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Streamlined Sales Tax Helps wth State and Local Tax CollectionsMost businesses are concerned about the increasing burden of determining and remitting state and local taxes. Even though the 1972 Quill decision created the "brick and mortar" test, effectively exempting many educational publishers and suppliers from state and local taxes, the reality is that new efforts to target mail order and other non-local businesses for taxes is increasing. States have been looking for new revenue sources since their tax receipts took a hit after the 2001 recession. The trend is for states to institute new sales and use taxes on goods and services--specifically on those purchased for state use such as instructional and educational materials. States realize that there is a challenge in collecting state and local taxes from out-of-state vendors. Most state budgets, and certainly local taxing district budgets, do not have the capacity to enforce all taxes at all levels. In recognition of this dilemma, some states have formed an alliance known as the Streamlined Sales Tax Project. The purpose of the project is to facilitate the calculation and remittance of the taxes, thereby making the process less burdensome for sellers. Member states benefit by actually being able to collect the taxes on the products. Under this system, sellers who volunteer to register with the Project will get the most recent and updated sales and use tax information for all member and selected associate member states. The seller is then registered in each of the selected member and associate member states. By registering, the seller agrees to pay the tax. The seller will then have a choice in how the taxes are determined. There are currently three ways that sellers can have their taxes determined. First, they may use a Certified Service Provider (CSP), an agent certified under the Agreement to perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax on its own purchases. Second, sellers may use a Certified Automated System (CAS), which is software certified under the Agreement to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction. Finally, a seller may use its own proprietary automated sales tax system if the system has been certified by the member states and the seller has entered into a performance agreement with the member states. There is a list of approved CSPs and CASs for sellers. For those who register and choose to use a CSP or CAS, another benefit is amnesty. Amnesty is generally available to a vendor for the previous 12 months in which they had sales in that state, providing they are not under audit by a member state for unresolved tax issues. Questions, ideas, or in need of more information? Please contact Stacey Pusey at 302-295-8349. |
More information including an FAQ is available on the sellers' part of the Project's website.
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© 2011 The Association of Educational
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