The Streamline Sales and Use Tax Agreement (SSUTA) is an effort by the states in U.S to simplify and modernize state administration as well as the sales from the locals and use tax laws (Nicely). The SSUTA came about as a response to the decision of Supreme Court in the United States of making the collection of sales and use taxes from the unenforceable sellers of the states. Therefore, the Congress decided to simplify the nationality of the sales tax. Moreover, the agreement of the streamlined national sales and tax use have provided for some voluntary systems that can simplify and make improvement of sales and the administration of use tax for all vendors and any commerce.
The states that are participating in the SSUTA enjoy the benefits of business volunteering in collecting and remitting the previous revenues that are not collected from the interstate. They also enjoy from the simplification of their revenues and systems of tax use. The aim of the SSUTA is to gain from the passage of federal legislation through the collection of sales and use taxes on the remote mandatory sales rather than voluntary. Although as it has been designed originally to capture the previous uncollected revenues on the interstate business, the provisions of SSUTA once approved by a given state, should apply to all interstate and intrastate trade. This paper will analyze the pros and cons why states in the United States have not been included in the legislation of the SSUTA and why the largest states are not included in SSUTA.
Pros
Equal opportunities in trading
It provides a leveled playground for the vendors that are disadvantaged when competing with the online sellers since they are not required to make a collection on the sales and use tax for the purchased products. Moreover, SSUTA will enable the participants in ensuring that all business operation are treated equally. Since the adoption of the agreement applies to the interstate sales, the sellers in different cities without the sales tax will be needed to make a collection and remit sales or apply the taxes for the delivered products to other cities with a sales tax.
Uniformity
Importantly, it was an earlier case that the SSUTA was amended with uniform guidelines to enable a state to source different transactions from the interstate as compared to the interstate transactions. However, this act was not to bless the origin of sourcing concept for the interstate transactions but, it was implemented to address certain problems that states have with the conversion of the interstate vendors of particular goods delivered to a client to destination sourcing.
It will allow the sellers to move low and non-sales tax. That is they will understand some advantages especially when they don't make a collection on the sales tax on the transactions that the competitors are collecting. Consequently, more buyers will make their purchases while considering the lowest price in overall even if the price difference is the sales tax. The non-inclusion of these states in the legislation will enable the vendors to sell the similar products, and most buyers will look at that seller that they can obtain a product from for the lowest overall cost.
Destination sourcing
The local sellers that have no requirements for collecting the sales and use tax from other states will be affected by the change to origin sourcing. Therefore, it is not ignored that several local sellers are collecting the sales and use taxes for the states through the use of destination sourcing. Therefore, the states are not included in their legislation because the cost of the programs and training cannot be ignored
Cons
Customer confusion
Concerning the customer confusion, whether they are accurate or not, the customers will pay attention to whether a vendor will invoice the sales at their designated location of deliveries. When considering the confusion of the sellers that are located in a state without a sales and use tax, there is no one to take the complaints and it will fall on the sellers who will try to explain for the tax. Moreover, it will be the seller who will deal with the return of the products. Consequently, the buyer will not have to figure out the taxes collected by the seller. Hence, the states will not solve this issues since the laws are not enacted by the states.
Concerns of the constitution
The origin of the tax system may be the focus of a successful clause of the equal opportunity and the challenge of different rights of the states. Therefore, when addressing the protection of the equal opportunity, the Congress has got no power to waive the protection of the clause as addressed by the Supreme Court in the United States. Since the Congress has the power to remove the commercial clause protection to any company, the tax scheme of the states cannot challenge the grounds of equal protections. Additionally, if the hybrid sourcing forces a seller to make a collection of taxes at different rates, there will be a need to provide a basis for discrimination. Moreover, if a given state is advised not to impose its tax use, there will be a tax base on the buyers' use of the goods in the state. Therefore, since the laws are enacted by the Congress, interstate trade cannot make a conclusion because the power of the Congress will strip away from the states.
Alternative Taxes
The Congress can put several prohibitions in theses legislations, and this will undermine the intent of the state laws. Therefore, the states will differ on how they should impose their sales and use tax on certain goods. Consequently, the taxes under these states regarding sales will vary from one state to the other and it will difficult for the hybrid-origin sourcing to solve the issue.
The biggest sales volume is not part of this enactments because tax exemptions from the state and local use tax or sales do not rely on the sellers’ use of the goods in their states. However, it is based on the vendors’ use of the goods in their respective states. Consequently, the Congress will be hopeful address the issue and it require the states to apply a fair and uniform procedure for the sellers in claiming the exemption from the tax. The exemptions are not for the business use of the product but, they are broad based in applying them to any purchaser. More importantly, the purchasers also require protection during the claim of exemption. Lastly, the bigger state is not part of this because they perceive the simplicity of hybrid sourcing while dealing with the use tax issues due to the great variation of the exemptions from state to state.
Bibliography
Nicely, Fred. "Hybrid-Origin Sourcing". Task force on State and Local Taxation (2015): n. pag. Print.
