Streamlined Sales Tax (SST)

The Streamlined Sales Tax (SST) program is a cooperative arrangement among states in the United States for the collection and payment of retail sales taxes when the seller and the purchaser are located in different taxing jurisdictions... (Continued)

The Streamlined Sales Tax (SST) program is a cooperative arrangement among state governments in the United States for the collection and payment of retail sales taxes when the seller and the purchaser are located in different tax jurisdictions.

Until recently, sales tax did not apply to retail purchases made by a buyer located in a different state than the seller. The main reason was difficulty enforcing and collecting sales taxes among multiple jurisdictions. This was not considered a serious problem until the proliferation of Internet-based sales during the 1990s.

As increasing numbers of buyers made remote purchases using e-commerce in states other than their state of residency, state governments experienced revenue losses because such purchases were not taxed. While the use of toll-free telephone numbers and direct mail has always caused some loss of tax revenue for states, the e-commerce boom motivated state governments to work together to find a way to recover lost tax revenue. The multi-state agreement, drafted by representatives from 44 states and the District of Columbia, was named the Streamlined Sales and Use Tax (SSUT).

In October 2005, SSUT officially went into effect. As of December 2006, there are thirteen states in compliance, collecting tax revenue through the program. They are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota and West Virginia. Seven more states are expected to fully participate in the program by 2008.

This was first published in December 2006

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