
YOU SO THANK YOU VERY MUCH FOR
HAVING THIS HEARING TODAY.
MADAM CHAIR MISTER CHAIR AND
MEMBERS CHRIS MCKINLEY ON BEHALF
OF THE COMPUTING TECHNOLOGY
INDUSTRY ASSOCIATION AND WE
SHARE THE PERSPECTIVE THAT CAL
TEXTURE THANK YOU.
SEEING NO FURTHER PUBLIC COMMENT
CINNAMON GUARDIAN INCLUDING
STATE.
THANK YOU SO MUCH MANAGER.
JUST WANNA AGAIN SEE HOW
GRATEFUL I AM TO CHAIR --
INTO THE SIMPLY STAFF FOR ALL
THEIR WORK AND OF COURSE
EVERYONE ON THE SENATE SIDE INTO
THESE AND THEN THERE WAS A
SENATORS WHO ATTENDED TODAY'S
HEARING.
ON HOW MUCH WE APPRECIATE
ADVANCING THIS IMPORTANT
DISCUSSION IT'S CLEAR THAT THERE
NEEDS TO BE A LOT OF
CONVERSATION AS WE ADVANCE AND
HOW.
AT THIS COURT DECISIONS CAN BE
IMPLEMENTED --
HERE IN CALIFORNIA I DO THINK
THE DIRECTOR IS IN A BIT OF A
ROCK AND A HARD PLACE --
WANTING TO BE ABLE TO HE NEEDS
TO BE ABLE TO INTO HIM OUT BY
THE LEGISLATURE --
SERVER YEARS BACK I AND HOW WE
ARE CREATING A CONFUSING
SITUATION IF THE LEGISLATURE
ACTS AND DECIDES ON DIFFERENT
THRESHOLDS OF WHAT --
THAT YOUR WOMAN AND I WERE JUST
TALKING ABOUT IS SAYS SITTING
DOWN WITH THE DIRECTOR HERE IN
THE NEXT FEW WEEKS --
TOGETHER AND JUST.
HAVING SOME CONVERSATION --
ON THAT --
AND AND IT WILL GIVE HIM TIME TO
BE OVERTAKEN INDUSTRY INPUT
WHICH I THINK IS GOING TO BE
CRITICAL I'D TO ANY TYPE OF
IMPLEMENTATION HERE --
ACROSS THE STATE IN ADDITION I
WOULD HOPE.
THAT THE DIRECTOR WOULD BE
SITTING DOWN WITH LOCAL
GOVERNMENT AYE AS SITTING DOWN
WITH THE INDUSTRY TO BE --
TO GET THEIR INPUT AS WELL --
AS IT IS THAT FIFTY FIVE FORTY
FIVE NEXT --
55% FLOWN BACK TO WE GET AT HOW
THIS MAY WOULD BE A MEETING TO
BE HONEST AGAIN --
FIRST DISCUSSION HERE ORIGINALLY
MANY IN THE MONTHS TO COME AND
YOU WANT TO SAY THANK YOU TO THE
SIMPLY --
CHAIR IS WELL AS STAFF.
IN EVERYONE IS COME TOGETHER IN
THE FORCING DOWN THE SPIDERS
HERE IN A BIT WITH THE THANK YOU
SIR MCGUIRE THANK YOU. FOR DOING
THIS TODAY THANK YOU FROM THE
MEMBERS AND CENTERS THAT CAME AS
WELL AS A SPEAKERS --
I APPRECIATE THE TIME AND ENERGY
ON THAT YOU'VE PUT INTO THIS
ISSUE SINCE JUNE SENSE ARE AND
BEFORE THE DECISION WAS MADE --
I I DON'T WANT TO REPEAT WAS
SERRA REQUIRES AND HOWEVER I
LOOK FORWARD TO SEEING NOW WITH
THE DIRECTOR I I WILL SAY THIS I
DO THINK IT'S VERY IMPORTANT
THAT WE THAT WHATEVER THE
DIRECTOR DOES THAT THE
LEGISLATURE.
AT HAVE THEIR OWN STAKEHOLDER
PROCESS THAT WE SIT DOWN WITH
WHAT LOCAL BUSINESS WITH
STAKEHOLDERS AND REALLY
UNDERSTAND DIRECTLY WHAT THE
IMPLICATIONS.
TRULY ARE TO TO THOSE PEOPLE
HERE IN THE STATE OF CALIFORNIA --
AND TO JUST PUT ON THE DIRECTOR
I DO NOT THINK IT IS.
ALTHOUGH ALTHOUGH IN HIS LEGAL
SOUNDS NOT NECESSARILY THE
COURSE OF ACTION THAT ARE
CONSTITUENTS OF ASKED US TO TAKE
SO.
WITH THAT I WANT TO THANK
EVERYONE AGAIN FOR BEING HERE
LOOK FORWARD TO SPEAKING WITH
THE DIRECTOR SHORTLY AND WOULD
STAKEHOLDERS --
THOSE INTEREST IN HAVING A
CONVERSATION MOVING FORWARD
THANK YOU SO MUCH EVERYONE HAVE
A GOOD DAY THE* HEARING IS
ADJOURNED