In today’s time, the continuously changing regulations and tax-rates which are making the existing territory of sales tax collection quite complex and remittance of business selling across different states. To keep compliant, many merchants and account professionals are now giving utmost priority to be synchronized with the sales tax and other measures related to tax.
The Streamlined tax and Use Tax Agreement (SSUTA) is one such measure. Although it made a huge impact on online businesses, there are many businesses which do not have much idea about SSTUA. In this article, we will be knowing all the aspects of the streamlined sales tax and how it can benefit your business.
What is Streamlined Sales Tax ?
The Streamlined Sales Tax and Use Tax Project was introduced nearly 20 years ago for the emergence of e-commerce and in response to the complex & burdensome nature of existing sales regimes. The Streamlined Sales Tax was a combination of three different factors: the emergence of e-commerce; states effort to bring tax in the remote sales, and rulings of the US Supreme Court (National Bellas Hess v. Illinois in 1967 and Quill Corp. v. North Dakota in 1992).
Officials from more than 40 states collaborated with the business community for simplifying the tax collection and creating a business-friendly sales tax system. They created the Streamlined Sales Tax Governing Board. The objective of this government board is to make the sales tax administration less costly and reduce the burden on all businesses and e-commerce.
In the e-commerce industry, when the buyers from different states were making purchases, the state governments were facing losses because these purchases didn’t involve any state taxes. Earlier only toll-free telephone calls and direct mails were responsible for the state losses but with the boom of the e-commerce industry, all the state governments have to find ways to recover the tax revenue losses. Thus, they made a multi-state agreement, drafted by representatives of 44 states and the District of Columbia, which is named as (SSUT), Streamlined Sales and Use Tax.
It came into effect from October 2005, and from December 2006, there are thirteen states in compliance, which are collecting tax through this program. They are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota, and West Virginia.
Why should you pay attention to SST now?
In June 2018, the Supreme Court overruled the physical presence rule of Quill in South Dakota vs. Wayfair Inc. While having a physical presence in a state still triggers a sales tax collection obligation, the Wayfair ruling allows states the authority to require sellers with no physical presence in a state for collecting taxes on the basis of their economic activity in the state. Registering for SST can make sales tax compliance in SST tax easier and less burdensome, especially for businesses with a huge turnover into different SST states. Also, the businesses that can qualify as volunteer sellers, can avoid the standard registration fees, transaction fees, and filing in SST member states when they use a CSP (Certified Service Provider).
How will SST help in streamlining the taxation?
The member states of the SST must have:
- Electronic, central registration system
- Consumer privacy protection
- Simple administration of exemptions
- Simplified state and local tax rates
- Simplified tax remittance and returns
- No self-collecting local jurisdictions
- State administration of sales and use tax collections
- Uniform state and local tax bases
- Proper sourcing rules for all taxable transactions
- Uniform tax base definitions and rules
The businesses can register in SST through the Streamlined Sales Tax Registration System. This system allows businesses to register and collect sales tax in all SST states at once. After the registration, the business will be able to manage all aspects of the sales and use tax by itself, and can further simplify tax compliance by outsourcing the bulk of sales and use tax administration to a CSP.
Apart from managing sales and use tax registration, a CSP can provide real-time updates of sales and use calculation, filing returns, remitting payments, etc.
SSL also gives businesses the option of self-managing sales and using tax admin as well. For instance, businesses can quickly update the information (e.g. change an address) or terminate the registration.
Volunteer & Non-Volunteer Status:
If you want to become a volunteer seller in a member state and get CSP services at no cost, then your business should meet all the below-mentioned criteria during the 12-month period immediately after 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 percent of total property or payroll in the state
- Other Criteria
SST FAQs:
1. What is the SST Sales ID number?
An SSTID (Streamlined Sales Tax ID) number is a 9 digit ID that starts with “S”. It is issued after registering through the SSTRS.
2. What is a Streamlined Sales and Use Tax Agreement?
To create a more user-friendly business tax system, the Streamlined Sales and Use Tax Agreement (SSTUA) was introduced. This agreement was in consideration with 23 other states for simplifying standard sales tax calculation, collection, and remittance.
3. Is SST available in all 50 states?
No. Currently, there are 25 states in the Streamlined Sales Tax Program or offer a similar program.
Wrapping Up:
In this article, we have understood the importance of the Streamlined Sales Tax program and why you must focus on this while running an e-commerce store. At Ceymox Technologies, the best e-commerce development company in India, we are having expertise in developing e-commerce stores from scratch and implementing new features and functionalities. Thus, you can take care of the business strategies, sales, and don’t need to worry about the technicalities of your e-commerce store. Please let us know your requirements.
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