The Streamlined Sales Tax Project is an effort 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 heart of the project rests on the SSTP Agreement adopted on November 12, 2002, amended November 19, 2003, November 16, 2004 and April 16, 2005. It is the purpose of the SSTP Agreement to simplify and modernize sales and use tax administration in the member states in order to substantially reduce the burden of tax compliance. The Agreement focuses on improving sales and use tax administration systems for all sellers and for all types of commerce through all of the following:
(1) State level administration of sales and use tax collections
(2) Uniformity in the state and local tax bases
(3) Uniformity of major tax base definitions
(4) Central, electronic registration system for all member states
(5) Simplification of state and local tax rates
(6) Uniform sourcing rules for all taxable transactions
(7) Simplified administration of exemptions
(8) Simplified tax returns
(9) Simplification of tax remittances
(10) Protection of consumer privacy
For more information on the project, the national SSTP Web site is http://www.streamlinedsalestax.org/.
When did Arkansas’ law changes become effective for Streamline Sales Tax Compliance?
Most of Arkansas’ law to comply with the SSTP Agreement became effective January 1, 2008.
Is this a new tax?
No. This is not a new tax. The Streamlined Sales Tax Initiative is a way to simplify sales tax and create uniformity throughout all the participating states.
How will SSTP make it easier for sellers to comply with the tax laws?
There are several ways in which the Streamlined Sales Tax Project is designed to simplify compliance. These include:
Uniform definitions within tax laws: Streamline provides for definitions of terms that are common in sales tax laws across the country.
Tax Rate simplification: States are allowed one state rate plus one additional state sales and use tax rate in limited circumstances, such as food and food ingredients. Currently, there are two Arkansas state sales tax rates: 6.500% state sales and use tax and 1.500% food and food ingredients.
Uniform Tax base: If a member state has local jurisdictions that levy a sales and use tax, all local jurisdictions in the state shall have a common tax base. This provision does not apply to sales or use taxes levied on the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes.
Uniform Sourcing Rules: Under SSTP, the states must have uniform and simple rules for how they will source transactions to state and local governments. Sourcing is the term used to describe which state and local jurisdictions have the right to tax a transaction. The uniform rules are based on the destination/delivery or receipt by the purchaser and will be the same rules for tangible personal property and services.
Caps and thresholds: Member states are not allowed to require sellers to administer caps and thresholds in calculation of sales tax.