howardnlby Howard Stephenson
The Streamlined Sales Tax Project continues to make progress toward the goal of achieving tax equity between local retailers and out-of-state remote sellers. Currently, remote sellers such as internet and mail order catalogue retailers are not required to collect and remit taxes on sales from out-of-state customers if the remote seller does not have a physical presence in the customer’s state.
The Utah Taxpayers Association has been monitoring the progress of the Streamlined Sales Tax Project (SSTP) since its inception. Currently, thirty four states, including Utah, are participating in the project. The goal of the SSTP is to simplify state and local sales tax collections in order to enable remote sellers such as internet and mail order catalogue retailers to collect and remit sales taxes for states that are participating in the project.
Utah policy makers and business leaders are well represented in the SSTP, including State Tax Commissioner Bruce Johnson, Sen. Lyle Hillyard, Rep. Wayne Harper, and Jim Olsen of the Utah Retail Merchants Association and Utah Food Industry Association.
The SSTP has several components:
Uniform definitions States will continue to determine which items are taxable and which are tax-exempt but will be required to use common definitions.

Simplified rate structure State and local tax bases must be identical. In other words, items that are taxable at the state level will also be taxable at the local level. Tax rates cannot vary from product to product or service to service.

Uniform rules for point of taxation Tax rates and tax jurisdiction will be destination/delivery based.

Simplified exemption administration Sellers are relieved of the “good faith” requirements that exist in current law and will not be held liable for uncollected taxes related to purchasers claiming incorrect exemptions.

Uniform audit procedures Sellers participating in one of the certified Streamlined Sales Tax System technology models will either not be audited or will have limited scope audits. States may conduct joint audits of large multi-state corporations.

Reduction of financial burden on sellers States will assume responsibility for funding some of the technology models.
What Changes Would Need to Be Made in Utah?
To comply with the SSTP proposal, Utah would have to make relatively few changes. Currently, Utah sales tax is based on point-of-sale while the SSTP requires that sales taxes be based on point-of-delivery. If this change were implemented, cities such as South Salt Lake and Syracuse would lose sales tax revenue because they have large furniture and appliance warehouses that deliver products to customers, most of whom live outside the cities’ boundaries. There is currently great concern by a few cities which would stand to lose revenue under the SSTP proposal. There is some talk about allowing these cities some sort of hold-harmless provision for the first few years of implementation.
The current proposal would provide for retailers to voluntarily participate in collection of remote sales taxes. The process for voluntary collection would not begin until 10 states representing at least 20% of the U.S. population opt in to the program. At that time the remote sales taxes would begin to flow from retailers in those states based on purchases made by consumers in another of those states. Ultimately, the hope is that by showing Congress that compliance in collecting remote sales taxes has been made simple for retailers, federal legislation would ultimately be passed mandating out-of-state retailers to comply with the sales tax laws of the states where they ship their products.
Requiring out-of-state remote sellers such as mail-order catalogue companies and internet retailers to collect sales taxes just like in-state Main Street brick-and-mortar competitors is an issue of equity. Most Utah retailers support the principle of equity in taxation but many believe the new revenues should be used to cut taxes, such as eliminating the sales tax on unprepared food or reducing Utah’s general sales tax rate.