Streamlined Sales Tax In A Nutshell
To the surprise of no one, taking care of sales tax responsibilities as a business owner is a lot harder than it should be. Forty-five states require sales tax collection in some if not all circumstances, and each has its way of going about it. Services like TaxJar and Avalara aim to make that more accessible, but there’s a program not often talked about (because it cuts into their revenue–I’ll explain why in a bit) called Streamlined Sales Tax.
This is not tax advice. Speak with a tax attorney or accountant if you’re unsure about any of this.
What is Streamlined Sales Tax?
Streamlined Sales Tax or SST is a governing board made up of 23 full member states and one associate member state. The purpose of this organization is to make remitting sales tax to the member states as painless as possible. The program was first organized in March of 2000, almost 20 years ago(!), and when it was ready, was dissolved and turned into the Streamlined Sales and Use Tax Agreement.
The program defines a set of requirements and procedures that each state will follow, ensuring remittance is the same all around and predictable:
- State-level administration. Under the plan, sales taxes are remitted to a single state agency, and businesses no longer have to submit multiple returns in each state where business is conducted.
- Uniform tax base. Each member state must adhere to the same taxation rules, meaning the same categories of goods or services are taxed or exempt the same way within each state. States are allowed to determine if an item is taxable and what that rate may be.
- Simplified tax rates. This requires the same sales tax rate to be applied across all jurisdictions, except for food and drugs. In other words, where individual jurisdictions may have their own tax rates (state + county), the program dictates a single rate that prevails across all counties, cities, municipalities, etc.
- Uniform sourcing rules. In-state sales require the seller to collect based on the seller’s location (origin). Remote sellers collect tax based on the statewide rate (number 3 above) (destination).
The SST Program also grants power to Certified Service Providers (CSPs) to utilize the simplified rules to give e-commerce business owners a way to file sales tax returns in a predictable and low-friction fashion, and often for free.
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Which States have Streamlined Sales Tax?
The following states are a part of the Streamlined Sales Tax program:
- New Jersey
- North Carolina
- North Dakota
- Rhode Island
- South Dakota
- West Virginia
If you need to register to collect sales tax in these states, you will have to do so individually.
- New Mexico
- New York
- South Carolina
- District of Columbia
These states do not collect sales tax, and thus are not applicable:
- New Hampshire
How to register for Streamlined Sales Tax
The registration process is pretty simple and will only take a few minutes. Head to streamlinedsalestax.org and click Register Nowon the homepage.
From here, choose Edit State Registrations. You have a couple of options at this point:
- register for every state–and thus giving yourself the ability to collect and remit sales tax for all of the SST states
- register for only the states where you have economic and or physical nexus.
Because certified service providers that provide SST support almost entirely automate this process, and the fact that SST costs filers no money ever, the only difference here is choosing to file voluntarily. The states I’m sure would love the revenue, but you’re not required to file in states where you don’t meet the minimum filing requirements.
Streamlined Sales Tax Certified Service Provider List
Once you’re registered, get in contact with an SST CSP. A couple that I’ve known to be great are:
At the ripe cost of $0 per state, I highly recommend everyone register and file as many state returns through the program as they can, even if the returns are zero or small amounts.
Once you’re registered, be prepared to get a lot of mail. States will process this submission at their own pace. I received confirmations from some states within a business week. Some took over two months to get back to me.
How to get free SST Filing Services
SST isn’t free across the board for everyone. There are a few limitations, but most Amazon business owners won’t run into these. Besides registering for SST (below) and having a Certified Service Provider, all these boxes need to be checked, too, in order to receive free CSP services for a particular state (and be labeled a “volunteer seller”):
- No fixed place of business for more than 30 days in an SST state. If you’re operating a place of business in a state, you’re already likely filing as an in-state business operator, anyway.
- Less than $50,000 of property in that state.
- Less than $50,000 of payroll in that state.
- Less than 25% of the total payroll of property in that state.
- Was not collecting sales or use tax in that state as a condition to qualify as a seller in that state.
- Was not required to register as a statutory requirement to sell in that state.
Even with these requirements, a CSP is not required to charge for their services in states where you’re not a volunteer seller.
Not every tax provider Supports Streamlined Sales Tax Collection
I mentioned early on how this program could dig into revenues because services like TaxJar charge more per state return than the $20. I spoke to TaxJar a while back, and they told me they have no plans on becoming an SST CSP. I suspect the lower revenue per filer has something to do with it. (TaxJar starts at $17/month if paid yearly and charges as much as $25 per state to file returns on your behalf). If you have the revenue to support it, TaxJar + AutoFile might be worth it for simplicity’s sake, but consider alternatives.
For the remainder of the states which don’t participate in the SST program, you’re still required to figure out how to file those. TaxJar is the easiest, though the most expensive. Avalara also provides resources for filing in these states. If you only have a couple and the returns are for lower dollar amounts, I’d consider just filing them yourself.
Avalara is also working on a hybrid offering that combines the simplicity of CSP for the states that support it along with a more traditional automated filing method for non-SST states. No word yet on when that’ll be out, though they tell me it is in private beta.
It’s not the most glamorous thing in the world, but Once you do it the first time, it gets way easier. It’s also unfortunate that the system is still this fragmented, but with the increase in the number of states instilling Marketplace Facilitator requirements for taxation, I can’t imagine we won’t see more states come into the SST fold.
Streamlined Sales Tax Links
- Home page
- Registration form
- Member states list
- Streamlined Sales Tax Exemption Form
- Remote seller guidance
- Registration questions
- Contact Streamlined Sales Tax Governing Board, Inc.
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