Streamlined Sales and Use Tax Agreement
In brief:
- The Streamlined Sales and Use Tax Agreement (SSUTA) aims to make sales tax compliance easier for businesses and for states by encouraging states to sign on to simplification measures
- Currently, 23 states and one associate member state have signed on to the agreement
No one can dispute that the United States sales tax system is overly complex. Each of the forty-six states (plus Washington DC) that have a sales tax make their own rules and laws. Sales tax rates vary in the US’s more than 11,000 taxing jurisdictions. And the process for filing and remitting sales tax is different in every state.
But some organizations have set out to uncomplicate sales tax, and one of those organizations is the Streamlined Sales Tax Governing Board.
The Streamlined Sales and Use Tax Project
The Streamlined Sales and Use Tax Project aims to simplify sales tax administration for both businesses and states by persuading states to agree to a uniform set of rules. Currently, the Agreement has twenty-three member states and one associate member (Tennessee).
The SSUTA aims to achieve this by encouraging member states to change their laws and regulations to promote uniformity in:
- How tax rates work
- What products are taxed and how those products are defined
- How sales tax is sourced and collected
- Sales tax permit registration
- Sales tax filing and remittance
You can learn all about the SSUTA here.
Streamlined Sales and Use Tax Agreement States
Members of the SSUTA have enacted or changed their sales tax laws to conform with the guidelines set forth by the Streamlined Sales Tax Governing Board.
Member states include:
- Arkansas
- Georgia
- Indiana
- Iowa
- Kansas
- Kentucky
- Michigan
- Minnesota
- Nebraska
- Nevada
- New Jersey
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Rhode Island
- South Dakota
- Tennessee* (Associate Member State)
- Utah
- Vermont
- Washington
- West Virginia
- Wisconsin
- Wyoming
Should My Company Participate in Streamlined Sales Tax?
The SSUTA offers some benefits for retailers. These include:
- A single sales tax permit registration point for Streamlined Sales Tax (SST) states
- Free tax calculation and preparation in SST from certified service providers (CSPs) under some circumstances
- Reduce expenses around calculating, reporting, and filing sales tax
- Audit protection when using a CSP to calculate and remit sales tax in SST states
An easy way to register for sales tax, as well as free software to calculate and report sales tax can be powerful incentives for a company that finds sales tax complex.
Streamlined Sales and Use Tax Agreement: FAQ
Why Was the Streamlined Sales and Use Tax Agreement Created?
The Streamlined Sales and Use Tax Agreement was created in 1999 by the National Governor’s Association (NGA) and the National Conference of State Legislatures (NCSL) to simplify tax collection. These organizations felt that a 1930s sales tax was no longer relevant in 21st-century commerce and worked to develop a more business-friendly tax system.
How Does the SSUTA Simplify Sales Tax Administration?
The SSUTA simplified sales tax administration by improving tax law, creating more efficient administrative procedures, and emerging technologies. Overall, SSUTA resulted in state-level administration of sales taxes, uniform sourcing (where the sales is taxable), and rate simplification.
What Is a Full Member State?
Under the SSUTA, a full member state has complied and changed its sales tax laws to meet all the requirements set forth in the agreement.
