Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.
To take advantage of this opportunity and get your questions answered, submit questions to firstname.lastname@example.org and we’ll answer them here, in this blog series.
Why will DtC wine shippers now be able to use the SST program?
The Streamlined Sales Tax (SST) project is an agreement among 24 Member States that have determined to simplify sales tax administration by establishing uniform rules and procedures for sales tax registrations and filings. As part of this project, the SST Governing Board will work with select tax technology compliance companies to certify their tax determination and filing processes. When a tax filer uses one of these Certified Service Providers (CSP) for their tax filings in the SST Member States, the tax filer can have the SST Member States pay the CSP directly for their tax filings services.
However, under the previous agreements between the SST Governing Board and CSPs, this offer was only available to “volunteer sellers,” and tax filers that had a statutory requirement in a state to collect and remit sales tax were excluded from this benefit. Because DtC wine shippers are required to collect and remit state sales tax in all SST Member States they ship to, as a condition of getting their DtC shipping licenses, they were also excluded.
Under the latest agreement, signed on August 31 and coming into effect on January 1, 2021, this restriction has been removed. Therefore, going forward, DtC wine shippers who use a CSP for their tax calculations and filings in SST Member States can enjoy the full range of benefits that are offered under the SST Agreement.
What does it mean to be a Certified Service Provider?
A “Certified Service Provider” (CSP) is an agent certified under the Streamlined Sales and Use Tax Agreement to manage and support all of a seller’s sales and use tax requirements, other than the seller’s obligation to to remit use tax on purchases it makes where sales tax was not paid. As part of its offerings, a CSP must:
- Integrate the CSP’s software with the seller’s systems.
- Calculate tax on all relevant sales transactions by applying the correct rate and product taxability rule.
- Maintain a proper record of each transaction.
- Prepare and file the required tax returns.
- Remit the tax to each of the Streamlined member states.
- Resolve any notices or audits by any Streamlined member states.
- Protect the privacy of the tax information it obtains.
The SST Member States will periodically review a CSP to ensure that it provides accurate tax determinations and that its tax filing system is properly integrated with the states’ sales tax administrations. While this certification is available to any tax technology company that applies, only a select number have actually agreed to go through this certification process.
Sovos has been a participant in the SST Project since its inception in 2000, including being a CSP. Once the new Agreement becomes effective on January 1, 2021, qualifying DtC alcohol shippers will be able to enjoy the additional benefits when they use Sovos ShipCompliant to manage their tax filings in SST Member States.
For more information on the upcoming offerings for DtC shippers, read our recent FAQ blog post.