Fred Nicely (Left) is a Senior Tax Counsel at COST. His role as Senior Tax Counsel extends to all aspects of the COST mission statement: “to preserve and promote equitable and nondiscriminatory state and local taxation of multijurisdictional business entities.” Before joining COST, Fred served in the Ohio Department of Taxation for four years as Deputy Tax Commissioner over Legal and for the prior seven years as the Department’s Chief Counsel.Fred’s responsibilities at the Department included testifying before legislative committees, participating as an alternative delegate for Ohio at Streamlined Sales Tax Project meetings, and reviewing legal documents issued by the Department, including deciding the merits of filing an appeal. He is a frequent speaker and author on Ohio’s tax system and on multistate tax issuesgenerally. Fred also has extensive experience in public utility tax law, having served as an administrator of the Department’s public utility tax division. Fred’s undergraduate degree in psychology (with a concentration in accounting) is from the Ohio State University. He obtained his MBA and JD from Capital University in Columbus, Ohio. He can be reached at 202/484-5213; (email@example.com).
Patrick J. Reynolds (Right) is a Senior Tax Counsel with the Council On State Taxation (COST), where he has been employed since 2016. He currently leads COST’s legislative advocacy function, serves as staff liaison to the Unclaimed Property Committee and the Sales Tax Committee, andedits two of COST’s regular publications. Previously, he was Senior Managing Counsel with J. C. Penney and for 14 years provided legal support for audits, litigation, and appeals for income, franchise, sales/use, property and transfer taxes, as well as unclaimed property. He also advisedin strategic planning efforts, state tax aspects of financial accounting, and tax minimization and incentive strategies. He worked closely with the company’s government affairs team, frequently lobbying and testifying on a number of Texas issues, and has been an active participant on the Streamlined Sales Tax Governing Board and the State and Local Advisory Council. Pat started his career with Price Waterhouse in Omaha, Nebraska, and subsequently served for six years as an attorney in the Nebraska Department of Revenue’s Legal Division. He received his JD from Creighton University School of Law and his BSBA – Accounting from the University of Nebraska at Omaha. He is a member of the Nebraska and Texas state bars and is a licensed CPAin Texas.
Russ: Thanks for joining us today. How would you broadly describe the purpose of the Business Advisory Council (BAC)?
Pat/Fred: The Business Advisory Council (BAC) is the organization, officially recognized pursuant to Section 811 of the SSUTA, to represent the business community. Its goal is to advocate for the simplification and greater uniformity in the states’ sales and use tax laws to reduce the burdens imposed on businesses to comply with such laws. Small, medium, and large businesses and those representing the business community (associations and firms) are encouraged to join the BAC.
Russ: You and Pat Reynolds serve as staff for the BAC in an arrangement with the Council On State Taxation (COST). Can you briefly describe COST and its mission. Why does COST find it important to support this effort?
Pat/Fred: COST has been involved with the Streamlined Sales Tax Project from the beginning. COST has long advocated for continued simplification and uniformity of the states sales and use taxes, and its connections with the BAC endeavors is a perfect fit for both organizations. COST handles many of the administrative issues for the BAC, including the preparation of its meetings, tax returns, and membership issues. This fits within COST’s core mission of promoting fair and equitable taxation for multijurisdictional businesses. COST was formed in 1969 and presently has approximately 500 member companies in support of that mission.
Russ: How long have you been involved with Streamlined and with BAC?
Fred: I have been engaged in the SSTP efforts since 2002, and I was a delegate for Ohio to the Governing Board from 2005 to 2007. In the fall of 2007, I joined COST and I have been involved with assisting the BAC in its activities since that time. In 2008, I was pleased to be nominated and approved as one of the BAC’s Board of Directors.
Pat: I joined shortly after Fred when I worked at JCPenney. I have been involved ever since, continuing involvement after I joined COST.
Russ: How is the BAC governed?
Pat/Fred: The BAC is a 501(c)(4) organization, the official organization recognized by the Governing Board to advise that Board on matters, including any its other councils/committees. The BAC has over 35 entities that are members, from industry, CSPs, accounting firms, law firms, and associations. A BAC member entity is the member, which allows any person working for a BAC member entity to participate in the BAC’s activities. The official actions of the BAC are conducted by its Board of Directors, which presently has approximately 25 Board members. The BAC typically has two to three in-person meetings a year (conducted in unison with the Governing Board’s in person meetings), with a session open for discussion to all BAC members and a session which the BAC Board members take official action. The BAC provides input on proposed amendments to the Agreement, states substantial compliance with the Agreement, creation of various workgroups, and has provided the Governing Board and its member states with formal resolutions on its view with certain issues pending before the Governing Board. Three to four BAC Board members are also officers (president, vice-president, treasurer, and secretary), which guide the BAC activities.
Russ: The sales tax simplification effort was a pretty heavy lift, one in which the business community and states came together in launching it. How critical was that partnership to getting the effort off the ground and getting states to adopt the simplifications and to join Streamlined?
Pat/Fred: Fortunately, soon after the states first met to discuss ways to simplify their sales and use tax systems to encourage/require more sellers to collect those taxes, interested parties from the business community, both industry and associations representing the business community such as COST, were allowed to participate in the Streamlined Sales Tax Project. State sales tax administrators, interacting with business sales tax professionals, along with state legislator involvement (including the NCSL), all worked together to work on solutions that, for the most part, improved the ability of businesses to comply with collecting and remitting sales and use taxes in the member states of the Agreement.
Russ: The Business Advisory Council (BAC) has been an important working group within the Streamlined Sales Tax from the organization’s inception. What impact has it had in developing business friendly policies and practices?
Pat/Fred: Similar to COST, the BAC has not taken the position of focusing on states not taxing or taxing certain products or focused on states increasing or decreasing their overall sales and use tax rates. One of the biggest impacts the BAC has on improving sales and use tax administration is it providing the business’ communities concerns on issues pending before the Governing Board and/or one of its councils/committees. In finessing amendments to the Agreement, one of the BAC’s good accomplishments is its focus on uniformity and simplification, not specifically if a state (or states) should impose certain taxes.
Russ: From BAC’s perspective what are SST’s most important accomplishments?
Pat/Fred: It’s hard to pinpoint the most successful accomplishment. One important issue for the BAC was its organizational structure and whether it should be an independent body recognized by the Governing Board or a council controlled/managed by the Governing Board. The Governing Board ultimately sided with the business community, and since its inception the BAC has provided its input as an independent organization from the Governing Board. The ongoing collaboration between the state tax administrators, state legislators, and the business community has allowed the BAC to provide valuable input to the Governing Board to shape the Agreement on where it stands today.
Russ: What do you think SST should focus its attention on now and in the near future?
Pat/Fred: In the near future the BAC will likely work with the Governing Board and its councils/committees on addressing issues with digital products and clarifications on what type of customer address information is needed. The BAC also wants additional states to join the Agreementas full members or take steps toward simplification and uniformity by adopting as much of the Agreement as they can.
Russ: What are the activities BAC members engage with in regard to Streamlined?
Pat/Fred: The BAC has several subcommittees focused on various issues pending before the Governing Board or of general concern for certain industries that are part of the BAC. For example,the BAC has long had an exemption administration subcommittee to address exemption issues and recently created a food subcommittee to address proposed amendments over the past couple of years that pertained to food products (e.g., take-and-bake pizzas). The BAC always attempts to have some of its members participating on the Governing Board’s State and Local Advisory Council’s business calls (including its workgroups) and the Compliance Review and Interpretation Committee meetings addressing the states’ substantial compliance with the Agreement and request for interpretations of the Agreement.
Russ: What does a business need to do to become a BAC member and participate in its activities?
Pat/Fred: The main requirement for a business entity to join the BAC is that the business or an organization representing business interests agrees that it supports the states working together to simplify and have more uniform laws to ease sales and use tax administrative burdens. Other than that, there is an approval process by the BAC Board and a requirement to pay yearly dues that range from $100 for small businesses to $1,000 for larger businesses.
Russ: A lot of major retailers are members of the BAC and have the resources to actively participate.Why should a smaller business consider being part of BAC?
Pat/Fred: The BAC strongly encourages small retailers to participate in the BAC’s activities. It’s a two-way street, a small business will learn about the issues impacting the BAC members and the BAC membership is able to obtain input on any unique issues causing problems for small businesses. Perspectives from multiple business types are needed for the BAC to fully represent the business community’s interests/concerns.
Russ: Where can a business find out more about BAC? If a business is interested in learning more about BAC and Streamlined can they contact you?
Pat/Fred: We strongly recommend a person contact one of us (firstname.lastname@example.org or email@example.com) to obtain more information about the BAC, including a membership application to join the BAC. The BAC has a website that can also be used to obtain some information: BACSSUTA.ORG.
Russ: What does BAC do to encourage additional states to join SST?
Pat/Fred: The BAC encourages additional states to join the Agreement, full or partial participation. Both of us when attending state tax conferences where state administrators or legislators are present from non-SSUTA states have discussed the benefits of their state joining the Agreement. BAC members also participate in other groups, such as the NCSL’s state and local tax taskforce, and continuously encourage state legislators to join the Agreement.
Russ: BAC is made up of a wide range of businesses with different interests. Sometimes those interests are sufficiently different to impede consensus on an issue. How does the BAC manage differences when they occur?
Pat/Fred: Similar to COST which has a broad membership reflecting multiple industries, the BAC focuses on the issues of good sales tax administration and tries to stay away from industry specific issues, especially if there are competing views with other industries. Consensus on various issues is not always possible, and the BAC will note to the Governing Board (or other interested parties) that it is not taking a position on a certain issue.
Pat/Fred: Many thanks for providing us with this opportunity to participate in your blog!!
Russ: We want more businesses to know about the important work of BAC and its members so we were glad you could do this.