Contact: Ellen B. Marshall
202-662-3712
FOR
IMMEDIATE RELEASE
(November 12, 2002, Chicago, Illinois) Today, representatives of 33 states and
the District of Columbia voted to approve a multi-state agreement to simplify
the nation’s sales tax laws by establishing one uniform system to administer
and collect sales taxes on nearly $3.5 trillion in retail transactions
annually. The agreement was approved at
a meeting of the Streamlined Sales Tax Implementing States (SSTIS) held in
Chicago, Illinois.
“This is a historic achievement,”
stated Angela Monson, Co-chair of the SSTIS and First Assistant Majority Floor
Leader in the Oklahoma State Senate.
“State legislators, executive branch officials, and businesses have
worked for over three years to accomplish this goal. We believe this is a solid agreement and one
that greatly reduces the administrative burden on retailers. Legislators are excited about introducing
legislation to implement the Agreement when they convene in early 2003,” Monson
concluded.
The SSTIS met over the past year to review, debate, and approve provisions in the Agreement proposed by the Streamlined Sales Tax Project (SSTP), comprised of representatives of over 40 states. Working with the business community, the SSTP developed measures to design, test and implement a system that radically simplifies sales and use tax collection and administration by retailers and states. The simplified system reduces the number of sales tax rates, brings uniformity to definitions of items in the sales tax base, significantly reduces the paperwork burden on retailers, and incorporates new technology to modernize many administrative procedures. A pilot project to test the collection mechanisms of the new system has been in operation for approximately one year.
“As someone who has worked in the tax arena in both the public and private sectors, I can attest to the complexities associated with the current sales and use tax laws,” commented R. Bruce Johnson, SSTIS Co-chair and a member of the Utah Tax Commission. “The simplified system will eliminate much of the guesswork for retailers and states in, among other things, determining the taxability of items and which jurisdiction imposes the tax.”
Although the sales tax is traditionally viewed as one that is assessed by retailers at the cash register, the Streamlined Sales Tax System also incorporates simplifications aimed at assisting other industries that collect and remit tax on behalf of the state. “We have reached out and proposed numerous simplifications for other industries including software, leasing, and telecommunications. It’s a very comprehensive system and I hope retailers and legislatures take a hard look at what we have done and recognize the benefits to both retailers and taxpayers,” Johnson commented.
Activities now move to the states. Under the Agreement, state legislatures can begin immediately to consider and pass legislation to implement the Agreement and bring their state into compliance with its provisions. However, the Agreement does not become binding and take effect until 10 states comprising at least 20 percent of the total population of states with a sales tax have approved the Agreement. “We believe it is important to demonstrate that a significant number of states will participate in the Agreement before throwing the switch and putting it into action,” Monson commented.
National retailers have worked closely with the SSTP and SSTIS and are interested in taking advantage of the simplified system. “We look forward to swift action in state legislatures—and to working with states to integrate our collection systems into the new simplified system. The improvements are measurable—it’s a system built to accommodate the 21st century needs of traditional retailers and electronic commerce merchants,” according to Sean P. Nicholson, Senior Manager of Sales and Use Tax for Target Stores.
While current law does not require e-commerce and direct mail companies to collect and remit sales taxes on transactions that occur in jurisdictions where they do not have a physical presence, many expect some of these companies may come forward and volunteer to collect taxes under the simplified system. “The business structures adopted by many e-commerce companies are constantly changing. While the SSTIS has adopted a voluntary system, it is conceivable that numerous e-commerce companies may want to volunteer to use the system as a means of avoiding any potential tax conflicts with the states,” Larry Walters, Professor of Public Policy at George Mason University concluded.
Co-chairs Johnson and Monson concurred. “We want to get as many states into the system and as many companies using it as soon as possible.”
Individuals and companies seeking more information on the Streamlined Sales Tax Project and the new simplified system can refer to the Project’s website at www.streamlinedsalestax.org.
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