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What is New with the Streamlined Sales Tax Project? 

 

By Bill Labhart

 

The multi-state effort to encourage federal legislation to allow states the right to require out-of-state vendors to collect and remit customers' use tax, particularly aimed at internet transactions, appears to be taking some hits. Called the Streamlined Sales Tax Project (SSTP), it was conceived in 2000 and supported by several state governments. The stated purpose of the SSTP is to design and implement a voluntary sales and use tax system nationwide, which would include uniform tax definitions and simplified tax filings and audit procedures. The unstated purpose is to drastically overhaul the current sales tax framework and ultimately to ask Congress to legislate that nexus is no longer required in order for a company to be required to collect and remit a sate’s sales tax, thereby overturning the long-standing Quill decision. Fortunately for taxpayers they must establish nexus in a state before they can be required to collect and remit sales tax on sales into the state, as based upon Supreme Court rulings in both the 1967 National Bellas Hess and 1991 Quill cases.

 

However, what sounds good in theory isn’t always easy to implement in practice. This is principally because most states’ sales and use tax laws have evolved over many years and have been designed to favor the industries within their own borders. To undo these laws and to conform to a standard taxing scheme is not always popular with in-state businesses that have benefited from these statutes. So it’s not surprising that we’re beginning to see some states with fairly large sales and use tax revenue bases start to question the benefits of conformity. Florida and Missouri just recently either postponed indefinitely or let die in committee, legislation that would have authorized conformity with the SSTP.

 

How does this affect your business? If your business is growing and is beginning to sell products and/or services into other states, it could be time to review that activity to determine if nexus has been created. If your company has created nexus in more than the home state, then these rule changes could affect your company. At the very least, the company has grown into a situation that must be addressed, whether it is in a state that has conformed to the SSTP’s new rules or one that hasn’t yet adopted them.

 

For more information contact Labhart Miles Consulting Group at info@labhartmiles.com

www.labhartmiles.com

 

        

 

 

 


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