SSTP Runs Up Against Business Blockage

by Mike Godfrey, Tax-News.com, New York

16 July 2002

For four years, the Streamlined Sales Tax Program (SSTP) has been inching its way towards a multi-state platform that would allow major simplification of the 9,000 different sales and use tax regimes that make design of an Internet sales tax system an impossible nightmare. Leaders of the SSTP believe that once enough states have signed up to the standardised sales tax laws they have been developing, then Congress will legislate to allow states to impose sales taxes on out-of-state transactions - currently the ban on such taxes is a major road-block in the path of those who would design an Internet sales tax system.

Taxing Internet transactions is becoming an ever-more pressing need for the states, many of which face budgetary black holes as conventional sales tax revenues shrink.

Now, claim the states, businesses are putting four years' work into jeopardy by refusing to agree on enforcement procedures that would accompany the new rules. A meeting in Salt Lake City last week failed to agree on ways to prevent states from designing in complexities which would return the nation's sales tax system to pre-SSTP anarchy.

"If this is their final product, there will be many members of the business community who will not support the final product," says Stephen P. B. Kranz, tax counsel for the Council on State Taxation, a Washington, D.C., trade group of large corporations. But other commentators were more sanguine, pointing to multiple hold-ups during the last four years which were overcome when people reflected inbetween meetings. Now they have until September, when the group will re-convene, hoping to finalize the standard rules.

Although there is currently a moratorium on Internet sales taxes, it is not expected to be renewed when it ends in just over a year from now, and it's seen as vital that Congress should have legislated by then to create a nation-wide basis for Internet taxation if individual states are not to break loose and start imposing weird and wackly regimes of their own.

Multistate retailers such as Wal-Mart who would have to cope with the complications of state-driven Internet taxation are as much in favour of a unified system as anyone, so they are strongly motivated to reach a compromise with the SSTP which their powerful lobbyists in Washington will support. No proposal is likely to pass through Congress if the business lobby is opposed to it.

Recommended