“Streamlined Sales Tax (SST) ProjectWork Continues” by Frank Carnahan
States continue to work on a SST Agreement, under which member states could eventually compel remote sellers to collect and remit sales and use tax on sales to purchasers in that state. Once the Agreement goes into effect, it will remain a voluntary collection system for sellers without a physical presence in a given state, and become mandatory only if either: 1) a court of competent jurisdiction rules that the complexity concerns underpinning Quill Corp. v. North Dakota, 504 U.S. 298 (1992), have been resolved; or 2) federal legislation is enacted granting states collection authority over remote sellers. The states continue to lobby for federal legislation.
The SST Governing Board, State and Local Advisory Council (SLAC), and the Business Advisory Council (BAC), met in Oklahoma City on September 28-30, 2009, to consider unresolved issues and interpretations, including the following examples. Compensation to remote sellers and the small-seller exemption was not yet resolved, and discussion included cost estimates of 15% to 52% of new money collected depending on the options proposed. It was not resolved if points awarded to employees as sales incentives and redeemable for merchandise at a reduced price should be treated as a discount and excluded from the sales price of the merchandise. It was decided that fruit flavored cocktail mixes do, but unsweetened, unflavored ready to drink iced tea do not, meet the definition of “soft drink”. Baking ingredients having characteristics of candy (e.g., baking chocolate) meet the definition of “candy.” Compliance with the SST will require multistate sellers to make substantial operational changes, and while simplification is promised, considerable complexity will remain.