Border States Caucus

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AGREEMENT TO

EXCHANGE SALES, TRANSACTION PRIVILEGE,

GROSS RECEIPTS AND USE TAX

INFORMATION BETWEEN BSC STATES

 

THIS AGREEMENT FOR THE RECIPROCAL EXCHANGE OF SALES, TRANSACTION PRIVILEGE, GROSS RECEIPTS AND USE TAX INFORMATION is made and entered into by and between the BSC states which are Signatories to this Agreement, through their duly authorized representatives, and pursuant to the applicable laws of each Signatory State. The constitutional constraints placed on a state’s ability to tax transactions in interstate commerce have caused states to enact a use tax to assure that all transactions are equally subject to tax and to protect in-state vendors from unfair competition from vendors located in other states. This Agreement shall be binding on the Signatory State, their agents and employees, and their successors, in office, unless and until this Agreement is rescinded or modified or until the state withdraws from this Agreement pursuant to the terms contained herein.

 

Section 1.0                Introduction

 

1.1   This agreement provides the basis for coordination and exchange of sales, transaction privilege, gross receipts and use tax information between the Signatory States which are all members of the Border States Caucus (BSC). The completion by Signatory States of requests for information or for the performance of any activities under this Agreement, or any Addenda thereto, is on a voluntary basis and shall be conducted in such a manner so as to minimize the disruption of normal activities. The parties to this agreement will explore and adopt mutually acceptable techniques and modes of exchange most beneficial to improve sales, transaction privilege, gross receipts and use tax administration with the least possible interruption of their respective operating routines and with strict adherence to laws, regulations, and rules for protecting the confidentiality of exchanged information.

 

1.2   This agreement may be supplemented by addenda between two or more Signatory States prescribing the nature, quality and mechanics for the continuous exchange of sales, transaction privilege, gross receipts and use tax information. (See Section 6.) All provisions contained in addenda must be consistent with the terms and conditions in this agreement. In any situation where a conflict arises between the provisions of this agreement and the addenda, the terms of this agreement will govern.

 

Section 2.0                Definitions

 

For purposes of this agreement, the following definitions apply:

 

2.1   Agency. The term “Agency” means the agency, body, office, department, cabinet or commission of a Signatory State which is charged under the laws of that state with the responsibility for administration and collection of that state’s sales, transaction privilege, gross receipts and use taxes.

 

2.2   Agency Representative. The term “Agency representative” means the heads of the Agency or employees designated by the heads of the Agency as an individual who is authorized to request, inspect or receive sales, transaction privilege, gross receipts and use tax returns or return information pursuant to this Agreement on behalf of the Agency, but only so long as the duties and employment of such Agency head or employee require access to sales, transaction privilege, gross receipts and use tax returns and return information for purposes of state tax administration.

 

2.3   Background file document. -- The term “background file document” with respect to a written determination, includes the request for that written determination, any written materials submitted in support of the request, and any communication (written or otherwise) between the Agency and person outside the Agency in connection with the written determination received before issuance of the written determination.

 

2.4    Corporation. -- The term “corporation” includes associations, joint-stock companies, insurance companies and public corporations created by federal, state or local law.

 

2.5    Disclosure. -- The term “disclosure” means the making known to any person in any manner whatsoever; a sales, transaction privilege, gross receipts or use tax return or return information.

 

2.6   Fiduciary. -- The term “Fiduciary” means a guardian, trustee, executor, administrator, receiver, conservator or any person acting in any fiduciary capacity for any person.

 

2.7   Inspection. -- The term “inspection” means any examination of a sales, transaction privilege, gross receipts or use tax return or return information.

 

2.5   Partnership and partner. The term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, venture is carried on and which is not, within the meaning of this section, a trust or estate or a corporation; and the term “partner” includes a member in such a syndicate, group, pool, joint venture, or other unincorporated organization.

 

2.9   Person. The term “person” means any individual, a trust, estate, partnership, association, company or corporation; and includes any fiduciary acting on behalf of any such “person.

 

2.10 Sales, transaction privilege. gross receipts and use tax administration. -- The term “sales, transaction privilege, gross receipts and use tax administration” means:

 

(A)     The administration, management, conduct, direction and supervision of the execution and application of the sales, transaction privilege, gross receipts and use tax laws or related statutes of any Signatory State and the development and formulation of state tax policy relating to existing or proposed state sales, transaction privilege, gross receipts and use tax laws, and related statutes of the Signatory States, and

 

(B)     Include assessment, collection, enforcement, litigation, publication and statistical gathering function under the sales, transaction privilege, gross receipts and use tax laws and related statutes of any Signatory State.

 

2.11    BSC. -- The term “BSC” means the Border States Caucus.

 

2.12     BSC State. -- The term “BSC State” includes the following states: Arizona, California, New Mexico and Texas.

 

2.13    Signatory State. -- The term “Signatory State” means any BSC State that has executed this Agreement, so long as this Agreement remains in effect with that state.

 

2.14    State. -- The term “state’ means any state of the United States and includes the District of Columbia.

 

2.15 State audit agency. -- The term “state audit agency” means any agency, body, office, department, or commission of a Signatory State which is charged under the laws of that state with the responsibility of auditing state revenues and programs.

 

2.16 State sales, transaction privilege. gross receipts and use tax return. -- The term “state sales, transaction privilege, gross receipts and use tax return” means any tax or information return or report, declaration of estimated tax, claim or petition for refund or credit, or petition for reassessment or protest that is required by, or provided for, or permitted, under the provisions of the sales, transaction privilege, gross receipts or use tax laws, of the combined sales, transaction privilege, gross receipts and use tax law, of any Signatory State, which is filed with the Agency by, on behalf of, or with respect to any person, and any amendment, or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or a part of, the return so filed.

 

2.17 State sales. transaction privilege, gross receipts and use tax return information. --The term “state sales, transaction privilege, gross receipts and use tax return information” means:

 

(A)  A taxpayers identity, the nature, source or amount of his income, payments, receipts, deduction, exemptions, credits, assets, liabilities, net worth, tax liability, deficiencies, over assessments, or tax payments, whether the taxpayer’s return was, is being, or will be, examined or subject to other investigation for processing; whether the taxpayer is authorized to use a direct pay permit and any information related thereto; names of customers and any other relevant information related to specific sales, transaction privilege, gross receipts and use tax transactions or any other data, received, recorded by, prepared by, furnished to, or collected by the Agency with respect to a sales, transaction privilege, gross receipts or use tax return or with respect to the determination of the existence, or possible existence of liability (or the amount thereof), or by any person under the laws of the Signatory State for administration, collection or enforcement of the sales, transaction privilege, gross receipts and use tax laws of the Signatory State, including additions to tax, tax, penalty, interest, fine or other imposition, or offense; and

 

(B) Any part of any written determination or any background file document relating to such written determination. “Return information” does not include, however, data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.

 

2.18   Taxpayer. -- The term “taxpayer” means any person liable for payment or collection and remittance of sales, transaction privilege, gross receipts and use taxes imposed by a Signatory State.

 

2.19   Taxpayer identity. The term “taxpayer identity’ means the name of a person with respect to whom a sales, transaction privilege, gross receipts or use tax return is filed, his/her mailing address, his/her taxpayer identifying number, or combination thereof

 

2.20   Taxpayer return information. -- The term “taxpayer return information” means sales, transaction privilege, gross receipts and use tax return information as defined in paragraph 2.17, above, which if filed with, or furnished to, the Agency by or on behalf of the taxpayer to whom such sales, transaction privilege, gross receipts and use tax return information relates.

 

2.21     Written determination. The term “written determination” means a ruling, determination letter, technical advice memorandum, letter, or administrative decision issued by the Agency.

 

Section 3.0                Purpose

 

3.1     This agreement is designed to provide for and facilitate the exchange of sales, transaction privilege, gross receipts and use tax information between the BSC states, in order to increase compliance with each state’s sales, transaction privilege, gross receipts and use tax law, primarily as that law applies to sales transactions made across state boundaries. The constitutional constraints placed on a state’s ability to tax transactions in interstate commerce have caused states to enact a use tax to assure all transactions are equally subject to tax and to protect in-state vendors from unfair competition from vendors located in other states. The most effective and efficient enforcement of the use tax is performed through collection of the tax by vendors. Through this agreement, the Signatory States will endeavor to increase compliance with the sales, transaction privilege, gross receipts and use tax laws of each state by encouraging in-state vendors to register with states with whom they are required pursuant to the laws of the other state, and to voluntarily register with states with whom they may not be required to register pursuant to the laws of the other state, but to whose residents sales are being made on a regular basis.

 

3.2  To achieve this goal, information such as, but not limited to, names of consumers to whom untaxed sales were made will be exchanged by the states. It is understood and agreed that all information, in any form whatsoever, exchanged pursuant to this agreement shall be employed solely for the purposes of tax administration of the parties. It is understood that tax administration purposes are limited to those uses necessary for the assessment, collection and enforcement, including administrative and civil and criminal proceeding, of the respective sales, transaction privilege, gross receipts and use tax laws of the parties hereto.

 

Section 4.0                 Confidentiality

 

4.1   Each party agrees that information obtained pursuant to this agreement, shall not be disclosed in any manner other than as provided in the confidentiality statutes of each Signatory State. The information obtained as a result of this agreement will not be disclosed by any Signatory State to any other state, agency, department, or unit within the state, or local government unit, except by judicial order.

 

4.2  Nothing contained herein shall be construed to prohibit disclosure of any information obtained as a result of this agreement by any Signatory State to its proper legal representative for use in administrative, civil, or criminal proceedings concerning tax compliance.

 

4.3   Each Signatory State will provide the other Signatory States with information relating to the statutory provisions concerning confidentiality of exchanged information, and the penalties for unlawful disclosure.

 

4.4  Each Signatory State agrees to protect the confidentiality of any information obtained as a result of this agreement in accordance with its law.

 

4.5   No information obtained from the Internal Revenue Service shall be exchanged under the terms of this agreement.

 

Section 5.0                 Program of Operation

 

5.1   The Signatory States agree to encourage registration of in-state vendors, who make sales to persons of other states, with those states to collect use tax on such transaction. This contact with vendors would be on a systematic basis either in accordance with specific Addenda to this agreement, specific request of the other state or through the ordinary course of sales, transaction privilege and use tax administration. 

 

5.2   The Signatory States may agree to pursue in conjunction with its audit program the discovery of untaxed sales made by in-state vendors to persons of other states. This audit would be commenced in accordance with specific Addenda to this agreement.

 

5.3   The Signatory State agree that after a vendor has registered with another state to collect and remit that state’s use tax, the other state will have the responsibility to administer and enforce its use tax with regard to that vendor.

 

5.4    In order to achieve the goals of this program, it is essential that information be exchanged in a free and orderly manner. Each Signatory State will designate one or more agency Representatives who may receive and request information from the other Signatory States for use under the terms of this agreement or addenda thereto. Every effort will be made by the Signatory States to develop procedures for the efficient exchange of information necessary for the administration of this agreement. Information or data relating to the achievements of this program will also by shared by the Signatory States.

 

Section 6.0                 Addenda

 

6. 1 It will be necessary to focus the resources of the Signatory States in specific areas in order to achieve the goals of this agreement. Since this agreement is of a generalized nature, such specific program will be outlined in Addenda signed by two or more of the Signatory States. Such Addenda will be considered to be part of this agreement and will be binding on only the parties thereto, their agents and employees, and their successors in office to the same extent as this agreement, unless limited by the Addenda, or rescinded or amended or the Signatory State withdraws from the agreement, as provided in Section 10.

 

6.2   Such Addenda may also be used to outline cooperative efforts between two or more Signatory States with regard to other taxes, such as but not limited to, corporation net income tax, franchise tax, and excise taxes. Any difference from the agreement required because of they type of tax involved should be clearly described in the addenda.

Section 7.0                 Other Agreements

 

7.1   This agreement is not intended and shall not, be construed to conflict with any other agreements or compacts regarding the sharing of information which may exist between the Signatory States or between any of the Signatory States and another state.

 

7.2   The California State Board of Equalization’s authority to exchange information is based solely on its existing agreements with each of the BSC States for the exchange of Sales and Use Tax information. This agreement and any addenda signed by the California State Board of Equalization will in no manner modify these existing agreements. This agreement is binding on the California State Board of Equalization only as long as at least one agreement for the exchange of Sales and Use Tax information remains in effect with each of the signatory states. 

 

Section 8.0

 

8.1      The Signatory States agree not to charge each other for the costs of routine reproduction of returns and return information mutually exchanged. The Signatory States may charge each other a reasonable fee for furnishing sales, transaction privilege, gross receipts and use tax returns and return information in magnetic tape format or under other non routine circumstances.

 

Section 9.0                 Other Taxes

 

9.1     The Signatory States agree that they will not attempt to subject any vendor to franchise, income or any other taxes of their state solely on the basis that the vendor has agreed to register for use tax with their state due to actions taken under the provisions of this agreement. Such registration to collect tax shall not in and of itself require the vendor to register to do business in that state.

 

Section 10.0               Termination or Modification of Agreement

 

10.1   This agreement to exchange state sales, transaction privilege, gross receipts and use tax returns or return information may be terminated or modified at the discretion of any Signatory State due to changes in applicable statutes and regulations of that or another Signatory State, or whenever in the administration of its state sales, transaction privilege, gross receipts and use tax laws, that action is deemed appropriate by any party to this agreement.

 

10.2   Written notice of intent to terminate this agreement shall be served by the terminating party on each of the other parties to their agreement at least thirty (30) days prior to the date of termination of this agreement. This notice shall be served on the head of the Agency of such other Signatory State.

 

10.3   This agreement may be modified by written addendum .thereto executed by the head of the Agency of each Signatory State.

10.4  Any unauthorized use or disclosure of state sales, transaction privilege, gross receipts and use tax returns or return information furnished pursuant to this agreement or inadequate procedures for safeguarding the confidentiality of such returns and return information, by an Agency constitutes grounds for termination of this agreement, as to any, some or all Signatory States, and the exchange of information thereunder.

 

10.5   Any unauthorized disclosure of state sales, transaction privilege, gross receipts and use tax information shall be reported to the Signatory State which provided the information disclosed. In the event of any controversy regarding the disclosure of tax information of any state, that state’s laws will apply and litigation involving the disclosure of tax information of Signatory State shall be brought before the courts of such state. 

 

Section 11.0              Effective Date

 

11.1   This agreement shall be binding on each Signatory State as of the date each signs this Agreement and until this Agreement is terminated or modified as provided in Section 10.

 

 (revised 5/5/95)


ADDENDUM

AUDIT INFORMATION EXCHANGE

 

The parties agree to pursue, in conjunction with their audit program, the discovery of untaxed sales made by in-state or multi-state vendors to consumers in the other states. Each party to this agreement shall, where permissible, without need for request, utilizing standardized reporting forms and procedures, transmit information to any affected party under this agreement, as outlined below.

 

Information shall be provided under any of the following conditions:

 

·   Identification and an approximation of sales volume of taxpayers with a location in your state where sales in excess of $250,000 annually into a signatory state have been identified. A representative listing of at least five (5) untaxed sales transactions made by vendors to consumers in other member states shall be provided. In the spirit of this agreement, such information is also encouraged to be exchanged for taxpayers not domiciled within your state

 

·    Identification of untaxed single item consumer sales in excess of $10,000 and may provide information for sales on less than $10,000. Consumer sales are defined to be sales of tangible personal property made to a consumer for his own use, consumption, storage for use or distribution, or for any purpose other than for resale. Excluded from the reporting criteria are sales of motor vehicles, and sales to a consumer which are presumed exempt by statute.

 

·    When a taxpayer is accruing tax in a state which has entered into this agreement, the amount of use tax collected and/or reported shall be furnished to all other member states.

·    Each party may, through agreement with other parties to this instrument, exchange such other audit information deemed appropriate for the consistent application of the taxing statutes of each state, including nexus information.

·    The California State Board of Equalization under the authority of existing exchange of information agreements with signatory states, intends to exchange the following information:

The California Board of Equalization, during the course of its routine audit program, will identify untaxed sales made by in-state vendors to consumers in the other signatory states. Each party to this agreement shall, where permissible, without need for request, utilizing standardized reporting forms and procedures, transmit information to any affected party under this agreement as follows:

·      Identification of untaxed single item consumer sales in excess of $10,000 or untaxed aggregate sales in excess of $10,000 to a consumer from a single vendor. Consumer sales are defined to be sales of tangible personal property made to a consumer for his or her own use, consumption, storage for use or consumption, or for any purpose other than for resale. Excluded from the reporting criteria are sales of motor vehicles.

 

The above information shall be exchanged in full compliance with the confidentiality statutes and provisions of each signatory state.

 

Under the terms above, where untaxed sales are identified the exchange of information shall include, but not be limited to, the following information:

 

·    The name and address of the vendor, the applicable taxpayer identification number, and a brief description of the vendor’s business.

·     The name and mailing address of the consumer.

·     The invoice date, invoice number, invoice amount, a brief description of the items purchased and means of delivery.

·    Whether the consumer claimed an exemption and the nature of the exemption so claimed.

 

The above information shall be exchanged in full compliance with the confidentiality statutes and provisions of each member state.

For purposes of exchange of information, each party to this agreement shall designate a specific contact person/position within their respective state whose responsibilities shall include the transmittal of information under the terms of this agreement to the member states, and the receipt of such information from such member states.

In addition, the person/position shall be responsible for assembling the statistical data which tracks agreement referrals and resulting revenue.

This Addendum shall be binding on each Signatory State as of the date each signs this Addendum and until this Addendum is terminated or modified as provided in Section 10 of the AGREEMENT TO EXCHANGE SALES, TRANSACTION PRIVILEGE, GROSS RECEIPTS AND USE TAX INFORMATION BETWEEN BSC STATES.

 (revised 5/5/95)

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