Free Sales Tax Solution for Online Sellers | Streamlined Sales Tax

Okay, so Streamlined Sales Tax, SST, it's a quasi governmental agency that's formed by 23 member states and one optional member state, which is Tennessee. About 15 years ago these states came together and they said, how about we simplify sales tax and make it easy for people to comply? Let's have one portal of registration, which is just one form. Let's have one portal of filing, which has the exact same form. Let's have the same definition of products and services. Even though states can have different taxability, but let's at least simplify the definition of things, so then it's easy for people to understand. And let's have the same administration rules with rate updates and license renewal rules.

1:27

So it's such a good idea, and it's been 15 years, and now they have 23 states and one optional state, which is Tennessee. To qualify to be a member of the states, they have to comply to all the rules that the SST laid out. That's one of the challenges, that not all the states are part of it, because the states do not want to give up their freedom and join SST.

So here is a map of the current SST states. And as you can see, there's a good amount of states that are part of it, but also there's a lot of the big states that aren't part of it. And I'll talk about the problems that creates later on in this video.

2:10 Who qualifies

So people might be asking, who qualifies to use this program to register and file through SST? And the answer is most remote sellers can use this program.

And for sellers that even have just a little bit of payroll, property, and even like a physical presence, that's okay too. They have a threshold of $50,000 for payroll, $50,000 for property. And if you have physical presence in the state for less than 30 days of a calendar year, you still qualify to register and file through SST.

2:50 How certified service providers make it free

What makes this program free to business owners is to get your SST state filings done through CSPs. CSPs stands for certified service provider. These are the sales tax software companies that have been audited by the states, by the 23 plus Tennessee member states, to make sure their database is correct, they have the right calculation, they have the right taxability of different products. So they trust these service providers to file and integrate your shopping carts to their API, to calculate tax, to remit tax on your behalf to these member states.

So some of the certified service providers include Avalara, Sovos, hence Taxify, Tax Cloud, and I believe Accurate Tax.

So if you are a small business owner and you qualify to use SST to do your registration, calculation and remittance, and if you choose one of these certified service providers, they should provide sales tax services to you free of charge. And they get compensated from the states based on a percentage of sales tax they remit to the states.

4:15 The pros

So before we end this video, let me know if you have any questions so far. I know it's a lot of information, but I also just want to talk about the biggest pros and cons I see of this program.

Let's talk about pros first. The biggest one, of course, is that it's free. It's all compensated by the state to the service providers, so it's a free option for business owners.

And the second one is it provides a shield of audit defense, because whenever there's any issue with these filings, the state will go to the software companies first. They'll go to Avalara, they'll go to Sovos, they'll go to Tax Cloud and Accurate Tax, instead of going to audit the business owners. Because by them going through the SST program, they know that sellers are not liable anymore. It's these certified service providers that needs to be able to defend the numbers they put on the sales tax form. So that's the second biggest pro that I see.

5:17 The cons

Let's talk about some cons, just because I want you guys to have all the information before you make the decision.

So the biggest con, number one, is it doesn't cover all type of taxes. So for example, Washington is a member of SST, but you cannot file B&O tax through SST. So if you have nexus in Washington, you also need to file separately for B&O tax. And this applies for all the home rule states as well, for the local jurisdictions. SST doesn't cover that.

Second, you get automatically assigned a monthly filer status, so it's a more frequent filing frequency.

And the third con that I see, and in my opinion is the biggest one, is not all the states are part of the program, especially some of the bigger states like California, New York, Illinois. These states are so aggressive with sales tax and they're not part of SST. So that's the third one.

And the fourth is if you are in a lot of states that some of it is SST states, some of it is not SST states, it might take more admin time just to consolidate the filings and the numbers and to do reconciliations.

6:45

But besides that, if you are a small business owner, your sales are pretty straightforward, I strongly encourage you to talk to one of these certified service providers. They usually have a checklist of things they need to go through to make sure you qualify. And once they determine that you qualify, they will provide these services for you free of charge. So that's definitely a good solution.

7:09 Picking your states, and will the rest join

And before I leave, I just want to mention one last thing. Two years ago, before 2020, if you registered with SST you have to register with all the member states. But that has changed the past two years, that you have the option to pick and select which states you want to register. So it's not that you have to be on all 23, 24 states. You can do two states that you have economic nexus through SST, and some through your normal filings. So you can have a hybrid option to handle your sales tax filing.

7:54

I get asked this question a lot and I just want to address it before we end this video. Some people have asked me whether I think all the states will eventually join SST, because it's such a good program and it really helps small business owners.

And my answer is, I hope so. I'm praying for all the states being a part of SST. But realistically, I don't see it happening, because all these big states like California and Texas, New York, I just don't see them giving up the flexibility of defining what their products are, defining what their administrative procedures are, especially changing their tax form. I just don't see that happening anytime soon. So I'm hoping for it, but I don't think it's going to happen anytime soon.

Let me know if any of that makes sense. If you have questions, I will link below the SST link. It explains everything I just mentioned. And I'll meet you in the comments. Hope you are having a great day.