Streamlined sales tax agreement goes into effect.

• Position: STATESTATS

Online and other out-of-state retailers will find it substantially easier to collect sales taxes since the voluntary Streamlined Sales and Use Tax Agreement went into effect in October. The agreement provides states with a mechanism to capture uncollected sales tax revenue from transactions that occur through electronic commerce.

Nineteen states have signed the Streamlined Sales and Use Tax Agreement, designed to provide simplicity and uniformity for out-of-state retailers. In exchange for voluntarily collecting remote sales taxes, retailers will be compensated for the costs of collecting taxes and released from liability resulting from sales tax collection accounting errors.

The agreement does not change tax rates. It provides states a way to conform their tax codes with uniform definitions and simplified administrative and sourcing rules. Each state maintains its sovereignty on which items are subject to the sales tax and which are not.

The U.S. Supreme Court ruled in 1967 and again in 1992 that states do not have the authority to require remote sellers to collect sales and use taxes in states where a retailer does not have a physical presence as the nation's more than 7,500 sales tax codes were an undue burden to interstate commerce. The court, however, did leave open the door for Congress to grant collection authority to the states. By creating uniform standards and rules, states are hoping that Congress will grant them the authority to require retailers to collect sales taxes.

COMBINED STATE & LOCAL ESTIMATED REVENUE LOSSES FROM E-COMMERCE...