Here are the answers to our frequently asked questions about Streamlined Sales Tax (SST).
What is the Streamlined Sales and Use Tax Agreement?
The Streamlined Sales and Use Tax Agreement (SSUTA) is the result of the cooperative effort of 44 states, the District of Columbia, local governments and the business community to simplify sales and use tax collection and administration for retailers and states. It focuses on four major requirements for simplification of state and local tax codes:
- State level administration
- Uniform tax base
- Simplified tax rates
- Uniform sales sourcing rules
It encourages "remote sellers" selling over the Internet and by mail order to collect tax on sales to customers living in the streamlined states. It levels the playing field so that local "brick-and-mortar" stores and remote sellers operate under the same rules. The SSUTA ensures that all retailers can conduct their business in a fair, competitive environment.
There are currently 23 SST Member States and one Associate Member State (Tennessee) that is in the process of becoming a full member.
What are the SST service models?
The SSUTA recognized that no matter how simple and uniform they could make the different state and local sales taxes it was impossible to completely eliminate the burden. A seller must know what to tax, what rate to charge, how to file a return, and how to remit the tax. So, recognizing that simplification via policy was not going to be enough, they needed to encourage sellers to implement a technology solution that simplified compliance. The SSUTA incentivized companies to use software by certifying the accuracy of the software and by paying for the software in certain instances.
The following service models are available with Avalara:
- Model 1 - Certified Service Provider (CSP): An agent certified under the SSUTA to perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax on its own purchases. A CSP is designed to allow a business to outsource most of its sales tax administration responsibilities. The software system of a CSP identifies which products and services are taxable, applies the appropriate tax rate, interfaces with your accounting system, and files the tax return and remits the tax to the appropriate taxing authority. Each member and associate state has certified the accuracy of the software and provides liability relief for errors that may result in the incorrect calculation of the tax amount (the CSP can provide additional information regarding their relief). In addition, these services are to be paid for by the member and associate member states, at no cost to you, in states in which you meet the definition of a volunteer seller.
- Model 4 – Other: A seller that registers with the Streamlined Sales Tax program and chooses to calculates its tax on its own or using AvaTax, prepares its own tax return or engages Returns to process and file the tax returns on their behalf. A Model 4 seller is not contracted with Avalara to preform Streamlined Sales Tax CSP services.
What are the benefits of joining SST with Avalara as your CSP?
Below are details on a number of benefits to your company from hiring Avalara as your Certified Service Provider for SST.
The SSUTA offers an amnesty program for associate states and the first year of any new full member states. To qualify for amnesty, a seller had to register with SST and remain registered for 36 months. The seller's uncollected and unpaid sales and use taxes are completely forgiven for all periods before the registration. Amnesty is not available for sales or use taxes already paid or remitted to the state or for taxes collected by the seller. In addition, amnesty does not apply to any matters for which the seller had received an audit notice. Only sales and use taxes are covered by the amnesty program. Additional details about the amnesty program are available on request.
Streamlined Sales Tax Registration:
- An SST volunteer seller is:
- A seller who registered with the Member State or Associate Member State on or before November 12, 2002, that did not have a legal requirement to register and in fact did not have a requirement to register in the Member State or Associate Member State at the time of registration, regardless of any previous registration the Seller may have made in the Member State or Associate Member State; or
- A seller who meets all of the following criteria during the twelve (12) month period immediately preceding the date of registration with the Member State or Associate Member State:
- No fixed place of business for more than thirty (30) days in the Member State or Associate Member State;
- Less than $50,000 of Property, as defined below, in the Member State or Associate Member State;
- Less than $50,000 of Payroll, as defined below, in the Member State or Associate Member State;
- Less than twenty-five percent (25%) of its total Property or total Payroll, as defined below, in the Member State or Associate Member State; and
- Was not collecting sales or use tax in the Member State or Associate Member State as a condition for the seller or an affiliate of the seller to qualify as a supplier of goods or services to the Member State or Associate Member State. (this only disqualifies one as a volunteer if one has supplied goods and services to the Member state, were as part of that agreement one was required to start collecting sales or use tax in that state)
- Was not required to register and pay or collect sales or use tax in the Member State or Associate Member State as a statutory requirement for the seller or an affiliate of the seller to be able to sell, ship or deliver a particular type of product into the Member State or Associate Member State. (e.g. tobacco, alcohol, products for which the state has a non-sales tax authority to regulate.)
A seller keeps their volunteer or non-volunteer status for two years after they register for SST. After two years, SST Volunteer sellers have to confirm that they've met the volunteer requirements for the past twelve months. Non-Volunteer sellers who have met the volunteer requirements for twelve months in a state can switch to SST Volunteer at that time as well.
After the initial two-year post-registration period, SST status must be confirmed once a year. If your business changes between confirmation periods (for example, if an employee leaves and the company no longer has payroll in a state), let Avalara know and we'll change your status for you.
What are the system requirements for model 1 sellers?
In order to work with Avalara as your CSP, the following conditions must be met:
- Must map item codes to Certified AvaTax - SST Tax Matrix Codes
- Must pass an invoice item description for each item sold
- Must pass a street level address for accurate tax calculations
- Must supply exemption certificate information into AvaTax prior to an exempt transaction being processed. This process can be completed by using either ECMS or CertCapture.
- Must file a monthly Simplified Electronic Return (SER) in xml format via their CSP (Avalara) to all member states and chosen associate states
- All transactions for an SST registered business for SST states need to be processed and reported through AvaTax
How do you apply?
Access the PDF application, and have the following information prepared before you begin:
- Your federal employer’s identification number (FEIN) or social security number (SSN) if you do not have a FEIN
- Business name, business address and mailing address
- State of incorporation
- Name, address and phone number of contact person
- Your NAICS code. (www.naics.com)
- The states (if any) where you are currently registered to collect sales tax, date of registration and filing frequency
- The states in which you remit payroll withholding tax
- The states in which you have real or tangible personal property
- Review and understanding of the Washington B&O Tax document
- To access the PDF application, click the link and then save the document to your computer.
The application cannot be filled out in your browser.
- Open the PDF application, fill out all required fields, and save the document.
- Email the completed document to your SST implementation manager.
How do you transition to SST?
After applying for SST with Avalara as your CSP, manage the following details to make your transition seamless.
- Registration – After your organization is registered with SST, you are assigned a single SST state identification number, which is used for all SST state filings. Your SST identification number starts with an "S" and is followed by 8 numbers.
- Filing Frequency Transition – For any SST state in which you were previously remitting sales tax on a filing frequency other than monthly, your organization is required to remit the previous months of the current filing period to the state using a short period return.If you originally filed by paper, write at the top of the return "short period return" and remit the necessary tax as soon as possible to eliminate any late notices, penalties or interest. If you file electronically, contact the SST state and notify them of your SST registration; then ask the SST state the best way to remit your previous tax liability.
- SST State Notices – Please scan and submit any notices you receive from SST states to email@example.com. A dedicated SST notices team resolves any issues that arise. At any time, you can view the status of your noticesintheAdmin Console.
How does SST impact CertCapture users?
By default, Tax Number Type and Business Number Type are required fields when validating documents for states that are in compliance with the agreement.