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About Streamlined Sales Tax (SST)

This article applies to:Avalara AvaTax

If you're new to SST and Avalara, see Get started with Streamlined Sales Tax.

What is the Streamlined Sales and Use Tax Agreement?

Created in 1999, the Streamlined Sales and Use Tax Agreement is the result of a cooperative effort between state and local governments and the business community. The goal of SST is to simplify sales and use tax collection and administration for all sellers and all types of commerce by making sales tax administration requirements less burdensome. Participating states must simplify and centralize aspects of sales tax administration. For some companies, SST offers critical tools to help address ever-changing sales tax regulations. For others, the benefits of SST are less obvious.

For more info on the program and participating states, see Avalara's official FAQ.

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 who registers the seller in the SST program as the seller’s CSP and performs all the seller’s sales and use tax functions. 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 calculate 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 may be contracted with Avalara to perform tax services, but Avalara is not performing as a Certified Service Provider.

Determining Volunteer Status

Sellers are considered to be a Volunteer Seller (vs Non-Volunteer) in the state if the following is true for the prior 12 month period:

  1. No fixed place of business for more than 30 Days.
  2. Less than $50,000 of property in the state.
  3. Less than $50,000 of payroll in the state.
  4. Less than 25% of total property or payroll in state.

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.

Amnesty:

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:

Avalara completes your online SST Model 1 registration with the desired 24 states as part of your GoLive process, free of charge.
 
One identification number:
This number is used to file and pay taxes for all SST Model 1 registered states.
 
One time and place:
The ability to register or update registration data with all registered states (24) at one time and place.
 
Rates and boundaries:
Rates and boundaries are supplied directly from the state. Each state participating in Streamlined Sales Tax is required to provide a rate and boundary file. These files are required to be posted thirty days prior to the beginning of a quarter. Each member state shall relieve sellers and CSPs using the approved quarterly rates and boundaries files from liability to the member state and local jurisdictions for having charged and collected the incorrect amount of sales or use tax resulting from the seller or CSP relying on erroneous data provided by a member state on tax rates, boundaries, or taxing jurisdiction assignments.
 
Taxability matrix:
A taxability matrix is supplied directly by the state. To ensure uniform application of terms defined in the Library of Definitions, each Member State completes a taxability matrix adopted by the governing board. A Member State relieves sellers and CSPs from liability to the Member State and its local jurisdictions for having charged and collected the incorrect amount of sales or use tax resulting from the seller or CSP relying on erroneous data provided by the Member State in the taxability matrix.
 
SST Volunteer Status – Free Monthly Return Processing:
Each model 1 seller answers specific questions to identify whether they are considered an SST Volunteer or SST Non-Volunteer. In the scenario where the model 1 seller is an SST Volunteer, the model 1 seller is not charged a filing fee; Avalara receives compensation from the state that equals a percentage of the tax collected. If the model 1 seller is an SST Non-Volunteer, the model 1 seller is charged a filing fee for the monthly return.
  • An SST volunteer seller is:
    • A seller who registered with the SST 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 SST State at the time of registration, regardless of any previous registration the Seller may have made in the SST 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 SST State:
      • No fixed place of business for more than thirty (30) days in the SST State;
      • Less than $50,000 of Property, as defined below, in the SST State;
      • Less than $50,000 of Payroll, as defined below, in the SST State;
      • Less than twenty-five percent (25%) of its total Property or total Payroll, as defined below, in the SST State
Automatic calculation of vendor discount:
Calculations for vendor discounts for SST states are done automatically. The vendor discount is calculated for all applicable SST states in accordance with SST state laws, the SST Agreement, and the volunteer or non-volunteer SST status of model 1 sellers.
 
Audit liaison:
Avalara is contractually obligated to supply the SST states, on an annual basis, with transactional data supporting the monthly remittances for SST volunteer sellers. During an audit of a model 1 volunteer seller, SST State must go through Avalara (CSP) during the audit, rather than auditing the model 1 volunteer seller directly. All audit questions are presented to Avalara. Avalara then reaches out to the model 1 volunteer seller electronically to collect any additional supporting documentation that is required for the audit. The model 1 volunteer seller is held liable for any additional taxes, including any penalties or interest that are assessed within an audit. For SST model 1 non-volunteer sellers, the state will contact your organization directly if they plan to perform a sales tax audit.

What are the system requirements for model 1 sellers?

All transactions for an SST registered business for SST states need to be processed and reported through AvaTax. For detailed requirements, see:

How do you apply?

How do you transition to SST?

After applying for SST with Avalara as your CSP, manage the following details to make your transition seamless.

  1. 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.
  2. 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.
  3. SST State Notices – Please scan and submit any notices you receive from SST states to avataxreturns@avalara.com. A dedicated SST notices team resolves any issues that arise.

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. 

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