How to Handle Streamlined Sales Tax Exemptions
- Jan 4, 2016 | Suzanne Kearns
The Streamlined Sales Tax Project (SSTP) has made it easy for businesses that sell across state lines to stay in compliance. In an effort to make sales tax compliance easier for ecommerce sellers, 44 states (see table below) came together and formed the SSTP, which is not only a more uniformed sales and use tax system, but also reduces the costs and burdens of sellers who do business in many states.
One of the things aligned across all member states is the Streamlined Tax Exemption Certificate. Let’s take a look at how this exemption certificate work.
Sales Tax Exemptions Made Easy
If you do business in any of the 44 member states, you won’t need to worry about applying for a sales-tax exemption certificate in every state. That’s because member states all use the Streamlined Tax Exemption Certificate, which is valid in every state that participates in the SSTP. What’s more, the form can be used for a single purchase or as a blanket certificate that allows the holder to use it in multiple states whenever requesting an exemption.
Business owners can choose to use a paper exemption certificate or the electronic version, which is submitted in various ways in each state. And to make the process even easier, when using a paper certificate, sellers don’t even have to use the official form. They can use any type of exemption certificate as long as it has the same information that’s required on the SSTP certificate.
Not All Exemptions Apply to Each Member State
The only challenge to the process comes from having to know which exemptions each state accepts. Although the multi-state certificate lists twelve specific exemptions, it is up to the purchaser and seller to ensure that the state in which the transaction is made allows that type of exemption. If a buyer presents an exemption certificate but doesn’t qualify for an exemption in that state, they can be held responsible for the tax and interest, as well as civil and criminal penalties. Sellers who accept the certificates should keep them to prove to the state they don’t owe sales tax on the sale.
The Streamlined Sales Tax Project helps ecommerce sellers in many ways, and creating a multi-state exemption certificate certainly takes a great burden off sellers and buyers alike.
The Current State of the Streamlined Sales Tax Project
The following table outlines the 44 states currently participating in the Streamlined Sales Tax Project.
|Full Member States||Advisory States||Other SSTP States|
|Arkansas||Alabama||Pennsylvania (Associate Member state)|
|Georgia||Arizona||Tennessee (Project state)|
|Rhode Island||New York|
|South Dakota||South Carolina|
- Colorado is the only sales tax collecting state that is currently not participating in the SSTP.