RD10 - Report of the 2018 Accelerated Sales Tax Workgroup – December 2018

Executive Summary:

Pursuant to Item 272(D) of House Bill 5002 (2018 Special Session I, Chapter 2), the Department of Taxation (“the Department") was charged with convening a workgroup to examine the timing of Accelerated Sales Tax (“AST") payments. The workgroup was specifically required to:

• Establish a cost and a timeline for the Department to implement an easy online application provided by the Department for dealers to apply for the hardship exception;

• Determine whether the hardship definition is currently adequate or can be expanded to include additional hardship scenarios;

• Make recommendations regarding earlier notice to dealers;

• Assess the equity of monthly 6 percent late payment penalties;

• Study the impact to the state of phasing out AST by Fiscal Year 2022;

• Study the ability of the General Assembly to lower the AST threshold by more than 10 percent in one year when the threshold is at $15 million or less; and

• Discuss alternatives and limitations to the current AST requirement and other issues related to sales tax deemed appropriate, including semimonthly remittance of sales tax as an alternative

The workgroup met three times from August to November 2018 and addressed the seven topics included in its mandate. Representatives from the business, accounting, and legal professions, as well as staff from the Department, the General Assembly, and the Governor’s office were included in the discussion. This report summarizes the discussions during these meetings, as well as the findings from the workgroup.