The Collaborative Efforts Behind the Streamlined Sales Tax Project: How You Can Make an Impact

The Streamlined Sales Tax (SST) project was born out of the need for greater cooperation between states, local governments, and businesses to simplify and modernize the sales tax system in the United States. The primary goal of SST is to reduce the complexity and administrative burden of complying with sales tax laws, especially for remote sellers who face significant challenges in handling multiple tax jurisdictions across the country. In a landscape that became even more complicated after the United States Supreme Court’s 2018 South Dakota v. Wayfair decision, the need for uniformity and simplicity became stronger.

The Impact of Wayfair and the Evolution of Sales Tax

The South Dakota v. Wayfair Supreme Court decision was a game changer in the world of sales tax. It allowed states to require remote sellers to collect and remit sales tax even if they had no physical presence in the state. While this decision aimed to level the playing field between online and brick-and-mortar retailers, it also brought about significant new compliance challenges for businesses. Companies that sell products or services across state lines suddenly faced the daunting task of understanding and complying with the varying tax laws in each state where they had economic nexus—defined by sales thresholds that trigger tax obligations.

This patchwork of state and local sales tax laws created confusion, inefficiency, and unnecessary burdens for businesses. As a result, many businesses, especially small and mid-sized online sellers, found themselves struggling to stay compliant while navigating the labyrinth of sales tax rules, forms, and regulations in different states. The Wayfair decision highlighted the need for a more streamlined and uniform sales tax system that would make compliance easier for businesses and more manageable for states.

The Goals of the Streamlined Sales Tax Project

The Streamlined Sales Tax Project (SSTP) was initiated as a response to this growing complexity back in the late 1990’s! Its mission is to simplify the way businesses collect and remit sales tax, making it easier to comply with varying state and local tax laws. The project is governed by the Streamlined Sales and Use Tax Agreement (SSUTA), a comprehensive set of standards and best practices adopted by participating states to provide greater uniformity in sales tax administration.

One of the key objectives of SST is to create consistency in how sales tax laws are applied across different states. This includes standardizing definitions, tax rates, exemptions, and administrative procedures. For instance, the SSUTA ensures that all member states use the same definitions for various defined terms including certain product categories (i.e., food and food ingredients, drugs, clothing, etc.), as well as various administrative terms (i.e., sales price, delivery charges, etc.), making it easier for businesses to determine their tax liability regardless of where they sell their products. Whether it’s defining what qualifies as “food” or “clothing” for tax purposes or determining the thresholds for remote seller tax obligations, SST strives to create a more predictable and business-friendly environment.

Simplifying Compliance for Businesses

The Streamlined Sales Tax Project also aims to provide businesses with tools and resources to simplify their sales tax compliance efforts. One of the most impactful aspects of SST is the creation of a centralized, multi-state registration system that allows businesses to register for sales tax purposes in all participating states through a single application. This not only saves time and reduces administrative costs for businesses, but it also helps ensure that companies are properly registered in many states where they have tax obligations.

Another important feature of SST is the Certified Service Provider (CSP) program. CSPs are third-party companies that businesses can partner with to handle their sales tax compliance needs. These providers offer automated solutions for calculating, collecting, and remitting sales tax on behalf of businesses. By leveraging CSPs, businesses can focus on their core operations while leaving the complexities of sales tax compliance to experts. This is particularly beneficial for small and mid-sized companies that may lack the resources to manage multi-state sales tax on their own.

Additionally, SST member states have committed to providing businesses with clear, user-friendly resources that outline their sales tax obligations. This includes offering free sales tax tools that help companies calculate and report their sales tax liabilities accurately and efficiently. States also provide customer service support to ensure that businesses have access to the information and assistance they need to stay compliant.

Promoting Fairness and Reducing Burden

From a policy perspective, the SST Project promotes fairness in the sales tax system by ensuring that the same rules apply to remote sellers and brick-and-mortar retailers. Before the Wayfair decision, many online retailers were not required to collect sales tax in states where they had no physical presence, giving them a competitive advantage over local businesses. By implementing economic nexus standards and simplifying compliance, SST levels the playing field and ensures that all businesses—whether online or offline—are subject to the same tax rules.

For states, the SST Project provides an opportunity to modernize their sales tax systems and improve the efficiency of sales tax collection. By adopting uniform tax laws and working closely with the business community, states can reduce the costs associated with sales tax administration and enforcement. The project also helps to prevent tax evasion and ensure that states are able to collect the revenue they are owed, which is particularly important as more and more commerce shifts to the online world.

A Collaborative Effort

The success of the Streamlined Sales Tax Project depends on the collaboration between states, local governments, and businesses. It is a model of how public and private entities can work together to solve complex challenges in sales tax administration. By working together, states can provide businesses with the clarity and consistency they need to comply with sales tax laws, while businesses can help states understand the practical challenges of compliance and offer feedback on how to improve the system.

The importance of the collaborative relationship between the Streamlined Sales Tax Governing Board and the business community cannot be stressed enough. Businesses are in the best position to identify the issues that are creating difficulties for them, but they need to be willing to openly discuss and explain those issues to the states. Streamlined represents an opportunity for any business to bring forth issues, ideas or concerns related to sales tax administration. If sellers are concerned about retribution by the states, those sellers can reach out directly to Craig Johnson, the Executive Director of the Streamlined Sales Tax Governing Board or have their representatives bring the issues forward on an anonymous basis. Streamlined prides itself in the trusting relationship it has developed with the business community and welcomes input from any business that has ideas on ways to simplify and make more uniform the sales tax administration throughout the member states.

A recent example of this was when Diane and the Sales Tax Institute team identified numerous questions remote sellers encountered when trying to determine the states in which they had economic nexus after the Wayfair decision. Those questions were brought to the Streamlined Sales Tax State and Local Advisory Council (SLAC) and were eventually developed into disclosed practices/questions that each of the SST member states must answer to provide the guidance remote sellers need. The answers are all published on the Streamlined Sales Tax Governing Board’s website. SST is willing to continue to develop additional disclosed practices as new issues are identified. The SST member states recognize how these disclosed practices can help sellers more efficiently (and voluntarily) comply with their laws so the sellers can spend less time dealing with sales tax compliance issues and more time focusing on growing their businesses.

This ongoing collaboration has allowed the SSTP to continuously refine and improve its standards and practices. As more states and businesses join the initiative, the project’s impact continues to grow, making sales tax compliance simpler, more predictable, and more efficient for everyone involved.

The Future of SST

The Streamlined Sales Tax Project represents a forward-thinking approach to sales tax administration, one that is built on the principles of simplicity, fairness, and collaboration. As the marketplace continues to evolve and online sales become an even larger part of the economy, the need for streamlined sales tax solutions will only grow. Businesses and states alike must continue working together to ensure that sales tax compliance remains manageable, efficient, and fair for all. Through SST, businesses can gain confidence in their ability to navigate the complexities of multi-state sales tax, and states can ensure that they are collecting the revenue they need to fund essential public services.

Whether you are a small business owner, a large online retailer, or a state tax administrator, the Streamlined Sales Tax Project offers tools, resources, and solutions that benefit everyone. By embracing these collaborative efforts, we can reduce the chaos of sales tax compliance and create a more equitable and business-friendly tax environment for the future.

Simplification efforts sound great, but how are they put into practice? How can SST help your business? Join our upcoming live webinar on October 31st, Streamlined Sales Tax: Why it Matters and How You Can Benefit, to discover all the ways you can benefit from SST whether you register through the SST system or not – from simplified multi-state electronic returns to free tax collection technology services to taxability matrices and beyond.