SSUTA

Amnesty under the Streamlined Sales and Use Tax Agreement (the "SSUTA") ends on September 30, 2006 1 for the initial 13 full member states, which include Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota, and West Virginia. 2 Companies doing business in any of these states that have not collected or remitted sales tax can avoid paying past sales/use tax, interest, and penalties by participating in the SSUTA amnesty program.

The amnesty provisions are intended to apply regardless of nexus. Amnesty is most attractive to sellers that may have inadvertently created nexus in a state, but that are not currently registered and collecting tax. Amnesty under the SSUTA is similar to a typical prospective-only voluntary compliance agreement. The specifics of the SSUTA amnesty provisions include the following:

  • The seller must not be registered in the state in the twelve-month period proceeding the effective date of the state’s participation in the SSUTA.
  • Amnesty precludes assessment for uncollected or unpaid sales and use tax, plus penalty and interest, for all periods during which sales were made while the seller was unregistered.
  • The seller must register and begin collecting tax under the SSUTA for all current and future member states.
  • The seller must remain registered for at least 3 years.
  • Registration must occur within 12 months of the effective date of each state’s participation in the SSUTA.

Amnesty is not available with respect to: (1) matters for which a seller has already received notice of commencement of an audit; (2) matters currently open on audit, including those matters pending in an administrative or judicial appeal; (3) sales and use taxes already paid or remitted; or (4) use taxes due from a seller in its capacity as a buyer. Amnesty also does not apply in cases of fraud or intentional misrepresentation. 3

Companies should carefully evaluate any potential exposure in participating states where they are not registered and collecting tax on sales. If you have a risk of liability, consider registering soon for the available amnesty relief.

We have assisted several taxpayers in evaluating and registering for the SSUTA amnesty. Particularly for companies protected by P.L. 86- 72, the amnesty may offer a unique opportunity. General information on the amnesty, can be found at the Streamlined Sales and Use Tax Central Registration System web site, available at www. sstregister.org/sellers/Entry.aspx, or the SSUTA main web site, www.streamlinedsalestax.org.■

Footnotes

1. On April 18, 2006, the Streamlined Sales Tax Governing Board recommended extending the amnesty period. It appears that only South Dakota has agreed to extend the amnesty period for sellers registering to use certified service providers (CSP) or certified automated systems (CAS) services. See S.D. Codified Laws § 10-45C-9. Minnesota may also extend the amnesty period as suggested by the Governing Board. See www.taxes.state. mn.us/sales/tax_information/content/sstp_amnesty.shtml.

2. Associate member states, which include Arkansas, Ohio, Tennessee, Utah, Wyoming and Vermont, are also required to provide amnesty until twelve months after the date they become full members. All associate member states are expected to achieve full compliance by January 1, 2007 as required by the SSUTA. See SSUTA § 705.

3 See SSUTA § 402.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.