Taxware Certified By The SSTP

by Mike Godfrey, Tax-News.com, Washington

24 April 2006

US tax software provider Taxware announced last week that it has earned certification from the states that are members of the Streamlined Sales Tax Governing Board.

Businesses that use Taxware’s certified solution to comply with sales tax collection obligations will now enjoy certain audit and liability protections from the states that have certified the company.

Specifically, Taxware has earned Certified Service Provider (CSP) status, allowing businesses to fully outsource all sales tax compliance functions to Taxware, who will calculate, collect, report and remit liabilities on their behalf using remotely accessed certified software.

Under the terms of the contract between Taxware and the Streamlined Sales Tax Governing Board, Inc. in this outsourced CSP deployment, a volunteer seller that does not have a requirement to collect tax will receive this service free of charge, as the states will compensate the CSP for this service. This certified offering interfaces with financial, accounting, and ERP systems such as SAP, Oracle, and Oracle’s PeopleSoft, offering a new level of audit and liability protection to users of those systems.

“Taxware has been on the cutting edge of the Streamlined Sales Tax Initiative since its inception,” said Jon Abolins, senior vice president of operations at Taxware. “We are delighted to be among the first solution providers to offer certified solutions, and we look forward to offering to our clients the reduced audit and liability exposure that comes with certification.”

“Certified solutions are a critical tool for complying with the Streamlined Sales and Use Tax Agreement, and with helping businesses reduce the burden of tax compliance on remote and point of sale transactions,” said Charles Collins, vice president of government affairs at Taxware. “Transactions processed through certified solutions are subject to a reduced scope of audit, and the solutions support compliance with Sarbanes-Oxley by providing more control over cash flow as it impacts transaction taxes. Taxware’s solution offers the technology that enables governments to simplify and modernize transaction tax administration.”

Taxware Enterprise, the tax calculation software powering Taxware’s CSP, is built on Taxware’s 25 years of industry experience in transaction taxes.

Under the Streamlined Sales Tax Project (SSTP), states are required to establish uniform definitions for taxable goods and services, and maintain a single statewide tax rate for each type of product. The project also seeks to simplify tax reporting requirements for online sellers. But while some retailers support the SSTP, businesses in general are lukewarm or hostile to the plan, which they say will impose burdensome new recording and reporting requirements.

Currently the states estimate they are losing over $15bn a year from Internet sales, although much of this relates to uncollectable inter-state sales. The Supreme Court ruled in 1992 that states could not force businesses outside their borders to collect their sales taxes unless the companies have stores or headquarters in those states.

Full members of the project include Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, North Carolina, Nebraska, New Jersey, Oklahoma, South Dakota and West Virginia. Arkansas, North Dakota, Ohio, Tennessee, Utah and Wyoming are associate members.

“Streamlined’s goal is to bring simplicity and uniformity to state and local sales tax systems,” said Scott Peterson, executive director, Streamlined Sales Tax Governing Board. “Whether a business collects sales tax in one state or forty states, we are committed to making that process as simple as possible. Today’s certification and authorization of contracts are important milestones toward that goal.” The Streamlined project is funded under an agreement with the Streamlined Sales Tax Governing Board, Inc.

Eighteen states began voluntarily collecting taxes from purchases made over the Internet last October under the Streamlined Sales Tax Project, and they contracted software vendors to create free tax collection software for online merchants participating in the program.

Online merchants will collect and remit taxes for sales originating in any of 11 states that have fully amended their state laws to comply with the project's standards. In the other seven states, collection is optional until their tax codes are brought into compliance.

In both cases, the taxes collected will be based upon the rates in the state where the buyer is resident, and the retailers will be compensated for the cost of collecting and remitting the taxes to state governments. Many retailers have agreed to participate in the program.

Recommended