What is Streamlined Sales Tax? How does it simplify compliance?

• The Streamlined Sales Tax (SST) program simplifies sales and use tax compliance for businesses across the 24 member states. SST member states have adopted uniform tax definitions, a central registration system, and other measures to reduce costs and administrative burdens for multistate sellers.

• Qualifying volunteer sellers are eligible for free compliance services from a Certified Service Provider (CSP). If you qualify as a CSP-compensated (volunteer) seller in an SST member state, the state will compensate the CSP for a range of services including calculating sales tax, preparing and filing returns, and responding to tax notices.

• Avalara, the agentic AI platform for global tax and compliance, is one of just five SST Certified Service Providers. As a CSP, Avalara provides audit support and assumes liability for calculation errors in the 24 SST member states. Avalara is also a CSP for Pennsylvania, which runs its own, similar program.

SST grew out of the complexity of sales and use tax compliance, the emergence of ecommerce, and states’ desire to tax remote sales. 

The National Governors Association and the National Conference of State Legislatures created the Streamlined Sales Tax Project in 1999. Online sales were on the rise at the time, but states could only require a retailer to register for sales and use tax if it had a physical presence in the state. The Supreme Court of the United States had twice ruled — in National Bellas Hess v. Illinois (1967) and Quill Corp. v. North Dakota (1992) — that state and local sales tax compliance was too complicated to inflict on out-of-state businesses.  

The Streamlined Sales Tax Project set out to simplify the complex sales and use tax systems. The resulting Streamlined Sales and Use Tax Agreement made sales tax collection and administration in SST member states less costly and burdensome for businesses, especially for remote sellers with sales tax obligations in multiple states. This was prescient. 

On June 21, 2018, the U.S. Supreme Court overruled the physical presence rule with its decision in South Dakota v. Wayfair, Inc. While physical presence in a state still triggers a sales and use tax collection obligation, every state with a general sales tax now also requires out-of-state sellers making a certain amount of sales in the state (aka, economic nexus) to register for sales tax and comply with all applicable sales and use tax laws.  

SST reduces the complexity of selling across state lines by standardizing sales and use tax administration across participating states. The Supreme Court recognized the impact of SST in the Wayfair ruling, as South Dakota’s membership in SST was one of three reasons* the court did not consider South Dakota’s economic nexus law to be an undue burden on remote sellers. 

Retailers doing business in multiple member states may find SST’s simplification measures to be especially advantageous. 

SST member states must have:

• A central, electronic registration system 
• Consumer privacy protection 
• Simplified administration of exemptions 
• Simplified state and local tax rates 
• Simplified tax remittances and returns 
• State-level administration of sales and use tax collections (no self-collecting local jurisdictions) 
• Uniform state and local tax bases 
• Uniform sourcing rules for all taxable transactions 
• Uniform sales tax base definitions and rules

All retailers benefit from the simplification measures above, and there may be additional perks for remote sellers that register through SST. For example, Tennessee currently provides a tax amnesty program for all sellers that register through the Streamlined Sales Tax Registration System, or SSTRS (subject to limitations). And SST may soon establish an amnesty program for registration as well as a new Streamlined Sales Tax voluntary disclosure program for remote sellers.

There are even more Streamlined Sales Tax benefits for businesses that qualify as volunteer sellers (aka, CSP-compensated sellers). 

To qualify as a volunteer seller in a member state, your business must meet the following criteria during the 12-month period immediately preceding the date of registration with the member state:

• No fixed place of business for more than 30 days in the state 
• Less than $50,000 of property in the member state 
• Less than $50,000 of payroll in the state 
• Less than 25% of total property or payroll in the state 
• Additional criteria

Having economic nexus in a state doesn’t automatically disqualify a business from obtaining volunteer status.

The definition of CSP-compensated seller is used to determine if a Certified Service Provider will receive compensation from a Streamlined Sales Tax member state for providing services to the seller. It does not determine a seller’s legal requirement to register to collect and remit sales and use tax in a state.

What’s the benefit of being a volunteer seller?

CSP-compensated or volunteer sellers can obtain the following services at no cost in Streamlined Sales and Use Tax Agreement member states when they contract with a Certified Service Provider like Avalara:

• Free sales tax registration in participating states
• Free real-time sales tax calculation
• Free preparation, filing, and remittance of sales and use tax returns
• Free exemption certificate management within the sales tax calculation software
• Free SST notice management
• Free audit support and audit liaison services

It’s possible for a business to qualify as a volunteer seller in one SST member state but not another. Expect to pay for CSP services in any SST member state where you are not a CSP-compensated seller. Furthermore, CSPs may charge for services not covered by the CSP contract.

The Streamlined Sales Tax Governing Board has certified the accuracy of a handful of sales tax compliance automation businesses, including Avalara.

SST member states compensate Certified Service Providers for providing the software and services needed to set up and integrate its Certified Automated System (CAS) with retailers’ systems, calculate the tax due, prepare and file required returns, remit the tax due, and more.

Automating sales tax compliance facilitates sales tax management for any business required to collect sales tax in multiple states. In SST states, there are added benefits to working with a CSP, both for nonvolunteer and volunteer sellers.

As a CSP — one of the first certified by SST — Avalara must meet rigorous standards for data processing and management of sales tax information. We can help you with all aspects of sales tax compliance, from determining where you have sales tax nexus and an obligation to collect sales tax, to audit response.

“If SST wasn’t a thing, I’d be paying Avalara for those transactions and returns,” says Paul Jackson, CFO of Aseptico. “It’s astounding how many companies don’t understand those benefits.”

Avalara combines SST benefits with an AI-powered platform that calculates tax, prepares and files returns, and helps teams manage notices so you can stay compliant as you grow. Learn more about Avalara CSP services and Avalara plans and pricing.

*South Dakota law also “affords small merchants a reasonable degree of protection” by providing an exception for sellers with less than $100,000 in sales in the current or previous calendar year; and it prohibits retroactive application of its economic nexus law.