Download - Streamlined Sales Tax Project (SSTP)

Streamlined Sales Tax ProjectStreamlined Sales Tax Project (SSTP)

Streamlined SalesTax Project (SSTP) Overview

Society for Information Management (SIM)

April 13, 2005

Streamlined Sales Tax Project

AgendaAgenda

• SSTP Overview

• Wisconsin Legislation

• Federal Legislation

• Technology

• Pending Issues


Who’s InvolvedWho’s Involved

• 45 States & DC impose sales tax

• 42 States & DC involved in SSTP

• 21 States enacted conforming legislation

• Business community


What it does - - RulesWhat it does - - Rules

• State level administration of local sales and use taxes

• Common state and local tax bases within a state after December 31, 2005

• Uniform sourcing rules: destination based



• Menu of uniform definitions -- legislatures decide what is taxable or exempt

• Simplified exemption processing

• Rate simplification with databases

• No caps and thresholds after December 31, 2005



• Limited scope audits and certification standards

• Joint audits for large, multi-state businesses

• Hold harmless provisions if use data bases

• Uniform return



• Sales tax holidays (guidelines and limited defined products)

• One rounding rule

• Common customer refund procedures

• State funding of technology


Wisconsin Legislation -- Wisconsin Legislation -- Governor’s Budget BillGovernor’s Budget Bill

• Adopt uniform definitions

• Adopt sourcing rules

• Adopt exemption administration provisions (e.g., relieve seller from burden of proof)


Wisconsin Legislation -- Wisconsin Legislation -- Governor’s Budget BillGovernor’s Budget Bill

• Adopt hold harmless provisions for sellers and providers who uses the state’s taxability matrix and rate/jurisdiction database

• Effective October 1, 2005 (interstate agreement on January 1, 2006)


Federal LegislationFederal Legislation

• H.R. 3184 introduced 9-25-03

• S. 1736 introduced 10-15-03

• Authorization to require collection if adopt provisions of Streamlined Sales and Use Tax Agreement

• Small business exception

• Reasonable seller compensation


Technology ImplementationTechnology Implementation

• Central registration system

• Database matching rate to zip codes

• Taxability matrix


Technology ImplementationTechnology Implementation

• Model 1 - Certified Service Provider (CSP)

• Model 2 - Certified Automated System (CAS)

• Model 3 - Certification of In-house (Proprietary) System

• Continue with system “as is”


• States contract with CSPs

• States test and certify CSP’s systems

• States compensate CSPs

• Retailer selects CSP to perform all sales tax functions

• CSP determines tax due, pays the tax to the states, and files the return with the states

Model 1 - Certified Service Model 1 - Certified Service Provider (CSP)Provider (CSP)


• CSP is liable for tax due with two exceptions:

– errors by the states

– fraud by the retailer

• CSP is subject to audit and periodic system checks

• Retailer subject to audit on purchases (use tax)

Model 1 - Certified Service Model 1 - Certified Service Provider (CSP)Provider (CSP)


• Retailer selects CAS from those available

• Retailer establishes an interface with CAS

• CAS performs calculation of tax due

• States compensate retailer for use of CAS

Model 2 - Certified Automated Model 2 - Certified Automated Systems (CAS)Systems (CAS)


• Person/company who obtained certification of CAS from states is liable for failure of CAS

• Person/company who obtained certification of CAS is not liable for errors by states

• Retailer is liable for paying tax due and accuracy of returns



• CAS subject to periodic system checks

• Retailer subject to audit on tax remittance and return filing

• Retailer subject to audit on purchases (use tax)



Certification of CSPs and CASs Certification of CSPs and CASs by Governing Boardby Governing Board

• Contract between Governing Board of states and CSPs

• Certification of CASs for determining state and local sales and use tax rates, determining whether an item is taxable or exempt, any other requirement set by Governing Board


CompensationCompensation

• Model 1 - Monetary allowance to CSP per contract

• Model 2 - All retailers will receive a base rate for a period not to exceed 24 months following commencement of participation by a retailer


CompensationCompensation

• Retailers using Model 1 (CSPs) will not get vendor discounts otherwise provided in state law

• Retailers using Model 2 (CAS) will get vendor discounts otherwise provided in state law


Time Line - Model 1 Certified Time Line - Model 1 Certified Service Providers (CSPs)Service Providers (CSPs)

• Proposals due on 1-3-2005• Initial approvals 2-15-05• Certification process completed 8-15-05• Tentative awards 8-15-05• Negotiations completed 10-01-05• Final contracts 10-31-05


Time Line - Model 2 Certified Time Line - Model 2 Certified Automated Systems (CASs) Automated Systems (CASs)

• Some CSPs will provide CASs

• Other CASs will be certified after CSPs certified


Pending Issues Pending Issues

• Certificates of compliance

• Governing Board on July 1, 2005

• Interstate agreement on October 1, 2005

• Voluntary collections begin October 1, 2005


Pending Issues Pending Issues

• Telecommunication definitions

• Bundling rules

• Exemption processes

• Digital equivalent definitions


Contacts Contacts

[email protected]

[email protected]

[email protected]