Unfortunately, many countries have contradictory and confusing sales tax laws and set procedures. It can be easy for merchants to get lost in the over 11,000 sales tax authorities in america. To cope with this, a committee composed of officials from several nations started a project to enact laws and supply methods to simplify sales tax. One of the ways it has done this is by designating four revenue tax software solutions as”Accredited Service Providers.”
Enter the SSTGB
Scott Peterson is Executive Director of the Streamlined Sales Tax Governing Board (SSTGB) a multi-state initiative to simplify the procedure for collecting and remitting sales tax for merchants. Presently Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, South Dakota, Vermont, Washington, West Virginia and Wyoming are member countries of this project. Ohio, Tennessee and Utah are associate member countries. The SSTGB provides a registration system for any merchant who would like to register to collect sales taxes in the Streamline states. This can be done at the Streamlined Sales and Use Tax Central Registration System. This Peterson discusses some common questions merchants have about sales tax and about the sales tax and the SSTGB.
PeC: Is each ecommerce merchant subject to sales tax?
Peterson: No. As with any other merchant, ecommerce merchants located in a country with no sales tax don’t need to collect sales tax unless they’ve taken some actions to make a physical presence in a different state.
PeC: what’s the use of this SSTGB in assisting merchants fulfill their lawful sales tax obligations?
Peterson: Streamline’s role is to get states to work together to create their sales tax law and administrative procedure easier so that merchants spend less money collecting the tax.
PeC: Why should a country enter in the SSTGB?
Peterson: All states with a sales tax have something to gain by being members. Of course there are changes every nation must make to become members, and for a few it could be that the attempt to make those changes is too costly for the benefit they would receive.
PeC: What are the advantages of registering with the SSTGB?
Peterson: The advantages of registering include using a tax amnesty in seven distinct states, the chance to have the states pay the cost of sales tax management software and the ability to enroll in 1 area for all of the states.
PeC: How can amnesty work?
Peterson: Each nation that’s a member of Streamline must provide a tax amnesty for the first 12 months after joining. This amnesty should forgive all tax, penalty and interest that should have been gathered by any merchant who should have been collecting tax but did not. A merchant getting the amnesty must collect sales tax in all the Streamline states. Since most states have been members for over 12 months, only seven countries are now offering the amnesty.
PeC: What could happen to a merchant who does not collect sales tax?
Peterson: A merchant who does not collect sales tax but if faces the possibility of criminal and civil penalties. States are constantly searching for merchants who should be collecting sales tax but aren’t collecting. In most states a merchant would need to pay back taxes, penalty and interest for many years if a country finds them and decides they should have been collecting sales tax.
PeC: Describe the different”versions” and what each gifts to a vendor.
Peterson:“Model” is a term we use to distinguish between the kinds of technology employed by merchants to collect sales tax. A Model 1 merchant is a person who uses a certified service provider. A Model 2 merchant is one that uses a certified automated system. A Model 3 merchant is one which utilizes their own self-built technology that’s certified true by the states.
PeC: How did Avalara, ADP Taxware, Exactor and Speedtax make their designation as certified service providers (CSPs)?
Peterson: A CSP must experience almost a year’s evaluation by the Streamline states. That analysis is to be certain that the business’s tax decision software correctly reflects the sales tax law in each of the countries. In addition each company has to have the ability to integrate its software into a merchant’s accounting software and also be able to file tax returns and remit taxes to the states.
PeC: Which of the CSPs would be helpful for smaller merchants?
Peterson: I believe all four of those CSPs are equally effective at helping smaller merchants.
PeC: Can you call that all nations will enter into this arrangement?
Peterson: Yes, even though some states might not join until after federal legislation is enacted.
PeC: Does a seller need to register if they market to customers in a member state, even if it is not their place of business?
Peterson: No, unless the vendor has a physical presence in that condition. “Place of business” is a term of art intended to describe a shop or office. Other activities by a vendor can create a necessity to collect a state’s tax.
PeC: Does a seller must collect sales tax even in non-member nations?
Peterson: Not under current law.
PeC: How can a vendor go about submitting returns?
Peterson: The best choice is for a vendor to use a CSP since the CSP documents the tax returns and pays the tax. However, a vendor can do it by themselves. Every state has similar filing requirements.
PeC: Say I have been over-collecting or under-collecting sales tax from my clients. How can I fix this with the thing I owe taxes to?
Peterson: I think every state has a procedure for amending previously filed sales tax returns. The merchant should ask the state for its particular procedure.
PeC: Is the sales tax process easier for online retailers than it was when the project started?
Peterson: Yes. Through uniform definitions, uniform forms, and uniform procedures. That’s in addition to the creation of the CSP concept, which has significantly reduced the complexity of collecting sales tax.