States approve date for Sales Tax Simplification Agreement

States approve date for Sales Tax Simplification Agreement South Dakota is among 18 states which voted on July 1, to trigger an Oct. 1 effective date for the Streamlined Sales and Use Tax Agreement, a multi-state agreement providing for simplification of the nation�s varying sales tax laws.

While current law doesn�t require e-commerce and direct mail companies to collect and remit sales taxes on transactions that occur in jurisdictions where they do not have a physical presence, the states expect some of these companies may come forward and volunteer to collect taxes under the simplified system.

The agreement is the result of a nationwide effort by 43 states, local governments and members of the business community to design, test and implement a system to radically simplify sales and use tax collection and administration by retailers and states. Gov. Mike Rounds said the vote is good news for South Dakota.

�I was pleased to hear of the outcome of the vote to implement the agreement. When fully in place, the system will help local main street businesses in South Dakota better compete in a changing marketplace,� the governor said. �While we can�t count on any additional revenues until full implementation, we will certainly monitor any revenues collected from Internet and catalog sales by businesses that voluntarily begin to collect taxes as a result of the agreement.�

Gov. Rounds also commended Scott Peterson, director of the Department of Revenue and Regulation�s Business Tax Division and interim executive director of the Streamlined Conforming States Committee, for his work on advancing the streamlined project.

�Having Scott and other members of the department in key roles in the project, we have been able to put South Dakota in the forefront of this important move to make our tax system more equitable and efficient,� said Gov. Rounds.

The agreement was initially approved on Nov. 12, 2002. Since that time, state legislatures have considered and passed legislation to implement the agreement and bring their states into compliance with its provisions. Peterson says the states involved in the agreement have worked hard to make it a reality.

�These states have expended great effort changing their laws to create a seamless tax system to take us into the 21st century. This would have been possible without the cooperation of all the entities involved in the project,� Peterson said.

Under the terms, the agreement becomes effective when states comprising at least 20 percent of the total population of states with a sales tax have approved it. That threshold was achieved by the July 1 vote of the agreement�s 18 full state members. Full members are those states whose sales tax law and policies are in substantial compliance with each of the provisions of the streamlined agreement.

They include Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, North Carolina, Oklahoma, South Dakota and West Virginia. North Dakota, New Jersey, Ohio, Tennessee and Utah were approved as associate members and will become full members when certain amendments to their sales taxes that have been approved by the legislature become effective.

The effective date of the agreement triggers a Web-based centralized point of sales tax registration for the member states, certification of software to assist in sales tax collection, and an amnesty period for sellers that have not been contacted by member states for audit.

The simplified system reduces the number of sales tax rates, brings uniformity to definitions of items in the sales tax base, significantly reduces the paperwork burden on retailers, and incorporates new technology to modernize many administrative procedures.

Individuals and companies seeking more information on the Streamlined Sales and Use Tax Agreement and the new system can visit the Web site at or call Scott Peterson at (605) 773-3311.

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