Streamlined Sales Tax Status

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The Streamlined Sales and Use Tax Project was initiated in September of 1999 in order to develop a sales and use tax system that eases the burden of tax compliance for all retailers. On October 1, 2005, the Governing Board (the "Board") was formed to administer the streamlined sales tax system. The Board is comprised of states that are in compliance with the Streamlined Sales and Use Tax Agreement (the "Agreement"). Currently, there are 23 states with seats on the Board. On October 1, 2005, the original Project converted to the State and Local Advisory Council (the "SLAC"). The SLAC will advise the Governing Board on matters pertaining to the agreement. The Business Advisory Council ("BAC"), comprised of private sector businesses, practitioners and associations, advises the Board on admission of states into membership, noncompliance, and interpretations, revisions or additions to the Agreement. The BAC also assists and advises SLAC on its initiatives.

As of October 1, 2009, the following represents Full Member states which are in full compliance with the Streamlined Sales and Use Tax Agreement:

Associate member Info

Associate Member states divided into two sub-categories. Sub-category one represents states which will be in full compliance once currently-enacted legislation takes place. These states are:

Sub-category two states are those that are in compliance with the Agreement as a whole, but not necessarily with each provision. These states must complete their compliance and re-petition for full membership. Currently, there are no states re-petitioning for full membership. In addition to Full and Associate members, a state can be an Advisor state. These states gain advisory status through enabling legislation or regulations by their state. Advisory states have full rights in the project, participate in work groups, and have voting status on the proposals considered by the SLAC. They serve in an ex officio capacity on the Governing Board, but do not have a vote on the Governing Board. As of October 1, 2009, 19 states, the District of Columbia, and Puerto Rico are Advisory States:

The remaining (non-mentioned) states have no sales tax, are not regarded as an "advisor state," or simply have not taken steps towards simplification at this time.

Significant Issues and Concerns of the Agreement

Bundled Transactions A bundled transaction is the retail sale of two or more products, except real property or the services thereon, where the products are distinct and identifiable, but sold for one non-itemized price. After years of work, the definition of bundled transaction was approved by the SST Project and incorporated into the Agreement, effective January 1, 2008, the deadline in which all Member states must comply with these provisions.

Amnesty Provisions - Upon discussion and acceptance by the Board, an amnesty period is provided to each voluntary seller by each member state for one year commencing on the date notice is provided that adequate CSP and CAS services are available to volunteer sellers. The amnesty period for Full Member states expires exactly one year from the date they become Full Member states. Amnesty for Associate member states is available until one year after they become a Full Member state. The Associate Member states that currently offer amnesty as part of SST Agreement are Tennessee, Ohio and Utah. The only Full Member state which still has amnesty available is Wisconsin - which will expire on October 1, 2010.

Purchaser Concerns - The Agreement addresses several pressing issues for sellers, but largely shifts the burden onto the purchaser or is silent with regard to the impact on the purchaser. As a result the Streamlined Sales Tax Governing Board voted in August 2006 to amend the Agreement to provide partial relief for purchasers, with a delayed effective date of January 1, 2009. Under the amendment, purchasers will be held harmless from penalties resulting from reliance on state-supplied rates, boundary databases, or taxability matrices or for reliance on such databases by their sellers or their sellers' Certified Service Provider (CSP). Purchasers may also receive relief from tax and interest resulting from such reliance, except where prohibited by a member state's constitution.

Replacement Taxes - A "prohibited replacement tax" is a tax imposed outside a state's general sales and use tax that has the effect of avoiding the intent of the Agreement. During the March 2008 meeting, a proposed amendment specifying that no member state may adopt a replacement tax on products was introduced in the Agreement's product definitions (other than tangible personal property) to avoid the intent and purpose of the Agreement. Issues were raised in the June 2008 meeting on the wording of the proposed amendment and the Board referred it to SLAC for further consideration. No resolution has come about, although it was said that SLAC will continue to work on the provision until it is ready for the Board's consideration.

Sourcing Debate - Despite its intent to require destination-based sourcing rules as part of the Agreement, the prolonged debate between origin-based and destination-based sourcing ultimately required the Board to accept compromises that would encourage new state membership in an effort to convince Congress to pass Federal authorizing legislation. At the December 2007 Board meeting, the Board decided that a state which is in substantial compliance with each of the provisions of the Agreement and elects to source sales on an origin basis in compliance with this new amendment may petition to become an Associate Member. On or after January 1, 2010, the Associate Member state will automatically become a Full Member state once five states, which were not Full Member states on December 31, 2007, are found to have met these requirements. It is unclear whether five states will comply with this provision by the deadline.