On June 21, 2018, the U.S. Supreme Court handed down the decision for South Dakota v. Wayfair, Inc., which struck down a long-held physical presence standard that has vexed state and local sales and use tax administration for years. GFOA’s publication Bringing Sales Tax Into the 21st Century details the case and considerations for tax collection going forward. So what has been happening over the past six months?
Many states have implemented or are contemplating new sales tax laws as a result of the decision. Local governments have a role to play, especially if your state legislatures are debating changes or additional simplification measures. The primary message should be that local governments want to work in partnership with the state to move forward on this issue and ensure success for both the government and business communities.
If your state has not joined the Streamlined Sales Tax (SST) Coalition, but has local sales taxes that are additive to the state’s rate, then some research is in order. We encourage you to contact your state Department of Revenue to see how they plan to proceed. If you have a locally administered sales tax, we encourage you to review the Wayfair decision and review the Justices’ comments about the simplifications they found favorable in reducing the burden on business. Do the potential benefits of collecting taxes from remote sellers make it worth it to simplify our own collection system? How can you get started? Check out the FAQ's below.
What is the Streamline Sales Tax Coalition?
This Streamline Sales and Use Tax Agreement is the result of the cooperative effort of 44 states, the District of Columbia, local governments and the business community to simplify and make more uniform the sales and use tax collection and administration for retailers and states.
The SSUTA minimizes costs and administrative burdens on retailers that collect sales tax, particularly retailers operating in multiple states. It encourages "remote sellers" selling over the Internet and by mail order to collect tax on sales to customers living in the Streamlined Member States. It levels the playing field so that local "brick-and-mortar" stores and remote sellers operate under the same rules. This Agreement ensures that all retailers can conduct their business in a fair and level competitive environment.
Why should I care?
The United States Supreme Court ruled in South Dakota v. Wayfair on June 21, 2018, that states may require sellers to collect and remit sales or use tax on sales delivered to locations within their state regardless of physical presence if economic nexus exists with the state. The Streamlined Sales Tax Coalition, including GFOA, the National League of Cities and the US Conference of Mayors are continuing to review the decision and its implications and are working with our members to make the implementation of this decision as smooth as possible.
Who is a member of the Streamlined Sales Tax Agreement?
To date, twenty-four of the forty-five states with a general sales and use tax have passed the conforming legislation. Those states have a total population representing about 33% of the country’s population.
Full Member States
- New Jersey
- North Carolina
- North Dakota
- Rhode Island
- South Dakota
- West Virginia
Associate Member States
Where can I find more information to share with my legislators?
Joining the streamlined sales tax coalition requires entering into an agreement. Please click here for a high-level overview and guide for state lawmakers and tax administrators to understand (1) the requirements that must be met in order to join the Streamlined Sales Tax Governing Board (SSTGB) as a full member state; (2) the requirements to remain a full member state; (3) how the SSTGB is governed; (4) the personnel commitments; and (5) the technology requirements.
The Streamlined Sales Tax website is full of information that would help inform the dialogue…
How can I help to spread the word?
GFOA publication Bringing Sales Tax Into the 21st Century details considerations for state and local governments in this new post-Quill environment. Additionally, the Streamlined Sales Tax Governing Board has an encyclopedia of information on internet sales tax collection on their website ranging from the very simple to highly complex, depending on your audience. If you have any questions about this project or its application to your state, please contact GFOA’s Federal Liaison Center.