Streamlined sales tax project.

• Author: Laffie, Lesli S.
• Position: State sales tax

The Streamlined Sales Tax Project (Project) was created by state governments (with input from local governments and the private sector) to simplify and modernize sales and use tax collection and administration.

The Project's proposals will incorporate uniform definitions within tax bases, simplified audit and administrative procedures and emerging technologies to substantially reduce tax collection burdens. The Streamlined Sales Tax System (System) focuses on improving sales and use tax administration systems for both mainstream and remote sellers for all types of commerce.

Currently, 38 states are involved in the Project; thirty-two states are voting participants because their legislatures have enacted enabling legislation or their governors have issued executive orders or a similar authorization. Six states are nonvoting participants, because they do not have the formal commitment of the state executive or legislative branch.

The Project has addressed its issues through a steering committee and the following four work groups:

* Tax base and exemption administration.

* Tax rates, registration and returns.

* Remittances, technology, audit, privacy and paying for the System.

* Sourcing and other simplifications. Businesses--including national retailers, trade associations, manufacturers, technology companies and others--have actively participated in Project meetings by reviewing proposals and providing feedback to the states on key elements. The System's key features include:

* Uniform definitions within tax bases. Legislatures still choose what is taxable and exempt, but will use the common definitions for key items in the tax base.

* Simplified exemption administration for use- and entity-based exemptions. Sellers are relieved of the "good faith" requirements under current law and will not be liable for uncollected tax. Purchasers will be responsible for incorrect exemptions claimed.

* Rate simplification. States will be responsible for the administration of all state and local taxes and the distribution of local taxes to local governments. State and local governments will use common tax bases and accept responsibility for notice of rate and boundary changes. States will be encouraged to simplify their own state and local tax rates.

* Uniform sourcing rules. The states will have uniform sourcing rules for all property...