Tax system for Web facing new delay

Already, legislators have extended the implementation of the streamlined sales tax a year from its original start date, planned for July 1 of last year. HB107, which passed the House Revenue and Taxation Committee Thursday, would mean it would not be implemented until 2006, if at all.

Rep. Wayne Harper, R-West Jordan, the sponsor of the bill, said the extension was needed because software was still not available that would help small businesses track their sales.

Originally, his bill would have actually proposed a flat tax rate, which would have negated the need for the streamlined sales tax.

When and if it is put in place, the streamlined sales tax would require businesses to tax their sales based on where the good is delivered, not where it is sold. For companies that deliver, such as furniture stores and Internet retailers, it would mean that they would have to track a number of different sales tax rates to account for speciality or "boutique" taxes.

Those taxes, which cities and counties can tack onto the state sales tax rate, can cover many things, from mass transit to recreation.

While HB107 only extends the implementation date until July 1, 2006, Sen. Lyle Hillyard, R-Logan, who sponsored the initial streamlined sales tax legislation in 2003, said he is starting to worry about the tax system. However, he said he understood the concerns and said that HB107 was a consensus bill.

"My real concern is whether this thing will ever get implemented," he said. "It seems like there will always be something."

The problem this year is that small businesses are having trouble finding software to track their sales, said Tom Bingham of the Utah Manufacturers Association. While there is some software available, many small businesses do not have compatible computer systems, while those that do cannot afford the cost.

"If the software were available, we'd be ready to go," Bingham said. "The larger companies are ready to go now, and it's primarily that the software for small businesses is either not available or is cost-prohibitive."

Rep. Roz McGee, D-Salt Lake, who was the only committee member to vote against the bill, said the concerns are being brought at the last minute about a bill that has been in the works for more than two years. Like Hillyard, she worried that the system may never get put in place.

Roger Tew with the Utah League of Cities and Towns echoed McGee's concerns. The group, which worked to help alleviate a number of concerns cities had with the original bill, was "reluctantly supporting" the extension.

"I would hope that there won't be another delay," he said. "Too much time and work has gone into this thing."

E-mail: jloftin@desnews.com

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