The Pros and Cons of Streamlined Sales Tax Registration (SST)

by | Feb 24, 2020

Summary: While the pros of low cost and minimal time spent registering for sales tax permits through SST are nice, there are significant drawbacks to using the SST registration process.   

What is Streamlined Sales Tax (SST)?

Streamlined Sales Tax (or SST) was first organized in 2000.  The intention was to find solutions to address the complexity of state sales tax systems that resulted from the US Supreme Court decisions of Bellas Hess v. Illinois and Quill Corp. v. North Dakota.  

Offered as a solution to the complexity of state sales tax, SST provides a simplified registration system that allows businesses to apply for sales tax permits in participating states (currently there are 24 states that participate in SST).

A business is legally required to register with a state if they meet nexus requirements as determined by that state (you can read more about state nexus requirements on our various blog posts, state-by-state).  A sales tax permit or license gives a business the ability to collect and remit sales and use tax to the state.  

Since the 2018 South Dakota v. Wayfair decision, the states have wasted no time going after remote sellers selling into their state.This means you better make sure you are registered in all states where you have nexus! 

From the outside, registering for sales tax permits through Streamlined Sales Tax (SST) seems like a good solution.  However, upon further investigation, I am not so convinced that using SST is the best solution.  

 

The Pros and Cons of Registering Through SST

While there are some benefits to registering through SST, sometimes the benefits don’t outweigh the issues.  

I recently experimented with registering for sales tax permits through SST instead of my usual process.  Typically, I go to the state Department of Revenue website in order to register a client. I had high hopes that SST could save me time and make the registration process more efficient. 

 

The Pros of Registering Through SST

It’s Fast and Free

There are just a few things I noticed in favor of SST.   Registration through SST was fairly fast. In fact, I finished registering for 15 permits in only 20 minutes!  Registration was also free. Sounds pretty good, right? Well, keep reading for more about the cons of SST registration. 

 

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The Cons of Registering Through SST 

It Takes Longer to Gain Access to Your Account

There are 10 states that take a lot longer to gain access to when you register with Streamlined Sales Tax instead of applying directly with the state Department of Revenue. For this reason, we don’t recommend registering through SST for these states.  These states include:

  • Georgia
  • Michigan
  • Minnesota
  • Nebraska
  • Nevada
  • New Jersey
  • North Carolina
  • Ohio
  • Vermont
  • Wisconsin

When you apply on the state website for any of these 10 states, you can actually gain access to your state accounts within 24-48 hours. When you register with SST, you need to wait for documentation to be mailed from the states before you can access the account.  The documentation from the states generally takes around 7-14 business days.  

 

You May Not Be Issued an Actual Sales Tax Permit

Several states that I have spoken to have stated that they do not issue a sales tax permit when you register through SST. Why is this an issue, you ask?  Well, sometimes a business needs to show proof of a sales tax permit (for example, to use for exemption purposes with wholesalers). This can end up causing a problem for some businesses. To make up for this, some businesses may take advantage of the Streamlined Exemption Certificate.  

 

Your Assigned Filing Frequency May Be Incorrect

While the SST process is quick and simple, one important question that is lacking from the application relates to a business’s estimated liabilities.  SST does not ask for your estimated liability in the registration process. When this information is not provided to the state, the state cannot accurately assess your filing frequency.  You could end up paying sales tax way more frequently than you need to. If that is the case, your returns may end up being fairly small but frequent.  

 

SST Registration May Lead to Insufficient Contact Information on Your Account

It is also surprising that SST does not ask for responsible party or officer information.  When applying through a state website, they always ask for this information. This is important because the state needs to know who to contact if there are outstanding and timely liability issues with the account.  SST only asks for contact information, which can pose an issue if the listed contact and responsible party are not the same people.  

 

Ohio Requires Extra Steps When You Register Through SST

There are a couple of states (Ohio and Oklahoma) that require additional steps AFTER you apply through SST even though there was no notification from either the state or SST about this fact.  After discovering this reality, I spoke with a representative in Ohio about their process. The representative confirmed that it would have been easier to just go directly to the state site to apply.  

 

Oklahoma May Register Your Company for an Extra (Unnecessary) Permit When You Register Through SST

In Oklahoma, SST will automatically register a business for a Sales Permit AND a Vendor Use Permit.  Out-of-state retailers, however, only need the Vendor Use Permit. The process to close the extra account in Oklahoma has not always gone smoothly, we have found.  

 

The Impact of Registering Through SST on Your Filings  

The impact of registering through SST go beyond your sales tax permit registrations.  In fact, they may also impact your regular sales tax filings as well. 

When you register through SST, you have the option of selecting a Certified Service Provider (CSP) to handle your filings. Some businesses qualify for the free service, however you only have the option of selecting one of the CSP’s listed on the SST site.

It is important to be aware that once a business has registered with SST, they will be required to collect and remit sales tax for each registered state beginning with the registration date. The business or service provider will need to set up their account on each state’s online filing system using the registration information from the state.  Most states will send this information and their reporting requirements within 15 days of completing SST registration. Once you are registered in a state, returns MUST be filed even if you have no sales in that state. 

It is possible to decline a CSP and hire someone like TaxValet, by the way (maybe even consider doing this BEFORE applying via SST).  TaxValet can register for all your permits with our Done-for-You Sales Tax Service and save you all the hassle and stress of doing it on your own.   

 

Streamlined Sales Tax (SST): The Final Say

Overall, every time I used SST to apply for sales tax permits, I appreciated the quick process.  But in the end, I also found that the work and time I spent to set everything up with the state took much longer than it would have had I started the process with the state Department of Revenue. This factor was too significant to ignore, so I no longer use SST for sales tax permit registrations.   

Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.

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