New tax mode bringing grief

Businesses that are already prepared for a new method of sales-tax collection may have to invest even more time and money because too many other businesses are unable to comply with the new system.

A special session of the Utah Legislature today, which was formally announced Friday by Gov. Olene Walker, could postpone by a year the implementation of the streamlined sales tax, which is a multistate project developed as a way for states to capture taxes on Internet and catalog sales.

Currently scheduled to take effect Thursday, the law would change the way sales tax is collected, forcing retailers to charge the tax based on where the consumer receives the product. For businesses that specialize in deliveries, the change has meant a complete overhaul of their accounting systems so that they can track sales based on customer's ZIP codes and the associated tax rate.

Roy Harris, chief financial officer for All-Purpose Windows and Doors, said that switching to the new system has already cost the company an estimated $2,500 to simply install the needed software and train employees, and that is not something he wants to have to repeat. Although he "hates the law, hates the cost, hates everything about it" and would have preferred maintaining the old system of charging sales tax based on the store's location, he would prefer to see the law go into effect with some sort of grace period for businesses that cannot comply.

"We are ready, and it better go into effect July 1," Harris said. "We have spent many hours to prepare for this thing. To undo everything would be impossible."

Sen. Lyle Hillyard, R-Logan, who sponsored the original legislation, said the special session bill will delay the implementation for a year and also change some language to allow legislators to ensure that some businesses aren't being hit with large tax increases because of the law. As for those businesses that are ready, legislators know it could hurt them, but most businesses have said it will not be a major problem.

"It's a no-win situation," Hillyard said. "For those who are ready to go, it hurts them," he said. "But we're being told by their representatives that they can deal with it for a year."

Jodi Monaco, Utah Tax Commission public information officer, said the agency has offered three-hour training sessions throughout the state for the past few months to businesses. It has also sent notices to businesses, has a special page on its Web site about the streamlined sales tax and has advisers available for questions. Although difficult at first, she expected that business owners would eventually find the system no more difficult, and perhaps easier, than the current system.

"Once the learning curve is crossed, people realize it will be a workable system," Monaco said. "But there will be an adjustment period."

That delay is not something supported by Curtis Child, chief financial officer for R.C. Willey, primarily because the furniture chain has already spent almost six months getting ready for the streamlined sales tax.

"We're absolutely ready, and we'll do the address fix (tracking deliveries using the ZIP+4 codes) regardless," he said. "We'd just as soon go, so we don't have to reacquaint ourselves with the tax policy in a year."

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E-mail: jloftin@desnews.com