Thanks to globalization and the World Wide Web, businesses can now sell their products across the United States and worldwide, leading to opportunities for growth. However, complying with various rules and regulations can be challenging. Fortunately, the Streamlined Sales Tax Program (SSTP) offers a solution.
Sales tax can be a complicated matter due to constantly evolving rules and requirements regarding its collection and remittance. To ensure businesses can properly understand and comply with these regulations, seeking professional assistance is often the best course of action.
The SSTP is an initiative by the state and local governments to reduce the complexity of tax collection for retailers. This article provides everything you need to know about Streamlined Sales Tax.
What is Streamlined Sales Tax?
Streamlined Sales Tax (SST) is a program designed and run by states to simplify sales and use tax compliance for retailers by developing an organized sales and use tax system. It was formed in 1999 – 2000 to streamline sales tax compliance with retailers responsible for collecting and remitting sales tax. The Streamlined Sales Tax Project (SSTP) is a collective national effort of the states to modernize the collection and remittance system of sales and use tax. States that become program members enter the Streamlined Sales and Use Tax Agreement (SSUTA). It requires them to comply with the policies and take measures to achieve the objectives of this initiative. The project benefits brick-and-mortar and ecommerce sellers alike. You can talk to a sales tax expert at TaxHero to determine if you qualify for SST or need registration.The Objectives of the SSTP
The following are the main objectives of the Streamlined Sales Tax Program.- To minimize administrative costs and responsibility for the retailers.
- To modernize the sales and use tax collection system.
- To offer a fair, competitive environment to remote sellers and brick-and-mortar stores.
- To develop a simple and business-friendly tax collection system
How Does the Streamlined Sales Tax Project Work?
Besides modernizing the sales tax collection system and simplifying it for businesses, the SSTP aims to provide a comprehensive plan to the states to streamline sales tax collection. This program simplifies tax administration by offering state-level tax collection administration. In addition, it provides uniformity in tax base definitions and state and local sales tax bases. Under this program, all member states have a central electronic registration system. It establishes uniform sales tax collection standards and provides the latest technology systems to facilitate the whole process. All these measures encourage more businesses to register and collect sales tax promptly. It benefits both the government and businesses.How does SSTP Benefit Businesses?
As discussed earlier, the primary aim of the SSTP is to reduce the complexities of sales tax collection to encourage businesses to collect and remit sales tax to the concerned authorities voluntarily. Small businesses can maximize this program to get worthwhile tax collection incentives. The following are the compelling benefits of SST registration.- If you conduct business in multiple states, you only need to register once, which applies to all SSTP member states. The registration process is simple and quick and occurs through the Streamlined Sales Tax Registration System.
- There is no need to update information separately in each state. One update applies to all states.
- You can use the same filing forms and exemption certificates for all streamlined sales tax states.
- Tracking one identification number is enough for tax payment and filing in all member states.
- You can reduce the burden of sales tax collection and filing by using certified sales tax administration software.
- You can benefit from the uniform sourcing rules across all member SST states.
- Volunteer sellers get free access to sales tax calculation and reporting services from a Certified Service Provider.
- Businesses can save their cost by collecting, filing, reporting, and paying sales tax for all jurisdictions at one location.
What are Streamlined Sales Tax States?
The Streamlined Sales Tax Project currently has 23 full member states and one associate member state. Let’s call them the Streamlined Sales Tax States. The list exempts the states with no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. The full member states change their sales tax laws according to Streamlined Sales and Use Tax agreement requirements. On the other hand, the associate member states do not change their laws but comply with SSUTA requirements. The following states have full SSTP membership.- Arkansas
- Georgia
- Indiana
- Iowa
- Kansas
- Kentucky
- Michigan
- Minnesota
- Nebraska
- Nevada
- New Jersey
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- Rhode Island
- South Dakota
- Utah
- Vermont
- Washington
- West Virginia
- Wisconsin
- Wyoming
Conditions to Qualify in SSTP
You need a sales tax permit or license to collect and remit sales tax in a state where you have your economic or physical nexus. If you have nexus in any of the SSUTA member states, you can benefit from the streamlined sales tax program by registering as a volunteer seller. You must meet the following conditions to qualify and register as a volunteer seller in the Streamlined Sales Tax Program. These conditions must be fulfilled over 12 months.- You must not have a fixed place of business for more than a month in a member state.
- The value of your property in the member state must be less than $50,000.
- Your payroll in the member state must be less than $50,000.
- Your total property or payroll in the member state must not exceed 25%.