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Olson to introduce State Streamlined Sales Tax at FBMA meeting Feb. 24

Discussion on the town of Farragut’s posture on the State Streamlined Sales Tax Legislation will be brought to the table at tonight’s Farragut Board of Mayor and Aldermen meeting.

Town administrator Dan Olson said in a telephone interview Friday, the mayor and aldermen had just been given a packet to review containing the 56-page impact study of the legislation, which was conducted by the University of Tennessee and commissioned by the Tennessee Municipal League and Nashville city government.

Olson said, “The town stands to gain about half a million (dollars) in additional revenue based on the study.”

But the revenue gain is at the cost of lost revenue to Knoxville city government to the tune of about $4 million.

Basically, the Streamlined Sales Tax would allocate sales taxes on certain items, such as furniture, purchased by Farragut residents and surrounding area residents outside Knoxville to the municipality or county in which the purchaser resides.

For example, a living room suite purchased by a Farragut resident from one of the several furniture galleries in the Shops at Turkey Creek on Parkside Drive, which is in Knoxville, would generate sales tax, which would be allocated to Farragut, the town in which the purchaser lives, rather than Knoxville, the city from which the furniture store is situated.

According to the report, the “Tennessee General Assembly initially adopted legislation to conform the state’s tax structure to the Streamlined Sales Tax Project on June 16, 2003, and passed technical corrections to the legislation on June 15, 2004. The legislation is scheduled for implementation on July 1.”

Olson said, “If the legislation is implemented on schedule, the revenue wouldn’t be in our 2005 budget. … We probably wouldn’t see any revenue until about September.

“The extra revenue would be set aside since it hasn’t been budgeted into any department.”

Olson said the revenue would flow into the town with other sales tax revenue on a quarterly basis.

Olson added that the SSTP affects tax revenue in that tax revenue will be attributed according to the destination rather that the origin of the sale.

One caveat to the system, Olson pointed out, is that goods picked up at the origin by the purchaser rather than delivered would result in the sales taxes staying where the store is located. The goods must be delivered to the destination.

Olson said SSTP was initiated in order to establish the groundwork to allow states to begin collecting sales tax on goods purchased via the Internet or by telephone from states that do not reallocate sales tax.

Olson said SSTP and the study were not on the FBMA agenda, but would be a topic in his Administrator’s Report presented at the conclusion of Board business.

Knoxville Mayor Bill Haslam and mayors of Chattanooga, Memphis and Nashville have made delay of the Streamlined Sales Tax a top priority.

Knox County Mayor Mike Ragsdale also has called for delay of the law.

According to the study, Knox County stands to gain more than $3 million when the law goes into effect.


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