SB 840 – Requires certain businesses to use an automated system for the collection of sales and use taxes

• Sponsor: Ridgeway
• LR Number: 5974S.01I
• Committee: Veterans' Affairs, Emerging Issues, Pensions and Urban Affairs
• Last Action: 3/1/2012 - Second Read and Referred S Veterans' Affairs, Emerging Issues, Pensions and Urban Affairs Committee
• Journal Page: S384
• Effective Date: August 28, 2012

Current Bill Summary

SB 840 - This act requires the Department of Revenue to implement an automated sales and use tax system for sending and collecting state and local sales and use taxes on July 1, 2013. Except for businesses that only file sales tax returns once a year or monthly, all new businesses and any business delinquent in paying sales or use taxes after July 1, 2013, will be required to use the automated system, or face revocation of the business's state sales and use tax license. Other businesses may voluntarily use the automated system. The Director of Revenue may defer implementation of the automated system for certain businesses.

All costs of purchasing and maintaining the computer hardware and software will be the responsibility of each business, except that each new business will receive one installed electronic cash register hardware unit and system software at the cost of the payment service provider.

The Director of Revenue may contract with third-parties to implement and operate the automated system. The act specifies how the system is required to operate. Among other requirements the system will include a unique merchant identification number for each merchant and a process requiring the business and payment service provider to send information electronically to the contractor each business day. The business's payment service provider will be required to send sales and use tax to the Department of Revenue on behalf of the business. The contractor is required to provide telephone support for businesses.

New businesses and any business delinquent in paying sales or use taxes after July 1, 2013, will not have to post a bond with the Director of Revenue, if the business complies with the requirement that they use the automated system.

Currently, sellers are allowed to retain two percent of the amount they pay to the director of revenue, if the seller sends the amount before it is due. Businesses that use the automated system will be allowed to claim this allowance for all sales and use taxes paid.

This act is similar to HB 1679 (2012).

EMILY KALMER