What Is the Streamlined Sales Tax Project?
- December 4, 2015 | Suzanne Kearns
In case you haven’t noticed, sales tax compliance is complicated. Really complicated. That’s why some state and local governments have banded together to try and make it easier for ecommerce sellers to collect it. It’s called the Streamlined Sales Tax Project (SSTP), and it likely affects your ecommerce business in one way or another.
If you’re an ecommerce seller who makes sales in one of the 24 participating states,* here’s what you need to know about the law.
How Did the SSTP Come About?
In an effort to simplify sales tax collection for retailers who sell to multiple states, the National Governor’s Association and the National Conference of State Legislatures joined together to create a the Streamlined Sales and Use Tax in the fall of 1999. According to the Governing Board, the two organizations were concerned that “A 1930’s sales tax would not be relevant in 21st century commerce.”
How Does it Affect Retailers?
In addition to simplifying sales tax collections across multiple states, the agreement also establishes a uniform sales and use tax standard, reduces the costs and administrative burdens on sellers by applying standard tax definitions and using common forms and procedures.
It also certifies tax administration software. (Shameless plug alert: Avalara is a Certified Service Provider with the Streamlined Sales Tax Governing Board.) This is especially helpful for those businesses that operate in more than one state. The idea behind the agreement is that encouraging online and mail order businesses to collect the same sales tax as brick-and-mortar businesses will level the playing field.
How Does the Agreement Define Remote Sellers?
Sellers who have not yet registered for the Streamlined Sales Tax and who do not have nexus don’t have to collect sales tax. But if you sell in a state that participates in the SSTP, you are encouraged (but not required) to collect sales tax. The agreement defines remote sellers as those who use the Internet, telephone, or mail order to sell to customers in a state. It’s not necessary for remote sellers to have nexus under the terms of the SSTP.
Which States Participate?
So far, 24 of the 44 states* have conformed with the legislation requirements of the SSTP. According to the Streamlined Sales Tax Governing Board, other states have contacted them and asked about conforming to their laws, but they have not yet passed the proper legislation. Here is a map that shows the streamlined state status of all states.
How Do Retailers Participate?
So far, participation in the SSTP is voluntary. In order to become a member of the Streamlined Sales Tax, you must register at the national registration site. You can submit your registration online, and after you do, you will be registered to collect sales and use tax in all of the current member states. When a new state joins the agreement, you will be alerted of your need to collect sales tax in that state.
* The participating states are Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. For more information about managing sales tax in those states, refer to our state sales tax guides.