Download Sourcing of Services Work Group October 2006 Mission Statement

Draft Document Not For Publication But For Discussion Purposes Only – Nothing
contained herein represents a final position or opinion of the State and Local Advisory
Council (SLAC) or any of the member states. Readers should neither rely on any
information herein nor make any inferences about final SLAC positions or positions of
member states contained herein as this is a draft only and may change in response to
comments and input from the public or private sector.
Sourcing of Services
Work Group
October 2006
Mission Statement: To address issues related to the sourcing of services that are
subject to state sales taxes for the purpose of achieving uniformity among the
member states.
Plan of Action:
1) Revive discussions on the sourcing of services using as a basis for discussion the
August 2004 draft paper on Sourcing Services (attached).
2) a) Identify services for which the general sourcing provisions of the SSUTA create
confusion, or lead to undue burdens on sellers of those services.
b) Develop methods of dealing with these sourcing issues consistent with the principles
of destination sourcing.
3) Identify services for which an MPU claim is appropriate and those for which it is not
appropriate.
4) Evaluate the need for interpretive rules related to the sourcing of services and, if such a
need is identified, draft such rules for presentation to the Compliance Review and
Interpretations Committee and Governing Board.
5) Evaluate the need for any changes to the sourcing provisions of the SSUTA, and if
such changes are identified, draft the necessary amendments for presentation to the
Governing Board.
Discussion Paper - Sourcing Services
August 2004
We believe that the general sourcing rules provided in 310A of the Agreement
can be used to adequately source services to real property, personal property,
personal services and admissions. Based on discussions at previous SSTP
meetings, it appears that there is agreement (or near agreement) that these
sales should be sourced as follows.

Services to real property – Building cleaning, pest control, lawn care,
security services. Source to the property location where the service is first
used. Section 310(A)(2), location of delivery known to seller.

Personal services – Tanning, barber, massage. Source to the location
where the service is performed. Section 310(A)(1), receipt at seller’s
location or 310(A)(2) delivery location.

Admissions and reservations – Movies, sporting events, concerts,
seminars, lodging, golf. Source to the location of the event, attraction or
lodging establishment. Section 310(A)(1) or 310(A)(2).

Services to personal property – Auto repair, dry cleaning, storage, pet
grooming and boarding services. Source to the location where the
customer picks up the serviced item. Section 310(A)(1) or 310(A)(2).
Discussion Items
Sourcing rules for the following services are still under discussion. Each service
is described along with a suggestion for how it could be sourced under the
existing sourcing rules as defined in the Agreement. These suggestions are
provided for discussion purposes only.
Storage – source to the location of the storage. Discussed at the Nashville
sourcing meeting. Agreement of members present was that storage should be
sourced to the location of the storage.
Towing Services – source to the location where the customer receives the
towed property. Towing is a service to tangible personal property. To be
consistent with how we source other services to tangible personal property,
source to the location where the customer receives the serviced property. Like
other services to tangible personal property, where the service is performed is
not a factor.
Accounting, attorney, consulting, investment services – source to the
location where the customer receives the service. If the service is received
at the attorney’s office, source there. If the service is received at another
location, source there. If the seller does not know where the service will be
received, or if it will be received at multiple locations, or over a period of
time, source to the location of the customer.
Armored car – unless the service is performed entirely within the same
state and local taxing jurisdiction, source to the customer’s location.
Armored car services are often conducted on flat rate contracts. There may be
some fuel cost escalators and charges for additional runs requested by the
customer. The armored cars generally service routes with more than one
customer, but these routes frequently change. There may be more than one car
transporting for a single customer at any one time. To be consistent with
suggested sourcing for other services that are not received at the same location,
we suggest sourcing armored car services to the customer’s location.
Funeral services – source to the funeral home or the location where the
body is prepared; source services provided by the cemetery to the location
of the cemetery. This is consistent with industry proposal and seems to make
the most sense. Services of transporting the body to and from the funeral home
are incidental to the total service provided.
Admissions or lodging that can be used in multiple locations
-
If the admissions or lodging must be used in a single state, source to
the lowest taxing jurisdiction possible. For example, ski passes that
can be used at various locations in Vermont will be sourced to Vermont.
The seller should collect Vermont state sales or use tax, but is not
required to collect any local tax since the seller does not know in which
local taxing jurisdiction the customer will use the tickets.
-
Admissions or lodging can be used in multiple states. Treat these
sales as over-the-counter sales if the purchaser picks up the tickets or
signs the contract for services at the service provider’s location and the
purchaser can use the service at that location (theater, health club, etc.). If
the service cannot be used at the seller’s location, or the sale is made online the over-the counter rule cannot apply. The sale should be sourced to
the location where the tickets or confirmation are sent using rules 310A(2),
(3), (4), or (5).
Maintenance contracts – source to the location the customer receives the
contract. If sold with a product, source to the location where the customer
takes possession of the product.
Realtors, surveyors – source to the location of the property. This is
consistent with sourcing for services to real property.