Legislative Audit Committee. Any business owner who wants to sell retail goods in the state (retailer) must first obtain a sales tax license from the department of revenue (department). Given the complexity of the state's local sales tax system, in which rates vary depending on applicable jurisdictions such as cities, counties, and special districts, a key step in the process is the department's method of determining which local taxing jurisdictions apply to the retailer's location. The department has created a system of location codes that identifies tax liabilities for various geographic regions of the state. When a retailer registers for a sales tax license, the department assigns one of these location codes to the business site and prints it on the sales tax license to represent the retailer's liability for collecting local sales taxes.
A November 2015 performance audit of the department by the office of the state auditor reflects that the department does not sufficiently ensure it assigns location codes to business sites that accurately reflect the sales tax jurisdictions that apply to their locations.
The bill specifies that if a retailer obtains a license as required by law in good faith, the retailer provides a business address that conforms with the United States postal service's address database and is correct, the department assigns an incorrect location code to the retailer, and the retailer in good faith collects and remits sales taxes for the local jurisdictions represented by the assigned location code, then the retailer is held harmless for any tax, charge, penalty, interest, or fee payable as a result of failing to collect and remit sales taxes for a local jurisdiction as a result of the incorrect location code.