Utah participates in project designed to streamline sales taxes across nation
The Utah Legislature had enacted several guidelines designed to qualify the state to participate in the national streamlined sales tax program.
Forty-three states and the District of Columbia are currently participating in the project, explained the Utah Taxpayers Association.
Officially starting in March 2000, the national program represents an effort to modernize sales and use tax collection as well as administration.
Forty-five states and the District of Columbia have imposed a sales and use tax.
The only states with sales and use taxes opting not to participate in the project are Colorado and Idaho.
The goal of SSTP is to provide states with an improved sales tax system that includes the following key features:
Developing uniform definitions within tax laws.
Simplifying the state's sales tax rates.
Administrating sales and use taxes at the state level.
Establishing uniform sourcing rules.
Simplifying administration for use and entity-based exemptions.
Developing uniform audit procedures.
Implememting state funding of the system.
On Nov. 12, 2002, 30 states and the District of Columbia approved the SSTP agreement, pointed out the independent public policy organization.
The agreement set standards for participating states to meet.
The criteria required states to amend or modify sales and use tax laws to achieve the designated simplifications and uniformity.
The agreement became effective July 1 after a minimum of 10 states representing 20 percent of the nation's population met the compliance standard.
On Oct. 1, a governing board compromised of representatives from participating states in compliance with the agreement will be created, indicated the taxpayers association.
Pursuant to the agreement, member states will be entitled to one vote on the governing panel.
The board will be responsible for interpretations of the SSTP agreement, drafting future amendments and issue resolution.
According to the taxpayers association, here are three categories of member states.
Full member states are currently in compliance with the requirements and may vote on amendments to or interpretations of the agreement.
The states include Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, North Carolina, Oklahoma, South Dakota and West Virginia.
The second category is associate member states that will be in compliance with the agreement, once currently enacted legislation takes effect. The states include Utah, New Jersey, North Dakota, Ohio and Tennessee. The states will automatically become full members on the effective dates of the legislation.
Utah's effective date is July 1, 2006 unless the Legislature determines that certified software is available before then to assist vendors in complying with the agreement.
The third category is also associate members and are in compliance with the agreement when taken as a whole, but not necessarily with each provision. The states must successfully petition for full membership prior to Jan. 1, 2008, or forfeit memberships. The states include Arkansas and Wyoming.
Twenty-four tates have enacted legislation authorizing them to enter into the agreement and are designated SST Implementing States. However, the states have not enacted the necessary conforming legislation to occupy board seats.
A state and local government advisory council along with a business and taxpayer advisory council from the private sector will advise the governing board.
The sales tax system in the United States is complicated. Rates and definitions vary in the states. In addition, more than 7,000 local jurisdictions or taxing entities have different rates, definitions and rules.
The streamlined sales tax project will reduce, but not eliminate the expense and burden of complying with the complicated matrix of conflicting laws and regulations.
To prevent the state's participation in SSTP from becoming a tax increase, the Utah Legislature requires that the new sales taxes from out-of-state purchases by Utah taxpayers will be placed in escrow and not go directly into state spending. The requirement is intended to enable the state to utilize the new funds to cut taxes in other areas.