New tax system may be delayed

Gov. Olene Walker tentatively plans to call a special legislative session before July 1 to delay for a year a new sales-tax collection system.

Without the delay, many businesses will be out of compliance and subject to fines and penalties, Sen. Curt Bramble, R-Provo, said Wednesday. The change will be especially helpful to hundreds of small Utah businesses that are not ready to implement the streamlined sales tax system. Although the Legislature will have to deal with "tax fairness" at some point, during the special session legislators will only be postponing the new tax for a year.

However, while it will help the smaller businesses, a delay would also frustrate large retailers, like RC Willey, which have spent tens of thousands of dollars to reprogram their computers to meet the new reporting system's July 1 deadline, retail merchants told a meeting of the Legislature's Revenue and Taxation Interim Study Committee. And by putting off the new system — specifically aimed at collecting unpaid sales taxes on catalog and Web sales — the state will lose millions of dollars next fiscal year.

Walker's spokeswoman, Amanda Covington, said that the governor is looking at having a special session on June 28, the last Monday of the month. It would most likely start at noon and would probably only include the streamlined sales tax on the agenda, since the sponsors of other issues that Walker has supported calling a special session to amend — such as the Carson Smith tuition waiver or abortion laws — have not indicated they are prepared with the changes.

Ideally, Covington said, they would like to see a bill that helps those businesses not adequately prepared for the new tax without penalizing those who have invested the effort needed to follow the law, possibly by phasing in the tax.

"She's looking to ensure that businesses can come into it without too much impact," Covington said.

Earlier this week, the Utah Taxpayers Association and the Utah Chamber of Commerce called for the special session to delay the tax. Sen. Howard Stephenson, R-Draper, who is president of the pro-business tax association, said that one of the biggest problems is that software approved by the Utah Tax Commission that was supposed to be available to retailers is not ready. Also, despite promises to the contrary, there are actually new taxes being imposed to address inequities in the way some taxes are charged, such as for installation or delivery charges.

"It's a question of breach of trust," Stephenson said.