Streamlined Sales Tax Registrations Pros and Cons
Streamlined Sales Tax (SST) is a program that was created to simplify and modernize the sales tax system in the United States. The Streamlined Sales Tax Governing Board administers the SST program, a non-profit organization made up of representatives from participating states.
The SST program aims to simplify the process of collecting and remitting sales tax for businesses that operate in multiple states. It does this by establishing uniform tax rates, definitions, and rules across participating states and by providing a central, online system for businesses to register and file their sales tax returns.
To participate in the SST program, states must meet certain requirements, such as adopting a uniform sales tax base and implementing certain tax simplification measures. As of 2021, 24 states are full members of the SST program, and four are associate members.
Often, many accountants use Streamline to register in multiple states for sales tax, on one application to avoid a lot of extra work, but this comes with pros and cons.
Streamlined Sales Tax Registration Benefits
When you register through the Streamlined Sales Tax Registration System (SSTRS):
- You may register in all Streamlined States or just selected states with one application.
- You can end registrations in selected or all states and, if needed, register in a state with a few quick clicks.
- You may receive amnesty in certain states, subject to limitations.
- You may use a Certified Service Provider (CSP). These services may be free to you in states where you are a “CSP-compensated seller.”
- You may use a Certified Automated System (CAS). A seller using a CAS is entitled to compensation from the states where it qualifies for the first twenty-four months.
- You can update your registration information for all Streamlined States registered through the SSTRS.
Since streamlined allows registration in 24 states, there are all the other states you may need to register (less the five without sales tax) when you cross economic nexus thresholds or have physical nexus (for non-marketplace sales activity).
Even with the ease of registration through Streamlined, the sales tax registration process has pros and cons.
Pro: Streamlined Sales Tax allows you to register online for free.
Con: In addition to the fast approval process, there are no fines or fees if you get denied. It can also run into issues if your business doesn’t meet certain requirements. Also, you can only register in the SST member states. There are 24 non-SST states that you must register separately through each revenue website.
Pro: There are no fees for registering through Streamlined Sales Tax.
Con: There will still be fees applied to those states with registration fees. Also, certified service providers may have hidden charges for filing tax returns as opposed to what SST claims of free filing service.
Pro: Streamlined Sales Tax registration is fast. In under 20-30 minutes, you can submit your application to all or selected SST member states.
Con: The state may contact you for additional information, and it may take longer (2-4 weeks) to set up your tax account versus registering through each state via the revenue website, which can only take 7-10 business days except for foreign sellers with no SSN.
Pro: Streamlined Sales Tax registration is good for foreign sellers with no SSN since the SST registration page doesn’t require SSN.
Con: It depends on the state. This would actually take more time once the state contact for additional information. You need to state that you are a foreign seller with no physical presence in the US.
Pro: You will get a Streamlined Sales Tax ID (SSTID) after registration.
Con: The SSTID is not an actual state permit. There are states where you still need to submit a state application separate from the SST application form for the state to issue an actual sales tax permit.
Shopping carts are not looking for your SSTID as the number to use in your tax settings. Only use the unique state tax registration number issued by each state when setting up your tax calculation settings. Your SSTID is for communications within the Streamline program, do not use your SSTID for your tax calculation settings.
Pro: The registration through SST is fast since they do not need a specific sales volume per state on the registration
Con: The state may inappropriately assign you a filing frequency. Suppose you are only making fewer sales in a year, and by registering through SST, your assigned filing frequency is monthly instead of quarterly or annual if you register directly through the state.
Pro: They have a Taxability Matrix resource to determine if your products or services are taxable or not
Con: You may still need to consult a SALT expert to determine if your products are taxable since the list may be general for the sellers.
Pro: The SST-member states have streamlined policies/rulings.
Con: Some states don’t follow some of the policies imposed by SST to their agreement because of the institutional barriers for each state.
Pro: The CSP Providers offer free filing services. A CSP calculates and remits the sales and uses tax due on your behalf. They are also responsible for determining the taxability of all products and services you sell, determining the jurisdiction to which the sale is sourced, and calculating the proper state and local sales or use tax.
Con: The CSP may provide services to sellers beyond what is listed in the Pros. The CSP may charge for these additional services. These may include, but are not limited to:
(a) General accounting services,
(b) Invoice preparation, billing, and accounts receivable collection services,
(c) Tax calculation or reporting services unrelated to the CSP services; and,
(d) Consulting services.
In conclusion, if you are looking to save money on the front end with sales tax registrations and returns but are willing to go through more steps on the back end with a few states, the Streamlined process is a good option. That still leaves multiple other non-streamline states to register for sales tax, and that is where we can help out.
We are partnered with Certified Service Providers, and we can recommend and give you a price quote for the non-streamlined states.