Tax executives met recently in Washington D.C. at the fourth annual Tax Council Policy Institute Symposium for the purpose of examining jurisdiction-to-tax issues in today's economy. Not surprisingly, a majority of symposium participants expect the Streamlined Sales Tax Project and similar tax issues to have a major influence on their companies' ability to compete in the next five years.
The Streamlined Sales Tax Project is a plan to organize the nation's 7,600 taxing jurisdictions into a workable arrangement for collecting sales tax on Internet sales. So far, 36 states and the District of Columbia have joined the project and are preparing to confront Congress this summer with what they hope will be a workable plan for having businesses collect and pay sales tax on e-commerce.
Survey participants discussed the rights of states and nations to collect sales tax, nexus issues, existing jurisdictional tax rules, and the possibility of a national consumption tax.
Big Four firm KPMG surveyed the 130 symposium participants and found the following issues to be of concern to businesses:
- 59% of survey respondents expect their company's ability to compete domestically will be impacted by the jurisdiction to tax issues.
- 65% expect their company's ability to compete internationally will be impacted by the issues.
- 43% indicated the issues have already impacted their business.
- 45% say their compliance efforts will be more complicated by tax jurisdiction issues. Included in this group are 30% who feel the tax jurisdiction issues will be more time-consuming.
Symposium participants agreed that more technology and additional training would be necessary to meet the demands of an Internet sales tax system should such a plan be implemented.
"The advent and growing use of the Internet, electronic commerce and the development of the service economy have signaled the beginning of a new era in taxation as long-standing fundamental tax concepts currently used in tax jurisdictions globally are being reviewed," said Timothy H. Gillis, partner in charge of the Washington National Tax group of KPMG's State and Local Tax practice.