The 24 member states of the Streamlined Sales Tax Governing Board recently met in a special session to consider a proposed new contract with designated Certified Service Providers (CSP’s), including Sovos. The contract was voted on favorably, 23 – 1. The new contract kicks in on January 1, 2021.
The new contract means that existing clients using Sovos under the SST program will continue to do so without interruption and that Sovos will continue offering SST “Model 1” services to qualifying perspective new clients.
What is SST
Streamlined Sales Tax is a voluntary association of 24 member states who agreed to work together to simply sales tax compliance. Together they created the Streamlined Sales and Use Tax Agreement which details a series of uniform definitions and other requirements to which each member state agrees to adhere.
What this means for you
The Streamlined Sales Tax Governing Board has recognized that solving the challenges of modern tax requires companies to adopt technology solutions that ensure proper application of rates, taxability rule, reporting and remittance requirements.
With virtually every state adopting an economic nexus standard subsequent to the Supreme Court decision in S.D v. Wayfair, the necessity of states adopting rules and requirements that appropriately consider the role of tax automation in compliance is tantamount.
All sellers benefit from the clarity and uniformity created by SST. For example, any company can utilize the Streamlined Sales Tax “Central Registration System.” Similarly, most taxpayers can file their taxes using the Simplified Electronic Return adopted by all the members. However, there are some taxpayers, for which the benefit is even more tangible.
Certain qualifying businesses can also receive two additional highly material benefits, those being reduced cost and liability/audit protection. The new contract adopts the term “CSP Compensated Seller” to describe those companies entitled to these additional benefits. Eligibility is determined on a state by state basis and to qualify, you must meet the following conditions:
- No fixed place of business in the state
- Less than $50,000 of property in the state
- Less than $50,000 of Payroll in the state
Most importantly, you must utilize one of the identified SST CSP’s for your tax determination, filing, and remittance requirements.
If your company meets these criteria, the additional benefits flowing from Sovos’s contractual relationship with SST includes liability/audit protection and compensation.
As part of being an SST CSP, the member states certify all Sovos sales tax rules and the accuracy of our engine. If for whatever reason the states provide erroneous data upon which the CSP relies, the taxpayer will not be held liable. Likewise, audits change considerably. The member states audit Sovos directly and while we may need to obtain some information from our clients directly, we serve as the primary contact. For CSP Compensated Sellers, compliance becomes more affordable because Sovos obtains compensation directly from the member states and not you.
Negotiating a new contract with the SST member states was a lengthy process marked by frequent and rigorous debate. However, both sides remained professional and respectful throughout, neither forgetting that states and technology providers working together represents one of the keys to solving modern tax.