Ohio Accepted as Full Member of the Streamlined Sales Tax Project


On October 29, 2013, Ohio was unanimously accepted as a full member of the Streamlined Sales Tax Project (“SSTP”).  The full membership will be effective on January 1, 2014.

As a member of the SSTP, Ohio, and all other full member states, will be able to impose a sales tax collection responsibility on remote sellers if the Marketplace Fairness Act is approved by Congress and signed into law.

History of the SSTP

In 1967, the U.S, Supreme Court (“Court”) ruled in National Bellas Hess v. Illinois (“Bellas Hess”, that a state does not have the power to impose a use tax burden on out-of-state retailers that do not have a physical presence in the state.  In its decision, the Court stated:

And if the power of Illinois to impose use tax burdens upon National were upheld, the resulting impediments upon the free conduct of its interstate business would be neither imaginary or remote.  For if Illinois can impose such burdens, so can every other State, and so, indeed, can every municipality, every school district, and every other political subdivision throughout the Nation with power to impose sales and use taxes. The many variations in rates of tax, in allowable exemptions, and in administrative and record-keeping requirements could entangle National’s inter-state business in a virtual welter of complicated obligations to local jurisdictions with no legitimate claim to impose a fair share of the cost of the local government.


The very purpose of the Commerce Clause was to ensure a national economy free from such unjustifiable local entanglements.  Under the Constitution, this is a domain where Congress alone has the power of regulation and control.

In 1992, the Court reaffirmed the Bellas Hess decision in Quill v. North Dakota (“Quill”).  In Quill, the Court clearly threw the issue to Congress stating:

Our decision is made easier by the fact that the underlying issue in not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve.  No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions.

The Streamlined Sales Tax Project was created by the National Governor’s Association and the National Conference of State Legislatures in the fall of 1999 to simplify sales tax collection. As a result, 44 states, the District of Columbia, local governments and the business community have met in an effort to simplify sales and use tax collection and administration by retailers and states.  The following is a quote from the Streamlined Sales Tax web page regarding the Streamlined Sales Tax Agreement “(Agreement”). “The Agreement minimizes costs and administrative burdens on retailers that collect sales tax, particularly retailers operating in multiple states.”  

The cost and administrative minimization is achieved through tax law simplification, more efficient administrative procedures, software, rate simplification, state level administration of all sales tax, uniform sourcing (destination), uniform definitions, and state funding of administrative costs.    

Member States

A member state is one that has been determined by the Streamlined Sales Tax Governing Board to have changed their sales tax laws to meet all of the requirements of the Agreement.  Any seller that registers under the Agreement must collect sales and use tax for all member states.  The member states are: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming. 

Tennessee is the only remaining associate member state.  This means that Tennessee is in compliance with nearly all parts of the Agreement.  There is no requirement for a remote seller to collect sales or use tax in associate member states.

Benefits of the Streamlined Sales Tax Agreement

Registration – Companies that register through the SSTP can register for all member states in one place.  In addition, those that register through the SSTP have the ability to use the certified sales tax administration software.  

Certified Service Providers (“CSP”) – Currently there are six companies that supply software that have been designated as Certified Service Providers.  Remote sellers utilizing software provided by these companies are relieved of any liability for errors that may result in the incorrect calculation of the tax amount.  A remote seller may use one of two technology models to collect and report sales tax using CSP software.

Model 1 – In this model, the CSP will perform all of the seller’s sales and use tax function, other than the seller’s obligation to remit use tax on its own purchases.  The software will interface with the seller’s sales system, identify which products are taxable, apply the appropriate rate.  The CSP will file the tax return and remit the tax.  These services are paid for by the member and associate member states as long as the seller meets the definition of a volunteer seller.

Model 2 – This model utilizes the software available in Model 1, but the responsibility to file returns and make payment remains with the remote seller.  In addition, the cost of utilizing the software is not paid for by the states.

Remote sellers may also use any other software product that they wish; however they will be liable for any incorrect collection of the tax.

State Information - All member and associate member states have posted product taxability matrices on their respective website as well as on the streamlined sales tax web page.  In addition, current rate tables, rate and boundary files, amnesties and sales tax holidays are all available on the SSTP web page. (www.streamlinedsalestax.org)

Amnesty – Currently amnesty is available in Ohio and Tennessee. To obtain amnesty, the seller must register using the Streamlined Sales Tax Registration System.  Amnesty will be granted regardless of “nexus” of the seller.  No amnesty is available for taxes collected by the seller but not remitted.   

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 This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

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