Happy days are here again for tax collectors. The ongoing Streamlined Sales Tax Project went live in October, with 150 small to large Internet retailers signing up that month. With the backup of third- party service providers, they will collect sales taxes on online purchases in the 18 states that participated in the streamlining effort.
Many of the first retailers to sign up were already collecting taxes through their own systems. Others were motivated by the promise of amnesty from any liability incurred from not having collected taxes previously.
The amnesty would be especially valuable if Congress gives its blessing to the states' effort, compelling all retailers, online or otherwise, to collect sales taxes. It's possible that Congress could act next year. Business groups, therefore, would like to see the amnesty extended from the current deadline. It is now an offer to sellers who sign up by October 2006.
That could change. Since states have been slow to certify the software that would make it easier to calculate the tax and to certify the third-party service providers, state revenue officials are likely to restart the 12-month clock for the amnesty after these problems are ironed out. "It's kind of a chicken and egg thing," says Utah tax commissioner Bruce Johnson. "We knew we had to have a date to start, and there are always problems that aren't worked out until you actually do start."