SSTP Simplifies Sales Tax Laws For Businesses

Help is on the way, however, thanks to the Streamlined Sales Tax Project. The SSTP is an effort by nearly all 50 states to simplify and streamline their sales tax laws.

According to the National Governors Association, "The goal ... is to substantially reduce or eliminate the costs and burdens of sales tax compliance for businesses through a combination of simplified laws and administrative policies and the implementation of a system that would be paid for by the states."

The effort could have profound benefits for solution providers regarding tax payments, who also expect any new tax laws to lead to new money-making opportunities in the accounting space.

"As it stands now, any change in standards is good for us," said John Abolins, vice president of tax and government affairs for Velosant, a solution provider in San Francisco. "New standards mean new needs for compliance, which means new business for companies like ours. You can't get much better than that."

The SSTP proposes two new technology methods for reporting sales taxes and use taxes, which are attached to goods bought from retailers outside of the consumer's home state.

The first model, dubbed Certified Automated System, would run on licensed, on-premise software. The second, the Certified Service Provider approach, more closely follows a managed services model.

Both models would perform the same tasks of calculating tax payments, populating tax returns and storing them in audit files for later reconciliation. Both would also require enterprise customers to seek outside help, said Tony Turner, vice president of business development and marketing at TaxAutomation, a tax integration company in Boca Raton, Fla.

"Whether it's the software package or the ASP model, someone is going to have to integrate the customer's system into the application," Turner said. "We plan on making sure that someone is us."

That's the good news for solution providers.

The bad news is, inherent in the new standards is a shift in liability. Today, businesses are responsible for any reporting errors that occur during calculation and reporting. With the system proposed under SSTP, software companies would assume the burden of any errors, since the law will make them responsible for ensuring compliance across the various states' regulations.

That's one reason many accounting software resellers remain leery of the proposed changes. Others, such as Lissa Johnsen, president of Raleigh, N.C.-based solution provider Business Technology Solutions, worry that any new standards will require time-consuming and expensive training for new certifications.

"I am sure there will be many courses offered to learn the new rules," Johnsen said. "We will have to have our consulting and support teams trained."

Still, other solution providers question whether the new standards would affect anything much at all. Stephen Blythe, CEO of Best accounting software provider Blytheco, Laguna Hills, Calif., said that most top-level accounting packages already comply with varying tax codes.

"Reporting under the new standards would change a bit, but from the calculation and allocation side of things, it doesn't sound like SSTP will change that much at all," Blythe said. "With issues of taxation of Internet sales, the real question is: Are these new standards going far enough? I'm not sure anybody has an answer for that one just yet."