Vendor Compensation
Steering Committee Working Document
Draft-10/21/09
Overall Objective- Develop a definitive compensation proposal that is broadly supported
by state and local government and the business community.
Issue #1- Distinction between remote sellers and nexus sellers
Should the requirement for compensation be different for remote sellers than for sellers
that have a legal requirement to collect?
Things to considerHow compensation requirement works in a voluntary system as opposed to after federal
legislation is enacted?
How do you determine who is a volunteer seller and who is a nexus seller initially and
going forward?
What definition should be used for a volunteer seller?
What level of compensation is necessary for remote sellers in order to overcome any
“undue burden”?
How do you address some of the issues outlined below if you have a single compensation
requirement that applies to all sellers?
Issue #2- Simple for sellers.
Issue #3- As uniform as possible.
Issue #4- Can be easily administered by the states.
Issue #5- Should additional compensation be required in states with more complex tax
structures? What complexity factors should be considered?
Issue #6- How should the compensation requirement account for cost differences related
to the size of the seller? How can size differences be accounted for so that it is not
difficult to administer? Is it appropriate to use caps and if so, how should they be
structured?
Issue #7- Should compensation requirement be adjusted because of differences in tax
rates?
Issue #8- The application of any compensation requirement to local sales and use taxes.
Issues #9- How to provide adequate compensation for sellers with a large share of
exempt sales?
Issue #10- Can the compensation requirement ultimately be enacted by a significant
number of states? What is the cost of compensation relative to total sales and use tax
collections and expected new revenue from remote collection authority?
Issue #11- How does the compensation requirement impact states that have existing
compensation schedules? Does complying with the compensation requirement result is
some taxpayers getting less compensation?
Issue #12- How can the compensation requirement be implemented so that states are
assured that new revenue will be sufficient to cover the cost?
Issue #13- How is compliance with compensation requirement determined? What is the
process and timing for making that determination? What is the process for appealing a
determination of compliance?
Issue #14- When does collection authority commence and what procedures must be
followed to provide adequate notice to impacted sellers?
Issue #14- While states will be required to meet the compensation requirement in order to
get remote collection authority, does a state need to meet the compensation requirement
in order to maintain full membership in the Governing Board?
Issue #15- How is the compensation requirement impacted by the adoption of additional
simplifications or the implementation of additional technologies?
Issue #16- How is the compensation requirement impacted by any small seller exception?