Nonuniform state tax laws wreak havoc on corporate collection procedures. But relief may be in sight now that the Streamlined Sales Tax Project (SSTP) agreement — which promises to standardize sales tax and use regulations — has been enacted.
“The project makes sales-tax collection easier for everyone,” says David Bunning of law firm Greenberg Traurig LLP. “Businesses will have one set of regulations they need to comply with in all participating states.”
Percolating since 2000, the voluntary project was formally launched last fall to standardize product definitions, rates, and administrative aspects. Currently 44 states support the SSTP and 19 have enacted or are working toward legislation to harmonize their regulations. “Before, businesses would have to know whether chocolate was considered a food in one state and a candy in another because they are taxed differently,” says Bunning.
But experts like Curtis Ruppal, director of state and local tax at Plante & Moran PLLC, a consultancy in Southfield, Mich., caution that some benefits won’t be realized for some time. “It’s going to take years before everything is settled,” he says. Ruppal adds that many issues — such as discrepancies between regulations in states that have remodeled laws to fit SSTP standards and those that have not — are still unresolved. “These changes concern every business,” he says. “CFOs need to keep an eye on them and understand how they will affect their sales-tax responsibilities.”